INTRODUCTION

Venture capital means funds made

available for startup firms and small businesses with exceptional 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.

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.

DIFFERENCE BETWEEN P/E & VENTURE CAPITAL

PRIVATE EQUITY
PE firms buy companies across all industries PE firms almost always buy 100% of a company in an LBO PE firms make large investments at least $100 million up into the tens of billions for large companies. PE firms use a combination of equity and debt. PE firms buy mature, public companies

VENTURE CAPITAL
VCs are focused on technology, bio-tech, and clean-tech. VCs only acquire a minority stake less than 50%. VC investments are much smaller often below $10 million for early-stage companies. VC firms use only equity VCs invest mostly in early-stage sometimes pre-revenue companies.

VENTURE CAPITAL INVESTMENT & EXIT

Promoters with Project

Initial Meetings
Venture Capitalist with Funds

Prelimnary Project Review by Venture Capitalist

Term Sheet Signed by Venture Capitalist & Promoters

Due Diligence Review of Project

Promoters

Divestment & Exit from Project

Mentoring & Monitoring of Project

Investment made by Venture Capitalist in Project

Legal Documents /Agreement Signed

Venture Capitalist

WHAT DO VENTURE CAPITALISTS LOOK FOR

Growing market

Unique product

Sound business plan

Gross profit margin

STAGES OF VENTURE CAPITAL

EARLY STAGE

Seed financing Startup financing 1st stage financing

EXPANTION

2nd stage financing Bridge financing 3rd stage financing (mezzanine)

BUYOUT

Acquisition financing Leveraged buyout (LBO)

VC investment process
Deal origination Screening Due diligence (Evaluation) Deal structuring

Post investment activity Exit plan

Exit route

Initial public offer(IPOs)

Promoter buy back

Acquisition by another company

Methods Of Venture Financing

Equity
Conditional loan Income Note Other Financing Methods

Tom Perkin

Henry McCance

Major Players in Venture Capital Firms

Bob Kagle

John Doerr

REGULATION OF VENTURE CAPITAL IN INDIA

 VCF are regulated by the SEBI (Venture Capital Fund) Regulations, 1996.

The regulation clearly states that any company or trust proposing to carry on activity of a VCF shall get a grant of certificate from SEBI. The SEBI Act also makes it mandatory for every domestic VCF to obtain certificate of registration from SEBI in accordance with the regulations.
Hence there is no way that an Indian Venture Capital Fund can exist outside SEBI Regulations.

Registration of Foreign Venture Capital Investors (FVCI) is not mandatory under the FVCI regulations.

CRITERIA:
Not more than 25% of the corpus can be invested in one VCU
Investment in Foreign Companies subject to RBI guidelines Shall not invest in associate companies

Minimum Investment of not less than Rs.5 lakhs

Top Venture Capital Firms In India

1. Risk Capital Technology Finance

Corporation Ltd. (RCTC) 2. Venture Capital Fund (set-up under long-term fiscal policy of Government of India) 3. Indus Venture Capital Fund (Private Venture Capital fund) 4. Gujarat Venture Finance Ltd.(GVFL)

Cont
5. Credit Capital Venture Fund (promoted by international financial agencies) 6. State Bank Venture Capital Fund (promoted by SBI) 7. Can Bank Venture Capital Fund (promoted by Canara Bank) 8. Grindlays Venture Capital Fund (promoted by Grindlays Bank)

Venture capital funds in India

VCFs in India can be categorized into following five groups:
1)

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

QUESTIONSS????

Q) For how long do venture capitalists invest in a business??

Q) Post VC investment??
Q) WHAT DOES VC looks for??

Q) What a project must have??

Q) What a VC does??

RECENT SCENARIO

Venture capital beats private equity as Indian start-ups attract millions of dollars in funding

Venture capital industry wise segmentation

VC Circle Survey: 12-13 To Be A Good Vintage Year For PE/VC Funds

PRIVATE EQUITY

VENTURE CAPITAL