VENTURE CAPITALIST

Presented By:

Sr No. Roll No Name

1 43 Tanaya Khandwekar

2 56 Ranjita Modak

3 114 Preeticia Dias

4 124 T.D Joseph

CONTENTS:• WHAT IS VENTURE CAPITAL?• WHO ARE VENTURE CAPITALIST?• WHY VENTURE CAPITAL?• 6‘ BIGGEST MISTAKES IN

RAISING START UP CAPITAL? HOW CAN U QUALIFY FOR V.C.

• HOW TO APPROACH FOR VCF’s• VENTURE CAPITAL IN INDIAN

CONTEXT• ISSUES AND CHALLENGES• FUTURE OF V.C IN INDIA.• CONCLUSION• QUICK RECAP

• WHAT IS VENTURE CAPITAL?

• Venture capital is also called as “RISK CAPITAL”.

• It is provided as “seed funding” to early stage, High Potential Companies.

•WHO ARE VENTURE CAPITALIST

• Venture capital comes from Institutional investor and High net worth individuals or families and is pooled by dedicated firms

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

Who can avail venture Capital?• Generally Venture capitalist

firm invest in high technology industries such as biotechnology and IT (Information Technology).

• QUALIFICATIONS:• Should be a Technology Company.• Can you be a market leader.• Will it be cheap to make this

company.• Clear distribution channel.• Can the company go public or

Acquired.

WHY VENTURE CAPITAL?

• Firms opt for venture capital even though the cost of acquiring is higher because it will be difficult for new and budding firms to acquire loans from banks or raise capital from public

How to Approach vcf’s

• Business Cycle: Do they invest in budding or established businesses?

• Industry: What is their industry focus?

• Investment: Is their typical investment sufficient for your needs?

• Location: Are they regional, national or international?

• Return: What is their expected return on investment?

• Involvement: What is their involvement level?

6 ‘ biggest mistakes in raising start up Capital?

• 1.Half-baked business plans.• • 2. Focusing too much on the

idea and too little on the management

• 3. Not asking for enough money

• 4. Having too many lenders or investors

• 5. Failing to get the proper legal agreements

• 6. Poor cash flow management

VENTURE CAPITAL IN INDIA With the advent of liberalization, India

has been showing remarkable growth in the economy in the past 10 - 12 years.

The venture capital industry in India has grown dramatically in the last few years, even boasting its own ‘Silicon Valley' in

the form of Bangalore.

REASONS FOR GROWTH OF VENTURE CAPITAL INVESTMENT IN INDIA

• (i) Existence of a globally competitive high technology.

(ii) Globally competitive human resource capital.

(iii) Second Largest English speaking, scientific & technical manpower in the world.

(iv) Vast pool of existing and ongoing scientific and technical research carried by large number of research laboratories.

(v) Initiatives taken by the Government in formulating policies to encourage investors and entrepreneurs.

(vi) Initiatives of the SEBI to develop a strong and vibrant capital market giving the adequate liquidity and flexibility for investors for entry and exit.

Where are VC’s Investing In India?

IT and IT-enabled services • Software Products (Mainly

Enterprise-focused) • Wireless/Telecom/Semiconductor • Banking • PSU Disinvestments •Media/Entertainment • Bio Technology/Bio Informatics • Pharmaceuticals • Electronic Manufacturing • Retail

• Kotak Private Equity Group helps nurture emerging businesses and mid-size enterprises to evolve into tomorrow's industry leaders. With a proven track record of helping build companies, KPEG also offers expertise with a combination of equity capital, strategic support and value added services. What differentiates KPEG is not merely funding companies, but also having a close involvement in their growth as board members, advisors, strategists and fund-raisers.

Partnering to Build Leaders of Tomorrow• The Private Equity team at Kotak is headed by

Nitin Deshmukh, who brings with him over 23 years of experience in the Venture Capital/ Private Equity and Corporate space. The nine member team comprises successful professionals with diverse backgrounds bringing complimentary skill sets. The team has rich experience in the Indian Venture Capital/ Private Equity industry and is one of the very few in the country with "full life cycle" experience. The experience of the team spans across private equity advisory, investment banking, corporate finance, infrastructure finance, management consulting besides operating experience in pharmaceuticals, manufacturing and IT services.

The team also brings with it specific investment track record in the fields of Life Sciences (Pharmaceutical and Biotechnology), Retail, Media, Light Engineering, Technology and IT Services among others.

Private Equity Investment StrategyKPEG,s private equity investment strategy

involves seeking:- • a management team that demonstrates passion

and the hunger/drive to create a world class enterprise; a team that brings in both credibility and capability and has a proven track record

• a company with strong intellectual property, technology or a well differentiated market positioning

• a well articulated business plan coupled with strong execution skills that would give the company a sustainable competitive advantage

• a company that has the clear potential of achieving a leadership position in a well-defined, large and growing market.

• a company with clear exit plan for the investors and which has the potential to offer superior returns to the investor.

Investment Focus

• The India Growth Fund is focused on identifying growth sectors and entrepreneurs whose companies exhibit the following characteristics.

• clear international competitive advantage

• cater to a large domestic demand• growing at a rapid rate on the

back of increased investment in Infrastructure

• Kotak's past portfolio investments (either on its own books or through funds) include Divis Laboratories, Transelektra Domestic Products (Sara Lee has since taken a strategic stake), Hutchison Essar (indirect interest), Allsec and Sasken. The current investments from IGF include Home Solutions Retail, DRS Logistics, Sabare International, Bharat Fritz Werner, Dynaspede Integrated, INX Media, Siro Clinpharm Research, Metahelix Life Sciences to name a few.

Investment Structure & Size Kotak Group has been at the forefront, providing

structured innovative financial solutions catering to the requirements of various corporates.

Kotak believe that investment structures must be flexible and should accommodate the requirements of each company rather than impose a rigid formula and retrofit the business requirements to our structure.

Kotak develop an optimal capital structure in consultation with the company, reflecting the nature of the business, stage of growth and goals of its management and provide the necessary financing.

Kotak serve as a sole investor, a lead investor or a value added participant in a syndicate with others. The size of our initial investment is typically between USD 15mn and 40mn depending on the nature of the company's business, stage of growth and its financing requirements.

CONTD………..• KPEG also lead transactions greater than

USD 40mn through co-investment from our reputed Limited Partners, Kotak's international relationships or other Private Equity Funds. KPEG maintains relationships with a large number of financial organizations and can structure and execute a wide variety of financial transactions.

• KPEG expects to achieve its return on investments over a three to five year period either through a public offering or strategic sale to a third party.

• Kotak serve as a sole investor, a lead investor or a value added participant in a syndicate with others. The size of our initial investment is typically between USD 15mn and 40mn depending on the nature of the company's business, stage of growth and its financing requirements.

Investment Value Creation• For its part, besides

capital the KPEG provides:-

• Expertise in business growth• Strategic Inputs• Problem solving competency

• A committed sounding board and

• A broad domestic and international network of business contacts

Strategic Support• Strategy: Through active Board participation, we

help the portfolio companies fine tune their business strategy and growth plans. Budgeting: We actively work with the management teams to prepare realistic budgets and create an execution plan and systems to monitor the variances.

• Systems and processes: We strongly believe that the companies need to manage growth and not let growth manage them. We help the companies in building robust internal systems and processes and an effective management reporting system.

• Financial engineering: Our portfolio companies benefit from our significant expertise in financial engineering and structuring optimal financing instruments.

• Technical assistance: We organize external technical assistance for our portfolio companies on issues such as supply chain management, inventory control, channel management etc., though our partner's access to international network of consultancy organizations.

CONTD………..• Assistance in hiring senior management team: We use our

extensive domestic network of relationships to help broad base the Board and hire senior talent.

• Network development / Access to markets: We help our portfolio companies in providing market research and global trend analysis and actively work with them to develop a regional and/or global market strategy that requires insights that go well beyond the local market. We use our network to introduce these companies to newer markets, customers and suppliers.

• Provide visibility: The association with Kotak and access to the various resources within the group provides our portfolio companies with the necessary platform to generate visibility and presents lucrative opportunities to enhance its profile and outline their vision.

• Preparation for an IPO: We assist our portfolio companies in establishing good corporate governance standards. Our team, with its rich experience in the domestic capital markets, collaborates with the management of the portfolio companies to help them plan the timing of its IPO, attract and select the investment bankers, strategize the public positioning of the company within its industry group and help attract investor research coverage.

Investment Process Review• Each deal is handled by a team of two

investment professionals.• Business Plan Review• The investment process begins when the company

submits a business plan broadly outlining the following:-

• Company background - history and development• Founders/Directors/Management - background• Operating and ownership structure of the company• Product or services - competitive advantages • Markets - size, growth and competition• Medium and long term expansion strategy• Historical financials summary and note on prior

equity financings, if any • Future projections with key milestones• Amount of capital required and its proposed use

CONTD………..• Management Meeting• If the business fits into our investment

philosophy, we schedule an initial meeting with the Company's management to understand the business and explore the strategy and operating plan in greater detail.

• Preliminary Due Diligence• Follow-up meetings with the management team

of the company including visits to the offices/manufacturing facilities enable us to assess management and operational capabilities, check personnel and industry references and thus develop a more detailed understanding of the company, its strategy and its operating plan.

• Term Sheet• On completion of the preliminary due diligence

process, we discuss the broad terms of investment and sign a term sheet summarizing the principal terms of the investment.

CONTD………..• Detailed Due Diligence• Post the term sheet, we undertake detailed

business, financial and legal due diligence. The business due diligence comprises evaluation of the product/services, the management team and their background, technology (if any), market, competition, differentiators, financial plan and exit opportunities.

• Investment Decision• On satisfactory conclusion of the detailed due

diligence exercise, we seek the final investment approval from our Investment Committee.

• Legal Documentation & Disbursement• While completing the final decision making

process, the legal agreements are drafted around the terms agreed in the Term Sheet. On confirmation of the Investment Decision, the documents are signed and funds transferred based on the cash flow requirements of the company.

Current InvestmentsMetahelix Life Sciences Pvt Limited

DRS Logistics Limited

Dhaanya Seeds Pvt Limited Dynaspede Integrated Systems Limited

SIRO Clinpharm Pvt Limited Home Solutions Retail (India) Limited

Vlife Sciences Technologies Pvt Limited

INX Media Private Limited

Indus Biotech Limited Sabare International Limited

Rubicon Research Limited SIRO Clinpharm Private Limited

Intas Biopharmaceuticals Limited

Paramount Airways Private Limited

Muthoot Finance Limited Metahelix Life Sciences Private Limited

Mahindra Aerospace Private Limited

VLife Sciences Technologies Private Limited

Diamond Power Infrastructure Limited

Four Soft LimitedManipal Health Enterprises Pvt. Ltd.

National Stock Exchange of India Limited

Bharat Serums & Vaccines Limited

Multi Commodity Exchange of India Ltd.

Bharat Fritz Werner Limited Icomm Tele Limited

  BVG India Limited

Conclusion• The world is becoming

increasingly competitive • Companies are required to be

super efficient with respect to cost, productivity, labor efficiency, technical back up, flexibility to consumer demand, adaptability and foresightedness.

• There is an impending demand for highly cost effective, quality products

Conclusion• There are large sectors of the

economy that are ripe for VC investors ,like,. I.T., Pharmacy, Manufacturing. Telecom, Retail franchises, food processing and many more.

• Inspite of the existing shortcomings in the Indian infrastructure.

• Looking ahead for a bright future for India Inc.