2. Gist: -
Introduction to Venture Capital
Features of Venture Capital
Methodologies and Procedure for
Stages of Financing
Types of Venture Capital
Benefits of Entrepreneurs
Advantages and Disadvantages
Case Study and Conclusion
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 Business Management Skills,
Consist of High Risk and High Return
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
Structuring the Deal
Valuation of Portfolio
Mode of Compensation
9. S • Applied research phase where there is just Idea or
• Risk is Extremely High
E • Commercial Manufacturing Commenced
Start-Up • Risk is very High
F • Company earns profit but not too Big for
• Time Scale is shorter
N • Development Capital
A • Bridge or Expansion
Later • Buyouts and Buy-ins
N Stage • Turnaround
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
11. Financial Second Stage Third Stage Forth Stage
Period Taken 3 to 5 years 1 to 3 years 1 to 3 years
Risk Involved Significantly Medium Low
Expand Market expansion
Activity to be market and acquisition & Facilitating
financed growing product Public Issue
working development for
Capital need profit making
12. Financial Analysis:-
Conventional The First Revenue
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
Capitalist earn capital gains
when the shares are disposed
15. Royalty • Normally ranges between 2-
15% at the cost of financing.
• High interest rate around 20-25%.
Interest • This payments are made once the
Payment firm secure its commercial
confidence, strength and viability in
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