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Presented By:Niraj ThakurSadik Shaikh

VENTURE CAPITAL

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IT IS THE STORY OF

THE MAN WITH THE idea AND THE MAN WITH THE

money

WHAT IS VC FUNDING?

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The concept was introduced in India in

1987It was operated by I ndustrialD evelopment B ank of I ndia.

In the same year Industrial

Credit andI nvestment C orporation of I ndia was

also started venture capital activity.

Development In India

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VENTURE CAPITALVC is long term risk capital to financehigh technology projects which

involve risk but at the same time hasstrong potential for growth

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Features

F orm of Equity participationHigh risk but high growth potential projects.Commercialization of new ideasContinuous involvement in business.Venture capitalist disinvests his holdings either toPromoters or in Market when the venture reach the full

potential.Its not just injection of money but also an input needed toset up the firm.Investments usually made in small and medium scaleenterprise

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Stages of financing of Venture

Capital1: Development of an Idea- Seed finance2: Implementation Stage- Start up finance.

3: F ledging Stage- Additional finance4: Establishment stage- Establishment finance

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VC Structure

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Depending on your type business, the venture capital firm you approachwill differ. F or instance, if you're an internet [start-up company], fundingrequests from a more manufacturing-focused firm will not be effective.Doing some initial research on which firms to approach will save time

and effort. When approaching a VC firm, consider their portfolio:Business Cycle: Do they invest in budding or established businesses?Industry: What is their industry focus?Investment: Is their typical investment sufficient for your needs?Location: Are they regional, national or international?

Return: What is their expected return on investment?Involvement: What is their involvement level?

Types of Venture Capital firms

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Advantages of venture CapitalTo Investing Public:- Management malpractices can be stoped.- Analysis are done by expertise

To Promoters:- To obtain VC assistance the idea should be justified by theofficials.- Decrease in expenditure like: Printing and posting of annual reports,stock exchange listing fee etc.

General- Acts as cushion to support business borrowing- Its helps in developing new processes/products .

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Methods of Venture Capital

VC is available in four forms in India

Equity ParticipationConventional LoanConditional loan

Income notes

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CompensationVenture capitalists are compensatedthrough:

Management fees an annual payment madeby the investors in the fund to the fund'smanager to pay for the private equity firm'sinvestment operationsC arried interest a share of the profits of thefund (typically 20%), paid to the private equityfunds management company as a performanceincentive. The remaining 80% of the profits arepaid to the fund's investors

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Suggestions for the Growth of VC fundsExemption/Concession for capital gainsDevelopment of stock markets

F iscal IncentivesPrivate sector participationLimited partnership

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Example of ICICI Venture CapitalEnergyReliance Petroleum

Kalpataru Power Internet Naukri.ComTextilesWelspun IndiaSangam

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The greatest difficulty in the world is not for people to accept new ideas, but to make

them forget old ideas.--Tom Peters

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THANK YOU