Technology Incubation & Venture Capital

PRESENTED BY: PRASHANT NAIR ROLL NO. 28 MBA

Incubation
y Incubators represent an ideal place to start a

business. y Incubators normally provide techno-preneurs with reasonable rental rates and extend businessconsulting services, networks and access to capital.

Benefits of starting a venture in an incubator y At an incubator, there are many benefits that one could usually enjoy. These include: Common services, including secretarial support and shared use of office equipment and machinery; Hands-on business counseling with regards to business planning, training in management skills, as well as access to specialized assistance such as R&D support and venture capital; Networking activities among entrepreneurs inside the premises and beyond to the local community; Access to venture capital and seed funding;

Features of technology incubation

y A technology incubation programme is an innovative

system designed to assist entrepreneurs in the development of new technology-based firms, both start-ups and fledglings. y It seeks to effectively link talent, technology, capital and know-how to leverage entrepreneurial talent in order to accelerate the development of new companies and thus speed the commercialization of technology.

y The special emphasis is on providing assistance

directly from the technology sector, relevant govt. departments and from the universities. y Links directly to facilities such as multimedia corridors and information super highways enhance the benefits to new technology-oriented companies. y An incubator is meant to nurture young enterprises to a level of maturity. The period of incubation varies, from 12 months to two years, depending on the enterprise and the speed at which the technology is to be commercialized.

y The key role of an incubator is to leverage

entrepreneurship. The entrepreneur and enterprise should therefore, grow to a level of competency that allows the enterprise to be established as a selfstanding entity.

VENTURE CAPITAL
y Venture capital investment is defined as an activity

by which investors support entrepreneurial talent with finance & business skills to exploit market opportunities and thus obtain long term capital gain y Venture capital investment is made with the objective of obtaining equity ownership in such enterprises initially, and to take part in the growing prospects in the form of capital appreciation subsequently

FEATURES OF VC
y New Ventures y Continuous Involvement y Mode of Investment y Objective y High Risk-return Venture y Nature of Firms

Stages in Venture Capital Financing

Seed Capital: This is an early stage financing. It is the financing of the initial product development or the capital provided to entrepreneur to prove feasibility of the project. 2. Start-up Financing: It is the capital required to finance the product development, initial marketing & the establishment of product facilities. 3. Early Stage Financing: finance is provided to those companies that have completed development stage and require further funds to initiate commercial manufacturing.
1.

4. Follow on Financing: Provision of capital to a firm

which has previously been in receipt of external capital but whose financial needs have subsequently expanded. 5. Expansion Financing: It is the finance provided to fund the growth of a company which is breaking even or trading at small profit. 6. Replacement Financing: hereby V.C. extend financing for the purchase of existing share from an entrepreneurs in order to reduce their holding.

7.

Turnaround Financing: This is the type of financing provided by the venture capitalist in the event of an enterprise becoming unprofitable after the launch of commercial production.

BENEFITS OF VC FUNDS
y High-risk and High-return financing y Focus on New Ideas y Economic Growth y Catalyst Role in Industrial Development y Capital Support y Employment Generation

VENTURE CAPITAL FUNDS IN INDIA

y VCF of IDBI 1986:

The IDBI, an apex public special and development financial institution provides venture financing facility to new entrepreneurs. This is done by: 1. Direct venture capital assistance 2. Indirect venture capital assistance to new small & medium-scale units, the assistance being extended by the seed capital scheme

y VC FUND OF ICICI: Launched in 1986 by ICICI with

the aim of encouraging new technocrats in the private sector in new fields of high technology with high inherent risk. y VC FUND of IFCI: The VC fund was started by IFCI with the name Risk Capital & Technology Finance Corporation Ltd. It provides finance in the form of equity to ventures financed by conventional financial institutions to fill the gap in the promoters contribution stipulated by such institutions.

References
y Financial Services & Markets- Dr. S Gurusamy y www.wikipedia.com

THANK YOU