BUSINESS FINANCE

VENTURE CAPITAL FINANCE

PRESENTED BY:
SANJNA PRABHU 13
PRAVEEN PANDEY 8
SHUBHAM SETHIA - 15

INTRODUCTION
Business Finance is that business
activity which is concerned with the
acquisition and conservation of capital
funds in meeting financial needs and
overall objectives of business
enterprises.
Business Finance is a part of Financial
Management.

VENTURE CAPITAL
Money provided by investors to startup firms
and small businesses with perceived longterm growth potential.
Venture capital is money provided by
professionals who
alongside
management invest in young, rapidly
growing companies that have the potential to
develop into significant economic
contributors.

WHAT DO THEY DO?

Venture Capitalists generally:
Finance new and rapidly growing companies.
Purchase equity securities.
Assist in the development of new products or
services.
Add value to the company through active
participation.

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.

Promoted
By
State
Level
Financial
Institution
s

All India
Financial
Institutions

Private
Sector
Institution
s

Commerci
al Banks

Indian

IFCI
Venture
Capital
Funds
Ltd.

IDBI
Venture
Capital
Fund

ICICI
Venture
Fund
Manageme
nt
Company
Ltd.

SIDBI
Venture
Capital
Ltd.

Foreig
n

FEATURES

OF VENTURE
CAPITAL

Long-time horizon
Lack of liquidity
High risk
High-tech
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

DISADVANTAGES 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.

VENTURE CAPITAL
FINANCING PROCESS
There are five common stages of venture
capital financing:
I. The Seed stage
II. The Start-up stage
III. The Second stage
IV. The Third stage
V. The Bridge/Pre-public stage

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

VC investment process
Deal origination
Screening
Due diligence
(Evaluation)
Deal structuring
Post investment
activity
Exit plan

REASONS FOR GROWTH

OF VENTURE CAPITAL
High Technology

Human Resource Capital

Scientific & Technical Research

Government Initiative

Top cities attracting venture

capital investments
CITIES

SECTORS

MUMBAI

Software services, BPO, Media,

Computer graphics, Animations,
Finance & Banking

BANGALORE

All IP led companies, IT & ITES,

Bio-technology

DELHI

Software services, ITES ,

Telecom

CHENNAI

IT , Telecom

HYDERABAD

IT & ITES, Pharmaceuticals

PUNE

Bio-technology, IT , BPO

Venture capital industry wise

segmentation
9.03

Percentage

6.94

3.36

7.73

12.92

11.5

4.32
11.43

4.82

IT & ITES
Energy
Manufacturing
Media & Ent.
BFSI
Shipping & logistics
Eng. & Const.
Telecom
Health care
Others

27.95

Percentage calculated on the total VC investment- 14,234 USB (fig. of

K
N

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