1. By: - Paresh Mhatre(8074) & Hemanshu Koradia(8064)

2. Gist: -
Introduction to Venture Capital
Features of Venture Capital
Methodologies and Procedure for
Venture
Stages of Financing
Financial Analysis
Types of Venture Capital
Benefits of Entrepreneurs
Advantages and Disadvantages
Case Study and Conclusion

3. Introduction & Features: -
History
Scenario
Definition and
Features

4. Why Company needs Financing:-
For starts-up or growing companies as well as
those facing a major change, financing is one the
key business issues.
New capital is needed e.g. of
Product Market Investment Working
Development Penetration Finance Capital

5. The first venture capital Financing in India
ICICI Venture Capital.
Started in the 1998 by joint venture between
ICICI and UTI.
UTI Launched venture capital unit scheme
(VECAUS-I) to raise finance in 1990.
SBI and Canara Bank are also involved in Venture
Capital Finance. They provide their equity capital
or conditional loans

6. Providing seed, start up and first stage financing and
also funding expansion of companies that have already
demonstrated their business but so not yet have access to
the public securities market or to credit oriented
institutional funding sources.
- By. Jame Koloski Morries

7. Features: -
Supporting of Entrepreneurial Talent by
providing Finance,
Providing Business Management Skills,
Consist of High Risk and High Return
based financing,
Reduces the financial burden of the
business concern at the initial stage.
A Return in form of Capital Gain,

8. Methodologies and Procedures:-
Selection of Investment
Stages of Financing
Financial Analysis
Structuring the Deal
Aftercare
Valuation of Portfolio
Mode of Compensation
Quasi-Equity Investment

9. S • Applied research phase where there is just Idea or
T SEED
Concept
A CAPITAL
• Risk is Extremely High
G
E • Commercial Manufacturing Commenced
S
Start-Up • Risk is very High
O
F • Company earns profit but not too Big for
IPO
Second
• Time Scale is shorter
F Round
I
N • Development Capital
A • Bridge or Expansion
Later • Buyouts and Buy-ins
N Stage • Turnaround
C
E

10. Stages and there characteristics:-
Financial Stage Seed Money Start Up First Stage
Period Taken 7 to 10 years 5 to 9 years 3 to 7 years
Risk Involved Extreme Very High High
Activity to be R&D for Initializing Start
financed product Operation Commercials
development production
and Marketing

11. Financial Second Stage Third Stage Forth Stage
Stage
Period Taken 3 to 5 years 1 to 3 years 1 to 3 years
Risk Involved Significantly Medium Low
High
Expand Market expansion
Activity to be market and acquisition & Facilitating
financed growing product Public Issue
working development for
Capital need profit making
company

12. Financial Analysis:-
Conventional The First Revenue
Venture
Capitalist Chicago Multiplier
Method Method Method

13. Questions while Investing:-
1) Where is the company now?
2) What is the product or service?
3) What is your market?
4) How will you reach the market?
5) Who will be you competing against?
6) How will your product be produced?
7) Who are the people?
8) What are your financial projection?
9) How much money you will need?
10) What are the RISKS?

14. Generally does not exceed
49% of the total Equity
Overall Controls remain with
the entrepreneur.
Capitalist earn capital gains
when the shares are disposed
off

15. Royalty • Normally ranges between 2-
15% at the cost of financing.
Charges
• High interest rate around 20-25%.
Interest • This payments are made once the
Payment firm secure its commercial
confidence, strength and viability in
the market.

16. Income • It is a compromise between
conventional loan and
Notes conditional Loan
• Operation below minimum
level – No interest
Participating • Operation above minimum
level – Low Interest Rate
Debentures • Operation in full Swing – High
Interest Rate

17. Advantages Disadvantages

18. Alternatives for Venture Capital: -
Bootstrapping
Alternative
Angel Sweat
Investors Equity

19. Case Study: -
Gujarat Venture Finance Limited
and
Saraf foods limited

21. Bibliography: -
• www.wikipedia.com
• www.gvfl.com
• Financial Management
– By: - M Y Khan & P K Jain