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This report, which contains in-depth study of Venture Capital Industry in India, is made with an
intension to get through all the aspects related to the topic and to become able to make some
suggestion at the industry.
Future of any economy depends on the success of the new technologies and industries and services
supporting these technologies. In India, where human, particularly technical and entrepreneurial are
abundant and there is shortfall of capital, venture capital has a greater significance. It is observed that
new companies, particularly the smaller ones, create more jobs. Venture capital helps employment
generation particularly for educated and skilled workers.
The financing of domestically developed technologies in general and those developed by the new
generation of entrepreneur has always been a problem in both developed and developing countries.
This is because domestically developed technologies, either by organized sector or the unorganized
sector, are usually perceived to be uncertain by the conventional financial system. In India, since
independence, a number of financial institutions have emerged to cater to the needs of the industrial
entrepreneurs and these have mainly remained as debt providing organizations. In India, risk finance
has always been in short supply

The initial equity for any venture has to be raised by the promoters from their own sources and public
financial institutions are not of much help. To overcome this problem venture capital financing made a
small beginning in India since 1988.
Venture capitalists have been catalytic in bringing forth technological innovation in USA. A similar act
can also be performed in India. As venture capital has good scope in India for three reasons:
First The abundance of talent is available in the country. The low cost high quality Indian workforce
that has helped the computer user¶s world wide in Y2K project is demonstrated asset.
Second A good number of successful Indian entrepreneurs in Silicon Valley should have a
demonstration effect for venture capitalists to invest in Indian talent at home



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made in the knowledge based industry with substantially low
investments in land, building, plant and machinery .The asset/collateral-backed lending instruments
adopted for the hard for the hard core manufacturing industries, are proving to be inadequate for the
knowledge ±based industries that very often start with just an idea.
The only way to finance such industries is through Venture Capital.Venture Capital is instrumental in
bringing about industrial development, for it exploits the vast and untapped potentialities and promotes
the growth of the knowledge ± based industries worldwide.
In India too, it has become popular in different

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