VENTURE

FINANCING
BY:
M.SHAMRIN SOFIA
B.COM (PA)
18COAE049
 CONTENT
 INTRODUCTION
 DEFINITION

 HOW DOES VC WORK

 FEATURES

 NEED OF VENTURE CAPITAL

 ADVANTAGES

 VENTURE CAPITALIST

 DISADVANTAGES

 VENTURE CAPITAL IN INDIA

 CONCLUSION
 INTRODUCTION
 Venture capital financing is a type of funding
by venture capital. It is private equity capital
that can be provided at various stages or funding
rounds. Common funding rounds include early-
stage seed funding in high-potential, growth
companies (startup companies) and growth
funding (also referred to as series A). Funding is
provided in the interest of generating a return on
investment or ROI through an eventual exit such
as a merger and acquisition, (also referred to
as M&A), or Initial public offering, (commonly
known as an IPO) of the company.
 Venture capital means funds made available for
startup firms and small businesses with
exceptional growth potential.

 Venture capital is long term risk capital to

finance high technology projects which involve
risk but at the same time has strong potential for
growth.
 DEFINITION

According to 1995 Finance Bill,

“ Venture Capital is defined as long-term

equity investment in novel technology
based projects with display potential for
significant growth and financial return.”
VENTURE CAPITAL FINANCING

Venture capital financing is a type of

financing by venture capital: the type of
private equity capital typically provided to
early-stage, high-potential, growth
companies in the interest of generating a
return through an eventual realization
event such as an IPO or trade sale of the
company.
 HOW DOES VENTURE CAPITAL WORK?
 Venture capital firms typically source the
majority of their funding from large investment
institutions.

 Investment institutions expect very high ROI.

 VC’s invest in companies with high potential

where they are able to exit through either an IPO
or a merger/acquisition.

 Their primary ROI comes from capital gains
although they also receive some return through
dividend.
 FEATURES
 Long term investment. High risk.

 Lack of liquidity.
Participation in management.
 High risk return.
Finance to Smaller companies.
 Private equity.

 Wide scope. Lack of liquidity.

 Equity participation.
Long time horizon.
 NEED FOR VENTURE CAPITAL
 To bridge the gap b/w Capital and Knowledge.

 Maximum utilization of available resources.

 ADVANTAGES
 To provide large sum of equity finance.

 Venture Capitalist are rewarded by business

success & the capital gain.

 Able to bring wealth and expertise to your

company.

 The Venture Capitalist also has a wide network

of contacts.

 Providing additional funds.

 VENTURE CAPITALIST
 A venture capitalist is a person or investment
firm that makes venture investments, and these
venture capitalists are expected to bring
managerial and technical expertise as well as
capital to their investments.
 VENTURE CAPITALIST CHARACTERS
 Well Managerial Skills.

 Well Knowledgeable.

 Comes forward to take risk.

 Decision Making Ability.

 Analyzing Skills.

 Technology Back Ground.

 Scientist/Researchers.
 DISADVANTAGES
 Lengthy and complex process (needs detailed
business plan, financial projections and etc.)

 In the deal negotiation stage, you will have to

pay for legal and accounting fees.

 Investors become part owners of your business -

founder loss of autonomy or control.

 Requirement of Professional business Plan

Drawer .
 VENTURE CAPITAL IN INDIA
VCFs in India can be categorized into
following five groups:

 Those promoted by the Central Government.

 Those promoted by State Government.

 Those promoted by public banks.

 Those promoted by private sector companies .

 Those established as an overseas venture capital .

TOP CITIES ATTRACTING VENTURE
CAPITAL INVESTMENTS
VENTURE CAPITAL SEGMENTATION
 FUTURE PROSPECTS OF VC IN INDIA
 VC can help in the rehabilitation of sick units.

 VC can assist small ancillary units to upgrade

their technologies.

 VCFs can play a significant role in developing

countries in the service sector including tourism,
publishing, health care etc.

 They can provide financial assistance to people

coming out of universities, technical institutes,
etc thus promoting entrepreneurial spirits
 CONCLUSION
 The important reasons for the success of venture
capital financing are as follows:

 Resource raising, investment, management and

exit should be as simple and flexible as needed
and driven by global trends.

 Venture capital should become an

institutionalized industry that protects investors
and investee firms.
BY:
M.SHAMRIN SOFIA
18COAE049