What is venture capital & venture capital in india

1. WELCOME TO VENTURE CAPITAL PRESENTATION

2. Presented By:Sandeep Mane
Amol Waghmare
Nisha Negi
Rupali

3. WHAT IS VENTURE CAPITAL
Money provided by investors to startup firms and small
businesses with perceived long-term growth potential.

4. FEATURES OF VENTURE CAPITAL
•
•
•
•
•
•
Long-time horizon
Lack of liquidity
High risk
High-tech
Equity participation and capital gains
Participation in management

5. ADVANTAGES OF VENTURE CAPITAL
• They can provide large sum of equity finance
• Able to bring wealth and expertise to your
company
• Easier to secure future funding from other
sources
• The business is not obligated to repay the
money

6. DESADVANTAGES OF VENTURE CAPITAL
• Lengthy and complex process (needs detailed
business plan, financial projections and etc.)
• In the deal negotiation stage, you will have to
pay for legal and accounting fees
• Investors become part owners of your
business - founder loss of autonomy or control

7. Stages & Risk of financing
Financial Stage
Seed Money
Start Up
First Stage
Period (Funds locked
in years)
7-10
5-9
3-7
Risk Perception
Extreme
Activity to be
financed
For supporting a
concept or idea or
R&D for product
development
Very High
Initializing operations
or developing
prototypes
High
Start commercials
production and
marketing

8. Financial Stage
Second Stage
Period (Funds locked
in years)
3-5
Risk Perception
Activity to be
financed
Sufficiently high
Expand market and
growing working
capital need
Market expansion,
acquisition & product
development for
profit making
company
Third Stage
1-3
Medium
Fourth Stage
1-3
Low
Facilitating public
issue

9. VC INVESTMENT PROCESS
Deal origination
Screening
Due diligence (Evaluation)
Deal structuring
Post investment activity
Exit plan

10. METHODS OF VENTURE FINANCING
The financing pattern of the deal is the most
important element.
Following are the various methods of venture
financing:
• Equity
• Conditional loan
• Income note
• Participating debentures
• Quasi equity

11. Exit route
•
•
•
•
Initial public offer(IPOs)
Trade sale
Promoter buy back
Acquisition by another company

12. VENTURE CAPITAL FUNDING IN INDIA

13. Promoted By
All India
Financial
Institutions
State Level
Financial
Institutions
Private
Sector
Institutions
Commercial
Banks
Indian
IFCI
Venture
Capital
Funds Ltd.
IDBI
Venture
Capital
Fund
ICICI Venture
Fund
Management
Company Ltd.
SIDBI
Venture
Capital Ltd.
Foreign

14. Venture capital funds in India
VCFs in India can be categorized into following five
groups:
1) Those promoted by the Central Government
controlled development finance institutions. For
example:
- ICICI Venture Funds Ltd.
- IFCI Venture Capital Funds Ltd (IVCF)
- SIDBI Venture Capital Ltd (SVCL)

15. 2) Those promoted by State Government
controlled development finance institutions.
For example:
- Punjab Infotech Venture Fund
- Gujarat Venture Finance Ltd (GVFL)
- Kerala Venture Capital Fund Pvt Ltd.
3) Those promoted by public banks.
For example:
- Canbank Venture Capital Fund
- SBI Capital Market Ltd

16. 4)Those promoted by private sector
companies.
For example:
- IL&FS Trust Company Ltd
- Infinity Venture India Fund
5)Those established as an overseas venture capital
fund.
For example:
- Walden International Investment Group
- HSBC Private Equity
management Mauritius Ltd

17. Rules by SEBI
 VCF are regulated by the SEBI (Venture Capital
Fund) Regulations, 1996.
 The following are the various provisions:
 A venture capital fund may be set up by a
company or a trust, after a certificate of
registration is granted by SEBI on an application
made to it. On receipt of the certificate of
registration, it shall be binding on the venture
capital fund to abide by the provisions of the
SEBI Act, 1992.

18. • A VCF may raise money from any
investor, Indian, Non-resident Indian or
foreign, provided the money accepted from any
investor is not less than Rs 5 lakhs. The VCF shall not
issue any document or advertisement inviting offers
from the public for subscription of its security or
units
• SEBI regulations permit investment by venture
capital funds in equity or equity related instruments
of unlisted companies and also in financially weak
and sick industries whose shares are listed or
unlisted

19.  At least 80% of the funds should be invested in
venture capital companies and no other limits are
prescribed.
SEBI Regulations do not provide for any sectoral
restrictions for investment except investment in
companies engaged in financial services.

20. REASONS FOR GROWTH OF VENTURE
CAPITAL
 High Technology
 Human Resource Capital
 Scientific & Technical Research
 Government Initiative
 SEBI Initiative

21. How does the Venture Capital work?
 Venture capital firms typically source the majority of
their funding from large investment institutions.
 Investment institutions expect very high ROI
 VC’s invest in companies with high potential where
they are able to exit through either an IPO or a
merger/acquisition.
 Their primary ROI comes from capital gains although
they also receive some return through dividend.

22. Venture capital industry wise segmentation
Percentage
9.03
3.36
6.94
IT & ITES
7.73
Energy
Manufacturing
12.92
11.5
Media & Ent.
BFSI
4.32
11.43
Shipping & logistics
Eng. & Const.
Telecom
Health care
4.82
27.95
Others

23. Top cities attracting venture capital
investments
CITIES
SECTORS
MUMBAI
Software services, BPO, Media, Computer
graphics, Animations, Finance & Banking
BANGALORE
All IP led companies, IT & ITES, Bio-technology
DELHI
Software services, ITES , Telecom
CHENNAI
IT , Telecom
HYDERABAD
IT & ITES, Pharmaceuticals
PUNE
Bio-technology, IT , BPO

24. THE END