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PRESENTATION ON

VENTURE
CAPITAL
VENTURE CAPITAL
Venture capital is a form of equity financing
especially designed for funding high risk and
high reward projects with the objective of
earning a high rate of return.
1.It promoted by technically or professionally
qualified but unproven entrepreneur
2. It seeking to harness commercially
unproven technology
3. High risk venture
Features of Venture Capital
 High Degrees of Risk
 Equity Participation
 Long term Investment
 Participation in Management
 Achieve social objectives
 Investment is Illiquid
Types of Venture Capital
 Funds set up by angel investors.
 Subsidies of Corporation
 Private capital firms/funds
Modes of finance by venture capital
1.EQUITY 2.CONDITIONAL LOAN
3.CONVERTIBLE LOAN
STAGES OF FINANCING
 A. EARLY STAGE FINANCING
Seed capital and research and development projects
Start ups
Second Round Finance
B. LATER STAGE FINANCING
Development Capital, expansion finance, replacement
capital, turn around, Buy outs
FACTORS AFFECTING
INVESTMENT DECISION
 Strong mgt team
 A Viable Idea
 Business Plan
 Project Cost and Return
 Future Market Prospect
 Existing Technology
 Miscellaneous Factors
Procedure followed by VCs
 Receipt of Proposal
 Appraisal of Plan
 Investment
 Provide Value added Services
 Exit
Venture Capital in India
It can be divided into following categories:-

 Specialized financial institution and their


financing schemes
A. Risk Capital Schemes of IFCI
B. Technology Development &
information company of India (TDICI)
of ICICI
C. SEED Capital Scheme of IDBI
 Funds Promoted by State Level Institutions
(a) Andhra Pradesh Industrial Development
Corporation Ltd. (APIDC)- VCs Ltd.
(b) Gujrat Venture Finance Ltd. (GVFL)
 Funds Promoted by Public Sector Banks Such as
Canara Bank VC Fund
Private Agencies:- It includes as the:
1. Credit Capital Venture fund
2. 20th Century VC fund
3. India Investment fund
4. Indus VC fund
5. SBI Capital Venture Capital fund
 Overseas Venture Capital fund:- It look
for investment in areas ensuring high and
guaranteed returns such as tourism,
hospitals, air transport, IT, Comm., etc.
 Difficulties in India: -

1.The restrictive legal and financial


framework is one of the main reason for the
lack of development of venture capital.
2. There are no private pool of capital of
finance risk venture in India.
3. Small companies have no access to share
capital or long term debenture capital.

 Need for growth:- India process a pool of


young educated and technically qualified
entrepreneurs with real innovative mind.
Vast potential of our country need to be
properly tapped for continuous
development.
SEBI(VENTURE CAPITAL FUND)
REGULATIONS, 1996
 I). Registration of venture capital funds:

1. Application of grant of Certificate


2. Eligibility Criteria:
(i) if the application made by the
Company
(ii) if the application by the trust
(iii) if the application made by the
body corporate
 II) Investment conditions and restrictions:
Minimum investment in a VC fund:
1.) A Venture Capital fund may raise
monies from any investor whether
Indian, foreign, or non-resident
Indian.
2.) No Venture Capital fund set up as a
company.
 III) General Obligation and responsibilities:-
Prohibition on investing subscription from
the public.
Private Placement
Maintenance of Books and Records
Submission of Reports to the Board
Winding Up
IV) Inspection and Investigation:-
1. To ensure that the books of account, records
and documents are being maintained by the
venture capital
2. Investigate into complaints received from
investors.
V) Liability for action in Case of Default
1. Contravenes any of the provisions of the act
2. Fails to furnish any information relating to its
activity as a venture capital.
THANKS