Venture Final)

8/4/2019 Venture Final)

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Swapnil Ghadi

Rohan Chavan

Tejas Mohite

Vikram Shinde

Prateek Nawale

Vijay Patil

Vivek Mirgule

Mitesh Nissar

42

41

29

30

49

12

65

68

Submitted by


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Venture Capital

Venture capital is a form of equity financing especiallydesigned for funding high risk and high reward projects

with the objective of earning a high rate of return.

Venture capital is also called as RISK CAPITAL.

It is provided as seed funding to early stage, High

Potential Companies.


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A financing institution which joins an entrepreneur asa co-promoter in a project and share the risks and

rewards of the enterprise

Definition (VCC)


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Venture capital is usually in the form of equityparticipation. It can be in the form of convertible debt

or long term loan.

Investment in high risk but high growth projects.

It is available for commercialization of new ideas or

technologies. (not for trading, agency, etc.)

Joins as a co-promoter and shares profits and losses.

Features

Contd.


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Continuous involvement in the form of guidance.

VC disinvests his holdings once the venture has

reached the full potential.

It is not only the injection of money to the businessbut also the inputs needed during the setting up of the

business

Investment is usually made in small and mediumscale industries


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Venture capital take different forms at different stages of

the

project. there are four stages of financing of venture

capital.

1. Development of an idea (seed finance)

This is the first stage, in this VC provide seed capital

for

Scope of Venture Capital

Contd.


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2. Implementation stage (start up finance)

In this stage there is a need of funding for manufacture a

product or provide service.

3. Fledging stage (additional finance)

In this stage VC provides funding for developing

marketing infrastructure.

4. Establishment stage (establishment finance)

At this point VC provides capital for expansion &

diversification.


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Objective of VCs to sell of the investments made by him

at

substantial gains. investment is not profit but capital

appreciation at the time of disinvestment.

Options available

Promoters buy backPublic issue

Sale to other venture capital funds

Management buy outs

Disinvestment Mechanism


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Advantages to Investing PublicReduce risk significantly against unscrupulous

management.

VCC representing directors will ensure that the affairsof the business are conducted prudently.

VCC representative will be able to analyze thebusiness position.

Advantages

Contd.


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Advantages to Promoters

Convincing only officials of the venture fund.

Efforts required are less compared to those of

entrepreneurs choosing to raise capital through publicissue.

Contd.


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General advantages

Reduce time lag between technological innovation &

its commercial exploitation.

Intermediary between investors (high returns) and

entrepreneurs

Development of economy

Acts as a cushion to support business borrowings

New products/process


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Government Guidelines

1. The public sector financial institutions, SBI, scheduled

banks, foreign banks & their subsidiaries are eligible forsetting up the Venture capital fund with a minimum size

of Rs.10 crore & a debt equity ratio of 1:1.5, if they

desire to raise fund from public then the promoters will

be required to contribute at least 40% of capital. Foreign

equity upto 25%.

2. The Venture capital companies & venture capital funds

can be set up as joint venture between stipulated agencies& non institutional promoters but the equity holdings of

such promoters should not exceed 20%.

Contd.


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3. Venture capital fund can assist the enterprises a total

investment not more than Rs.10 crore.

4. The VCC or VCF should be managed by professionals& should be independent from the parent organisation.

5. The VCC/VCF will not be allowed to undertake

activities such as trading broking, money marketoperations etc. they will be allowed to invest in leasing

to the extent of 15% of the total fund.

6. Listing of VCC/VCF can be according to prescribe

norms & underwriting of issues at the promotersdiscretion.

Contd.


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7. A person holding a position or full time chairman/president,

chief executive, managing director or executive /whole time

director in a company will not be allowed to hold the same

position in VCC/VCF.

8. The Venture capital assistance should be extended to,

(i) The enterprise having investment upto Rs.10 crores.

(ii) The technology involved should be new & untried.

(iii) The promoters should be new, professionally or

technically qualified with inadequate resources.

(iv) The enterprise should be established in the company from

employing qualified person for maintenance of accounts.


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Equity Participation

Conventional Loan

Conditional Loan

Income Note

Method of Venture Financing


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It can be divided into following categories:-

Specialized financial institution and their financingschemes

A. Risk Capital Schemes of IFCI

B. Technology Development & information company ofIndia (TDICI) of ICICI

C. SEED Capital Scheme of IDBI.

Funds Promoted by State Level Institutions(a) Andhra Pradesh Industrial Development Corporation

Ltd. (APIDC)- VCs Ltd.(b) Gujarat Venture Finance Ltd. (GVFL).

Venture Capital in India

Contd.


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Funds Promoted by Public Sector Banks Such asCanara Bank VC FundPrivate Agencies:- It includes as the:1. Credit Capital Venture fund

2. 20th Century VC fund3. India Investment fund4. Indus VC fund5. SBI Capital Venture Capital fund

Funds promoted by companies in private sector

i. Indus venture capital fund.

ii. Credit capital venture fund (India) Ltd.

iii. 20th century venture capital corporation Ltd.


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Venture Capital Financing by

Industry

(2006)


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Industry No. Amount(Rs. Mm)Industrial products & machinery 208 2599.32

Computer software 87 1832.00

Consumer related 58 1412.74

Medical 44 623.22

Food & food processing 50 500.06

Electronics 41 436.54

Communication 16 385.09

Bio-technology 30 376.46

Energy related 19 249.56

Computer hardware 25 203.36

Misc. 113 1380.85

691 10,000.46


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Suggestions for the growth ofVenture Capital Funds

1. Exemption/concession for capital gains.

2. Development of stock markets.

3. Fiscal incentives.

4. Private sector participation.

5. Review of existing laws.

6. Limited partnership.

7. Public issue through OTCEI.


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India process a pool of young educated and technicallyqualified entrepreneurs with real innovative mind. Vast

potential of our country need to be properly tapped for

continuous development. For that there is a need of

more Venture Capital funds to support those new ideas,

new technology to develop.

Conclusion


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Documents

Venture Final)