Family & Non-family Family & Non-family EntrepreneurEntrepreneur

Who are professionals?Who are professionals?

• Who have specific body of knowledge• Have a value & general know how• Who manages professional mobility• Who are reliable & trustworthy in the

sense of their performance.

Elements of professionalismElements of professionalism

• Responsibility• Skillful• Competency to retain & distribute

information• Communicative• Integrity• Personal development of one self & of

others

Role of professionalsRole of professionals

• To see the on going trend• To update their knowledge• To maintain the chain of professionals• Provides training• Competence development• Guiding the related establishment

ProfessionalismProfessionalism

Professionalism is a commitment to develop one’s skills & then applying them to resolve problems responsibly

Family EntrepreneurshipFamily Entrepreneurship

• Family Entrepreneurship: is defined as an ownership control by members of family in the form of its management by taking this to the generations ahead.

Differentiation Differentiation

On the basis of:• Degree of open mindedness• New practices• Impartial HRM• Organization oriented financial

management• Decision making style

VENTURE CAPITALVENTURE CAPITAL

WHAT IS VENTURE CAPITAL?WHAT IS VENTURE CAPITAL?

Venture capital is a type of private equity (PE’s). Venture capital is typically provided for early stage , high potential, growth companies in the interest of generating a return through an eventual realization event such as IPO.

Venture capital typically comes from four generic sources:• Private venture capital firms• Individual investors generally referred to as “angel

investors”• Corporations making strategic investments• Governmental sources.

VENTURE CAPITALISTSVENTURE CAPITALISTS

Venture capitalists comprise of professionals of various fields. They provide funds to these firms after carefully scrutinizing the projects. Their main aim is to earn huge returns on their investments, but their concepts are totally different from the traditional moneylenders. They Know very well if they may suffer losses in some projects, the other will compensate the same due to high returns. They take active participation in the management of the company as well as provide the expertise and qualities of a good banker, technologists, planner and managers. Thus venture capitalists and the entrepreneur literally act as partners.

VENTURE CAPITALISTSVENTURE CAPITALISTS

Venture capitalists are higher risk investors and, in accepting these higher risks, all they desire is a higher return on their investments. The venture capitalists manage the risk/ reward ratio by only investing in businesses that fit their investment criteria.

A venture capitalist is a person or investment firm that makes venture investments, and these venture capitalists are expected to bring managerial and technical expertise as well as capital to their investments.

FEATURES OF VENTURE FEATURES OF VENTURE CAPITALCAPITAL

For New EntrantContinuous InvolvementsMode of InvestmentLong Term CapitalHands-on ApproachHigh Risk-Return VenturesSource of Finance

ADVANTAGES OF VENTURE ADVANTAGES OF VENTURE CAPITAL FUNDINGCAPITAL FUNDING

As the venture capitalists are ready to lend their expertise and standing to the entrepreneur, the local groups and multinational companies can easily enter into joint ventures.Venture capitalists are also helpful to a large number of smaller units under which they are able to upgrade their technology to meet the demands of the major industrial units.Venture capitalists are also playing a significant role in tapping the potentiality of service sectors. Thus, venture capital is booming to exploit the potential of Indian economy.

DISADVANTAGES OF VENTURE DISADVANTAGES OF VENTURE CAPITALCAPITAL

Securing a deal with a VC can be a long and complex process.Person will be required to draw up a detailed business plan, including financial projections for which the entrepreneur may need professional help. Support from his local business link may be available for this.If he gets through the deal negotiation stage, he will have to pay legal and according fees whether or not he becomes successful in securing funds.

VENTURE CAPITAL FUNDING VENTURE CAPITAL FUNDING PROCESSPROCESS

Investment Valuation

Evaluation

Deal Structuring

Post Investment and Exit

Deal Origination

DIMENSIONS OF VENTURE DIMENSIONS OF VENTURE CAPITALCAPITAL

1. Equity Participation2. Conventional Loan3. Conditional Loan

STAGES OF FINANCING OFFERED STAGES OF FINANCING OFFERED IN VENTURE CAPITALIN VENTURE CAPITAL

1. Seed Money (Concept stage)

2. Start-up

3. First-Round (launched)

4. Second-Round (funding WC)

5. Third-Round (increasing plant capacity)

6. Fourth Round (going public)

TYPES OF FINANCINGTYPES OF FINANCING

1. Seed Financing2. Start-up (primary sources)

Angel InvestorsVenture Capitalists

3. First-Round(potential sources of financing)

Trade CreditSmall Business Administration (SBA)Government Assistance programsCommercial Banks

4. Second-Round

ADVANTAGES OF VENTURE ADVANTAGES OF VENTURE CAPITAL FUNDINGCAPITAL FUNDING

Even in the situation when entrepreneur having a good project idea but no previous entrepreneurial track record to leverage the firm, handles customers and bankers, venture capital can help the entrepreneurs in successful launch of their projects.Rapid growth of technology across the globe has led to the growth of technology in India but indigenous technology has been slack due to unwillingness of the people to take entrepreneurial risks.Venture capital has gained importance as it solves the sickness of a company.

GUIDELINES FOR VENTURE GUIDELINES FOR VENTURE CAPITAL COMPANIESCAPITAL COMPANIES

The government of India has issued the following guidelines for various venture capital funds operating in the country:The financial institutions, SBI, scheduled banks and foreign banks are eligible to establish venture capital companies or funds subject to the approval as may be required from the RBI.The venture capital funds have a minimum size of Rs. 10 crore and a debt equity ratio of 1:15. If they desire to raise funds from the public, promoters will be required to contribute minimum of 40% of the capital.The guidelines also provide for NRI investment upto 74% on a non- repatriable basis.The venture capital firm should be independent of the parent organization.

GUIDELINES FOR VENTURE GUIDELINES FOR VENTURE CAPITAL COMPANIESCAPITAL COMPANIES

The venture capital funds will be managed by professionals and can be set-up as joint ventures even with non- institutional promoters.The venture capital funds will not be allowed to undertake activities such as trading, broking and money market operations they will allowed to invest in leasing to the extent of 15% of the total funds deployed. The investment on revival of sick units will be treated as a part of venture capital activity.A person holding a position of being a full time chairman, chief executive, or managing director of a company will not be allowed to hold the same position simultaneously in the venture capital fund/ company.The venture capital assistance should be extended to the promoters who are new, and are professionally or technically qualified with inadequate resources.