what is venture capital & venture capital in india

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What is venture capital & venture capital in india

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WELCOME TO VENTURE CAPITAL PRESENTATION

WELCOME TO VENTURE CAPITAL PRESENTATION

Presented By:-

Sandeep Mane

Amol Waghmare

Nisha Negi

Rupali

WHAT IS VENTURE CAPITAL

Money provided by investors to startup firms and small businesses with perceived long-term growth potential.

FEATURES OF VENTURE CAPITAL

Long-time horizon

Lack of liquidity

High risk

High-tech

Equity participation and capital gains

Participation in management

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

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

Stages & Risk of financing

Financial StagePeriod (Funds locked in years)Risk PerceptionActivity to be financedSeed Money7-10ExtremeFor supporting a concept or idea or R&D for product developmentStart Up5-9Very HighInitializing operations or developing prototypesFirst Stage3-7HighStart commercials production and marketing
Financial StagePeriod (Funds locked in years)Risk PerceptionActivity to be financedSecond Stage3-5Sufficiently highExpand market and growing working capital needThird Stage1-3MediumMarket expansion, acquisition & product development for profit making company Fourth Stage1-3Low Facilitating public issue

VC INVESTMENT PROCESS

Deal origination

Screening

Due diligence (Evaluation)

Deal structuring

Post investment activity

Exit plan

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

Exit route

Initial public offer(IPOs)

Trade sale

Promoter buy back

Acquisition by another company

VENTURE CAPITAL FUNDING IN INDIA

Promoted By

All India Financial Institutions

State Level Financial Institutions

Commercial Banks

Private Sector Institutions

Foreign

Indian

IFCI Venture Capital Funds Ltd.

IDBI Venture Capital Fund

ICICI Venture Fund Management Company Ltd.

SIDBI Venture Capital Ltd.

Venture capital funds in India

VCFs in India can be categorized into following five groups:

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)

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

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

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.

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

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.

REASONS FOR GROWTH OF VENTURE CAPITAL

High Technology

Human Resource Capital

Scientific & Technical Research

Government Initiative

SEBI Initiative

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

VCs 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.

Venture capital industry wise segmentation

Top cities attracting venture capital investments

CITIES SECTORSMUMBAISoftware services, BPO, Media, Computer graphics, Animations, Finance & BankingBANGALOREAll IP led companies, IT & ITES, Bio-technologyDELHISoftware services, ITES , TelecomCHENNAIIT , TelecomHYDERABADIT & ITES, PharmaceuticalsPUNEBio-technology, IT , BPO

THE END

6.947.7311.54.3227.954.8211.4312.923.369.03

Percentage

IT & ITESEnergyManufacturingMedia & Ent.BFSIShipping & logisticsEng. & Const.TelecomHealth careOthers

Chart1IT & ITESEnergyManufacturingMedia & Ent.BFSIShipping & logisticsEng. & Const.TelecomHealth careOthers
Percentage
6.94
7.73
11.5
4.32
27.95
4.82
11.43
12.92
3.36
9.03
Sheet1IndustryPercentageIT & ITES6.94Energy7.73Manufacturing11.5Media & Ent.4.32BFSI27.95Shipping & logistics4.82Eng. & Const.11.43Telecom12.92Health care3.36Others9.03

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