Venture Capital

In 1975 Bill Gates and Paul Allen founded

Microsoft. 11 years later they sold shares @

$21 (now $52.06). Market Value $ 415.8 B
In 1976 Steve Jobs and Steve Wozniak
founded Apple Computer. In 1980, Apple
went public @ $22 (now $ 94.09). Market
Value $ 524.5 B
In 1996 Larry Page and Sergey Brin, launched
Google. In 2004 they went public @ $85 (now
$ 748.3). Market Value $ 514.6 B
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Venture Capital
2

In 2004 Mark Zuckerberg and Eduardo Saverin

founded Facebook. In 2012 FB IPO was biggest

in the history with Market Capitalization at $
104 B. Shares were offered at $ 38 (now $
109.11). Market Value $ 308.5 B.
In 1962 Atlas Group was formed with 3 staff
and capital of PKR 0.5 M. Today, Atlas
shareholders equity stands at PKR 30 B; assets
PKR 80 B; personnel strength 7500, and
annual sales over PKR 100 B.
In 2016 two . . .
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Venture Capital
3

What is Venture Capital?

Venture Capital (VC) is illiquid investing in high
potential, high-risk business opportunities.
More specifically, venture investments are classically
minority equity interests in young, rapidly growing
companies with the potential to become large companies.
However, they are not yet credit-worthy, and thus are
not eligible for traditional bank financing. Often lacking
many of the resources required for success, immature
companies call on the know-how as well as the capital of
the investor.
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Venture Capital
4

What is a Venture Capital Company?

Securities and Exchange Commission of Pakistan
(SECP) under its Venture Capital Companies and
Funds Rules 2001 defines a Venture Capital Company
as "A company which is engaged in financing any
Venture project, through equity or other instruments
whether convertible into equity or not and provides
managerial or technical expertise to venture projects,
or acts as a management company for management of
venture capital funds".
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Venture Capital
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What is a Venture Capital Fund?

SECP defines a VC Fund as "A company which is
managed by a venture capital company and raises
funds through private placement of equity and other
securities, as specified under these rules and invests its
resources in venture projects".
The fund is managed by a venture capital company
(the Management Company).
For example, TMT-PKIC Incubation Fund is a VC
fund managed by TMT Ventures.
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Venture Capital
6

Business Angels or Angel Investors?

Individuals who provide seed or start-up finance to
entrepreneurs in return for equity.
Angels usually contribute a lot more than pure cash they often have industry knowledge and contacts that
they can pass on to entrepreneurs.
Angels sometimes have non-executive directorships
in the companies they invest in.
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Business Plan
7

The first step to attract investment is to

prepare a Business Plan.

Typical contents of a business plan are:
1. Cover Page
2. Table of Contents and Table of Appendices
3. Executive Summary
4. Background and Purpose
5. Market Analysis
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Business Plan
8

6. Product or Service Development

7. Marketing
8. Financial Data
9. Organization Structure and Management
10. Ownership
11. Risk Factors
12. Conclusion
13. Appendices
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IPO
9

PURPOSE OF LISTING
The primary purpose of listing of a company
on a stock exchange is to raise funds for
meeting financial needs.
However, listing may be done for other
reasons like realization of the investment by
the existing shareholders and raising profile of
the company etc.
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IPO
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STEPS IN THE IPO PROCESS

Planning for the IPO Process
Choosing Underwriters
Filing a Prospectus
IPO Promotion
Final Offering Price and Amount
Selling on the Stock Market
Questions for Your Attorney
For legal requirements please visit

http://www.secp.gov.pk/Guides/Guide_Listing_Compan
ies_Initial_Public_Offerings.pdf
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Seasoned Companies
11

A successful company after IPO will need further

capital from time and will issue additional shares

(FPO).
Sale of securities by a firm that is already publically
traded is called seasoned offering.
Rights issue sales of securities offered only to
current stockholders.
Bonus shares instead of giving cash dividends
companies issue Bonus shares to the current
stockholders.
See example 15-4 on page 432
003. CF_Ch 15