7/27/2019 VC.pptx

1/13

Venture Capital

7/27/2019 VC.pptx

2/13

Venture Capital

Venture capital is a means of equity financing for rapidly

growing private companies

Finance may be required for the start-up,

development/expansion or purchase of a company

Venture Capital firms invest funds on a professional basis,

often focusing on a limited sector of specialization (e.g. IT,

infrastructure, health/life sciences, clean technology, etc.)

The goal of venture capital is to build companies so that the

shares become liquid (through IPO or acquisition) and provide

a rate of return to the investors (in the form of cash or shares)

that is consistent with the level of risk taken

7/27/2019 VC.pptx

3/13

With venture capital financing, the venture capitalist acquires

an agreed proportion of the equity of the company in returnfor the funding

Equity finance offers the significant advantage of having no

interest charges. It is "patient" capital that seeks a return

through long-term capital gain rather than immediate andregular interest payments, as in the case of debt financing

Given the nature of equity financing, venture capital investors

are therefore exposed to the risk of the company failing. As a

result the venture capitalist must look to invest in companieswhich have the ability to grow very successfully and provide

higher than average returns to compensate for the risk

7/27/2019 VC.pptx

4/13

When venture capitalists invest in a business they typically

require a seat on the company's board of directors They tend to take a minority share in the company and usually

do not take day-to-day control

Rather, professional venture capitalists act as mentors and

aim to provide support and advice on a range ofmanagement, sales and technical issues to assist the company

to develop its full potential

7/27/2019 VC.pptx

5/13

Stages of Venture Capital

There are 6 stages of venture round financing offered

in Venture Capital, that roughly correspond to these

stages of a companys development:

Seed Money: Low level financing needed to prove a newidea, often provided by angel investors.

Start-up: Early stage firms that need funding for expenses

associated with marketing and product development

First-Round: Early sales and manufacturing funds Second-Round: Working capital for early stage companies

that are selling product, but not yet turning a profit

7/27/2019 VC.pptx

6/13

Third-Round: Also called Mezzanine financing, this is

expansion money for a newly profitable company

Fourth-Round: Also called bridge financing, 4th round is

intended to finance the going public

Between the first round and the forth round, venture-

backed companies may also seek to take venture debt

7/27/2019 VC.pptx

7/13

Institutional Venture Capitalist in

India

Andhra Pradesh Industrial Development Corporation

Axis Venture Capital Fund

CanBank Venture Capital Fund

GVFL Venture Capital Fund HDFC Property Fund

ICICI Econet Fund

ICICI Emerging Sector Trust

IDFC India Infrastructure Fund 3 IDFC Infrastructure Fund

IDFC Infrastructure Fund - 2

7/27/2019 VC.pptx

8/13

IFCI Venture Capital Funds Ltd.

Kerala Venture Capital Fund

Rajasthan Venture Capital Fund

SBI Macquarie Infrastructure Trust

SIDBI SME Venture Fund

West Bengal Venture Capital Fund

7/27/2019 VC.pptx

9/13

Cases of Venture Capital Financing

Hyderabad-based venture capital firm

VenturEast, has invested $5 million in US-

based wireless technology licensing company

Ocra Sytems, Inc.

Orca Systems, Inc, is a semiconductor and

intellectual property licensing company providing

integrated radio frequency (RF) and modemtechnology for high performance wireless

applications

7/27/2019 VC.pptx

10/13

IFCI venture Capital to put Rs. 25 crore into

metals recycling company

Rajasthan Ventures Capital Fund (RVCF) has

acquired 32 per cent stake in its first round of

funding in Mumbai-based NexTenders (India)

Pvt Ltd for an undisclosed amount. RVCF has

invested in this company through its Rs 150

crore SME Tech Fund

7/27/2019 VC.pptx

11/13

NexTenders is engaged in web-based procurement of

goods and services and mainly caters to various state

governments, government agencies and public sector

undertakings both in India and abroad. For this

purpose, the company utilises e-procurementtechnologies, including e-tendering, e-auctions, e-

catalogues, etc

7/27/2019 VC.pptx

12/13

Company that have corporate VC

financing to fund their research

activities

Reliance Industries Limited

CISCO Tata

Unilever

Adobe

Dell

Birla Group

Infosys

7/27/2019 VC.pptx

13/13

Informal Venture Capitalist

Mrs. Sudha Murthy