Presented By:Anand Kumar (JU07019)

SEC- C

CONCEPT

Venture capital is a type of private equity capital typically provided by professional, outside investors to

new and growing businesses.

FEATURESFinance new and rapidly growing companies Assist in the development of new products or

services Add value to the company through active

participation Take higher risks with the expectation of

higher rewards Have a long-term orientation

ORIGIN OF VENTURE CAPITAL

In the 1920's & 30's, the wealthy families of an individuals investors provided the start up money for companies that would later become famous." Eastern Airlines” and “Xerox” are the more famous ventures they financed.

TYPES OF VENTURE CAPITAL

1) VCFs promoted by the central govt. controlled development financial institutions:-

Industrial Finance Corporation of India(IFCI)

2) VCFs promoted by the state government controlled development finance institutions:-

Gujarat Industrial Investment Corporation(GIIC)

CNTD…..3) VCFs promoted by Public Sector banks:-

SBI-Cap by State Bank of India

4) Promoted by the foreign banks or private sector companies and financial institutions:-

Indus Venture Fund

METHODS OF VENTURE FINANCE

• EQUITY- All VCFs in India provide equity but generally their contribution does not exceed 49% of the total equity capital.

• CONDITIONAL LOAN - It is repayable in the form of a royalty after the venture is able to generate sales. No interest is paid on such loans.

CNTD…

• INCOME NOTE- It is a hybrid security which combines the features of both conventional loan and conditional loan.

• OTHER FINANCING METHODS- A few venture capitalists, particularly in the private sector, have started introducing innovative financial securities like Participating debentures.

RECOMMENDATIONS OF SEBI COMMITTEE, 2000

SEBI appointed the Chandrasekhar Committee to identify the impediments in the growth of venture

capital industry in the country and suggest suitable measures for its rapid growth. Its report was

submitted in January, 2000.

THE RECOMMENDATIONS PERTAIN TO

VCF structures

Resource raising

Investments

Exit

VENTURE CAPITAL PROCESS

Generating a deal flow

Due diligence

Investment valuation

Pricing and structuring the deal

Value Addition and monitoring

Exit

PRESENT SCENARIO OF VENTURE CAPITAL IN INDIA

Some of the highlights of 2007 include

31% of all investments fell into the US$10-25 million category

Venture capital investments accounted for 25% of the private equity deals (in volume terms). Late stage deals accounted for 35% of all deals

PE firms obtained exit routes in 65 companies, including 16 via initial public offering (IPO)

LOOKING AHEAD

Some of the key sectors that private equity investors will be looking at in 2008 onwards include:

alternative energy, infrastructure services, banking and financial service and manufacturing.