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A PROJECT REPORT ON

VENTURE CAPITAL FUNDS

SUBMITTED BY JIMISH KAMLESH MEHTA

T.Y.B.M.S. [SEMESTER V]

MITHIBAI COLLEGE
VILE PARLE (W), MUMBAI - 400 056

SUBMITTED TO

UNIVERSITY OF MUMBAI
ACADEMIC YEAR

2007 - 2008
PROJECT GUIDE PROF. G.C.SOWANI

PROJECT REPORT ON

Study of Entrepreneurship
SUBMITTED BY JIMISH KAMLESH MEHTA T.Y.B.M.S. [SEMESTER V]

MITHIBAI COLLEGE
VILE PARLE (WEST)

SUBMITTED TO UNIVERSITY OF MUMBAI

ACADEMIC YEAR 2007 - 2008


NAME OF PROJECT GUIDE PROF. G.C.SOWANI

DATE OF SUBMISSION

30TH JUNE, 2007

DECLARATION
I Mr. Jimish K. Mehta of MITHIBAI COLLEGE of TYBMS [Semester V] hereby declare that I have compiled this project on Venture Capital Funds in the academic year 2007-2008. The information submitted is true and original to the best of my knowledge.

Signature of the Student

CERTIFICATE
I, Prof G.C.Sowani hereby certify that Mr. Jimish K. Mehta of MITHIBAI COLLEGE of TYBMS [Semester V] has completed project on Study of entrepreneurship in the academic year 2007-2008. The information submitted is true and original to the best of my knowledge.

Signature of the Principal [Dr. KIRAN MANGAONKAR]

Signature of the Project Guide [Prof G.C.SOWANI]

ACKNOWLEDGMENTS
Milestones achieved in the journey of life are never achieved alone, and this is one exception. As I complete this enlighting journey, I would like acknowledge and thank my Guide and Companions, who helped me put my best foot forward and made this story a successful. I am very grateful to my Project Guide, Prof G.C.SOWANI who inspired me to work well on the topic and seeing to it that my performance is up to the mark. He not only helped me on the topics but also helped me in inculcate Venture Capital Funds in the happening field of Finance. I would also like to thank my Coordinator Prof. (Mrs.) Neela B. Nair, for her support, eagerness and professional approach in guiding me through the careful details of the project. My special thanks to Mr.Kiran Pujari of SIDBI and Mr. Himanshu of IDFC for helping me to carry out my field study and for assisting me to obtain the expert opinions. Being experts in VCF fields, their excellence, cause and eagerness to educate me about the details of practical working style of VCF. I am highly indebted to my Mother for her moral support and encouragement. Also I thank my source of inspiration ,my teacher. I would also like to express my gratitude to my friends and colleagues who have been support in my effort to explore this area of study. Last but not the least I gratefully acknowledge the immense and unfathomable motivation that I received from my parents. They not only enabled me to pursue this area of study but also guided me all through my deliriums.

OBJECTIVE AND RESEARCH METHODOLOGY


Dreams give the power of imagination and a sense of vision. Dreams give rise to aspirations. Belief in dreams and aspirations give us the hope and conviction to turn pebbles of change into rocks of opportunities. And it was this childhood dream of mine mixed with immense curiosity which prompted me to take this subject for study as it was deeply attached to my aspirations. As a budding entrepreneur, I always desired to know more on challenges and opportunities linked with entrepreneurship. With this motivation and optimism, the topic of Study of Entrepreneurship was intended. THE CAREER is an opportunity of Self Employment and self- reliance, where a confident and qualified individual can venture out to be a master of himself and his life. It is a field where an individual either on his own or in partnership with others starts ventures of his clear vision, of the direction to be taken both for the activities as well as to guide the people working under. If a TATA, BIRLA, DUPONT, FORD, GODREJ can become house hold names and industrial celebrities, then any individual with clarity of vision, sense of direction and meaning can emulate them over time. India needs entrepreneurs. It needs them for two reasons: to capitalise on new opportunities and to create wealth and new jobs. A recent McKinsey & CompanyNasscom report estimates that India needs at least 8,000 new businesses to achieve its target of building a $ 87 billion IT sector by 2008. Similarly, in the next 10 years, 110130 million Indian citizens will be searching for jobs, including 80-100 million looking for their first jobs; that are seven times Australia's population. This does not include disguised unemployment of over 50% among the 230 million employed in rural India. Since traditional large employers including the government and the old economy players may find it difficult to sustain this level of employment in the future, it is entrepreneurs who will create these new jobs and opportunities.

Methodology: The methodology employed in making this report runs into several stages. In the first stage, huge secondary data was collected through a variety of books, newspapers, magazines, journals and via internet. Secondly, this data was verified for validity and reliability with reference to the concerned topic. Along with it, this data was also subject to strict due-diligence. Thirdly, the subject was divided into several headers and the data which was collected, was associated with the appropriate header. Care was taken when this information was inserted in the main contexts of the topic .Several rounds of discussions were done with the established and also with the budding entrepreneurs and valuable insights were obtained. The textual methods, current trends and the input received from the entrepreneurs were analyzed with the data already collected. Apart from the normal survey data, innovative concepts like online surveys were employed and detailed information was received from the respondents which were analyzed in an effective manner. Finally, after several additions and corrections of data, the context was again subject to rigorous tests for reliability and validity. Due care was taken to make the language as simple as possible, so that they convey the meaning of the context in the right sense. Care was also shown, so as not to make the context offensive in any way.

EXCECUTIVE SUMMARY

Venture capital means risk capital. It refers to capital investment, both equity and debt, which carries substantial risk and uncertainties. The risk envisaged may be very high may be so high as to result in total loss or very less so as to result in high gains. The investment in equities is expected to grow up as capital gains which can be converted into cash when required. Venture capital is thus an initiative to provide vital equity support to new industries where the risk element is high and entrepreneurs are qualified but lack necessary resources to proceed on their own. A venture capitalist entertains keen interest and active participation in the working of the business. Subject to the understanding with the investee, the investor takes part in the management, production, marketing, accounting, training activities etc. The venture capitalist therefore becomes a partner in the business and shares success or failure proportionate to the equity investment. The venture investment is long term and is not repayable on demand. The venture capitalist has to wait between 5 and 10 years for any significant return on his investment. The venture capitalist does not participate in the day to day working but protects and enhances his investment through an active supporting role.

Venture capital commonly describes not only provision of start-up finance but also for development for later stages of the business. The various stages at which venture capital operates can be shown as below

Time Stage of Financing (Years) Seed Money Stage 7-10 Small amount of financing needed to prove a concept or develop a product, marketing is not included. Start up financing 5-10 Financing for a firm that started up in the past one year, funds are likely to pay for marketing and product development. Funds earmarked for working capital for a firm that is Second Financing is still losing money. Third round financing 1-3 Financing for a firm that is breaking even and is contemplating an expansion project Fourth financing Buy-out 1-3 round1-3 Money provided for firms that are likely to go public soon, also known as bridge financing. Acquisition of a product line business Round3-7 selling its product but Uses for the Finance

Turnaround

3-5

Re-establishing a business

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