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Submitted byAmit Yadav Avijit Srivastava Kunwar Raghawendra Singh Prashant Prasad Sachin Kumar Suraj Boxi

Money provided by investors to start-up firms and small businesses with perceived long-term growth potential. This is a very important source of funding for start-ups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns. Venture capital can also include managerial and technical expertise. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity.

Myth-1 (Major role) we generally assume that venture capitalist has major role in encouraging innovation. Venture capitalists usually get a say in company decisions, in addition to a portion of the equity. But in reality they have minor role in innovation. Myth-2 (long term money) the venture capitalist buys a stake in an entrepreneurs idea, nurtures it for a short period of time, and then exists with the help of an investment banker. They focuses on those ideas on which it is expected that they could achieve IPO at initial stage or earliest. Venture capital provides support to niche customers following are the two main reasons for this: Bank has a limit to charge interest on loan and the risk associated with with start-ups demands higher rates than allowed by law. Banks will only finance the hard asset A company could not issue shares without a sales of about 15million assets of 10million and a reasonable profit history, so smaller firms will take more time, and which is the main reason for avoiding small firms by V.C.

We have one myth that venture capitalists invest in good people and good ideas but reality is that they invest in good industries More than 80% of the money invested by venture capitalists goes into the adolescent phase of a companies' life cycle. In this period of accelerated growth, the financials of both the eventual winners and losers look strikingly similar


Venture capitalist spends little time on the real winners or the worst performers called numnuts(no money, no time). Instead the VC allocates a significant amount of time to those middle portfolio companies, determining whether and how the investment can be turned around and whether continued participation is advisable.

GVFL, started in July 1990, was one of the first VC funds set up
under the world bank initiative. Mr. Vishnu varshney, who had a background in equity investment, project planning and implementation, and turn-around was selected by the parent company gujarat industrial investment corporation (GIIC) to run GVFL. Mr. Varshney, a senior project manager with GII chelped set up GVFL. He was joined and assisted early on by a very competent deputy, J M trivedi another GIIC project manager. After a year of putting together GFVL and initiating the work, varshney was the first venture capitalist in india to be selected to undergo the world bank sponsored eighteen-week internship in the US. He worked at hambro international equity partners in Boston in the US and attended a training program in 1991 organized by the national venture capital association in the US. Later on, he was one of the founding members of the Indian venture capital association (IVCA) and served as secretary and chairman of the association. Thrived also was an early intern in a new York early stage VC partnership Lawrence, smith and horey

A specific division of banking related to the creation of capital for other companies. Investment banks underwrite new debt and equity securities for all types of corporations. Investment banks also provide guidance to issuers regarding the issue and placement of stock. Functions of Investment Banking: Investment banks carry out multilateral functions. Some of the most important functions of investment banking are as follows: Investment banking helps public and private corporations in issuance of securities in the primary market. They also act as intermediaries in trading for clients. Investment banking provides financial advice to investors and helps them by assisting in purchasing and trading securities as well as managing financial assets Investment banking differs from commercial banking as investment banks don't accept deposits neither do they grant retail loans. Small firms which provide services of investment banking are called boutiques. They mainly specialize in bond trading, providing technical analysis or program trading as well as advising for mergers and acquisitions Core activities of Investment Banking are Investment banking, Sales and trading and Research