Venture Capital -EnC

8/6/2019 Venture Capital -EnC

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WELCOME WELCOME

SAMEER(PA1027)

RATI(PA1025)RAKESH

(PA1024)


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O OBTAINING VENTURE BTAINING VENTURE

AND GROWTH CAPITAL AND GROWTH CAPITAL


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GR OWTH CAPITAL GR OWTH CAPITAL


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GR OWTH CAPITAL GR OWTH CAPITAL Growth capital (also called expansion capital and growthequity ) is a type of private equity investment, investing in relativelymature companies that are looking for capital to expand orrestructure operations, enter new markets or finance a significantacquisition without a change of control of the business.C ompanies that seek growth capital, will often do so in order tofinance a transformational event in their lifecycle. These companiesare likely to be more mature than venture capital fundedcompanies, able to generate revenue and operating profits butunable to generate sufficient cash to fund major expansions,acquisitions or other investmentsGrowth capital is often structured as either common

equity or preferred equity, although certain investors will usevarious hybrid securities that include a contractual return (i.e.,interest payments) in addition to an ownership interest in thecompany.


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V ENTUR E CAPITAL


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INT R ODUCTION

y The venture capital investment helps forthe growth of innovativeentrepreneurships in India.

y Venture capital means risk capital

y The risk envisaged may be very high maybe so high as to result in total loss orvery less so as to result in high gains


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OR IGIN OF V ENTUR E CAPITAL OR IGIN OF V ENTUR E CAPITAL

y In the 1920s and 30s, the wealthy families of and individual investors provided the startupmoney for companies that would later

become famousy Eastern Airlines and Xerox are the morefamous ventures they financed

y In its early years V C may have been

associated with high technology, over theyears the concept has undergone a changeand as it stands today it implies pooledinvestment in unlisted companies


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MEANING MEANING

Venture capital means funds madeavailable for startup firms and smallbusinesses with

exceptional growth potential.

Venture capital is money provided byprofessionals who alongside managementinvest in young, rapidly growing companiesthat have the potential to develop intosignificant economic contributors.


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What kind of businesses are attractiveto venture capitalists?

Venture capitalist prefer to invest in"entrepreneurial businesses.it is more about the investment's aspirations

and potential for growth, rather than bycurrent size.Venture capital investors are only interestedin companies with high growth prospects,

which are managed by experienced andambitious teams who are capable of turningtheir business plan into reality.

WHAT KIND OF BUSINESSES A R E WHAT KIND OF BUSINESSES A R E ATT R ACTI V E TO V ENTUR E CAPITALISTS?ATT R ACTI V E TO V ENTUR E CAPITALISTS?


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FEATU R ESFEATU R ESy Investment made in equity, investors wait

for 5-7 years to reap the benefits of capital gain

y Investments are made in innovativeprojects

y Investors does not interfere in day-to-daybusiness

y C apital need not be repaid in the courseof business but realized through existroute (stock exchange)


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AD V ANTA GESAD V ANTA GESy It injects long term equity finance which provides

a solid capital base for future growth.

y The venture capitalist is a business partner,sharing both the risks and rewards. Venturecapitalists are rewarded by business success andthe capital gain.

y

The venture capitalist is able to provide practicaladvice and assistance to the company based onpast experience with other companies whichwere in similar situations.


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Venture capitalcomes fromInstitutional

investor and High

net worthindividuals orfamilies and is

pooled bydedicated firms

A venture capitalist is a person or institutional firm thatmakes venture investment and these venture capitalist

are expected to bring managerial and technical expertiseas well as capital to their investment

WHO ARE VENTURE CAPITALIST


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V ENTUR E CAPITAL IN V ESTMENT V ENTUR E CAPITAL IN V ESTMENT PR OCESSPR OCESS

Deal origination

Screening

Due diligence (Evaluation)

Deal structuring

Post investment activity

Exit plan


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PR OCESS OF V ENTUR E CAPITAL PR OCESS OF V ENTUR E CAPITAL IN V ESTMENT IN V ESTMENT


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DIFFE R ENCE F R OMDIFFE R ENCE F R OM T R ADITIONAL CAPITAL T R ADITIONAL CAPITAL

Venture capitalLess fluid

Requires high return rateInvested based on long-run future

C oncerned with product and market potentialVenture capitalist and partner are co-workers

Traditional capitalMore fluidBears lower return

Invested based on immediate futureC oncerned with past performanceLoaning bank is creditorRequires collateral


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DE V ELOPMENT OF V ENTUR E DE V ELOPMENT OF V ENTUR E CAPITAL IN INDIACAPITAL IN INDIA


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V ENTUR E CAPITAL IN INDIA V ENTUR E CAPITAL IN INDIA

T he concept of venture capital was formallyintroduced in India in 1987 by IDBI.

T he government levied a 5 per cent cess on all know-

how import payments to create the venture fund.

ICICI startedVC activity in the same year

Later on ICICI floated a separateVCcompany - T DICI


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CATEO R IZATION OF V CFSCATEO R IZATION OF V CFS

1)Those promoted by the C entralGovernment controlled development

finance institutions. For example:- IC IC I Venture Funds Ltd.- IFC I Venture C apital Funds Ltd (IVC F)- SIDBI Venture C apital Ltd (SVCL )


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2)Those promoted by State Governmentcontrolled development financeinstitutions.For example:- Punjab InfotechVenture Fund

- Gujarat Venture Finance Ltd (GVFL)- Kerala Venture C apital Fund Pvt Ltd.

3) Those promoted by public banks.For example:- C anbank Venture C apital Fund- SBIC apital Market Ltd


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V ENTUR E CAPITAL INDUST RY V ENTUR E CAPITAL INDUST RY

WISE SE G MENTATION WISE SE G MENTATION

6.94

7.73

11.5

4.32

27.95

4.82

11.43

12.92

3.36

9.03

Percentage

IT & ITES

Energy

Manufacturing

Media & Ent.

BFSI

Shipping & logistics

Eng. & Const.Telecom

Health care

Others

Percentage calculated on the total VC

investment- 14,234 USB (fig. of 2007)


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TOP CITIES ATT R ACTING V ENTUR E TOP CITIES ATT R ACTING V ENTUR E CAPITAL IN V ESTMENTSCAPITAL IN V ESTMENTS

CI T IES SEC TOR S

MUMBAI Software services, BPO, Media, C omputergraphics, Animations, Finance & Banking

BANGALORE All IP led companies, IT & ITES, Bio-technology

DELH I Software services, ITES , Telecom

CH ENNAI IT ,Telecom

HY DERABAD IT & ITES, Pharmaceuticals

PUNE Bio-technology, IT , BPO


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1.Half-baked business plans.

2. Focusing too much on theidea and too little on themanagement

3. Not asking for enough money

4. Having too many lenders or investors

5. Failing to get the proper legalagreements

6. Poor cash flow management

6 ~ BIGGEST MISTAKES IN RAISING START UPCAPITAL?


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THANK YOU

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Documents

Venture Capital -EnC