VENTURE CAPITAL

Presented By Salimmalik

CONTENTS

Meaning Features Business plan tips and elements Venture capitalist Venture capital in India and need of VC Future Prospects of Venture Financing in India

VENTURE CAPITAL

Venture capital represents financial investment in newly formed unregistered company(highly risky) in the hope of earning a high rate of return Venture capital is the investment of long-term equity finance where the venture capitalist earns his return primarily in the form of capital gains

FEATURES

It is basically equity finance in new co. It is a long-term investment in growth-oriented small/medium firms It involves high risk-return spectrum VC normally plans to liquidate its investment in the assisted firm after 3 to 7 year

BUSINESS PLAN FOR APPROACHING VC

Use simple and clear language Focus on four basic elements, viz., people, product, market & competition

Give projections for about two years with emphasis on cash flows

Identity risks and develop a strategy to cope with the same Convince that the management team is talented, committed, & trustworthy

ESSENTIAL ELEMENTS OF A BUSINESS PLAN

1. 2. 3. 4. 5. 6. 7. 8. 9.

Executive summary Background on the venture The product or service Market analysis Marketing Business operations The management team Financial projections Amount and use of finance required and exit opportunities

WHAT DOES A VENTURE CAPITALIST LOOK FOR IN A VENTURE?

Superior businesses Quality and depth of management Corporate governance and structure Appropriate investment structure Exit plan

VENTURE CAPITAL IN INDIA

In 1987 operated by the Industrial Development Bank of India (IDBI) VCFs in India can be categorized into the following four groups: VCFs promoted by the central government-controlled development finance institutions VCFs promoted by the state government-controlled development finance institutions VCFs promoted by the public sector banks VCFs promoted by the foreign banks and private sector companies and financial institutions

1.

2.

3. 4.

NEED OF VENTURE CAPITAL

To provide funds to entrepreneurs particularly those in small scale enterprises for: Intuition of new technology, processes or methods Introduce new product characteristics Encourage new ideas

FUTURE PROSPECTS OF VENTURE FINANCING IN INDIA

Rehabilitation of sick units Assist small technologies ancillary units to upgrade their

Provide financial assistance to people coming out of universities etc. VCFs can play a significant role in the service sector including tourism, publishing, health care, etc.

PLAYERS

Central financial institution such as IDBI, SIDBI State level financial institutions- GVFCL, APVCL Banks- Canfina, SBI Cap Private sector institution such as ICICI Foreign banks- Indus VC, Grindlays, and Credit Capital Venture Fund

Thank you