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Presented By: Anand Kumar (JU07019) SEC- C
CONCEPTVenture 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 CAPITALIn 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 CAPITAL1) 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, 2000SEBI 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 TOVCF structures Resource raising Investments Exit
VENTURE CAPITAL PROCESSGenerating 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 include31% of all investments fell into the
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 AHEADSome 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.