Venture Capital Definition Venture capital is defined as

Venture Capital

Definition Venture capital is defined as long-term funds in equity or semi-equity form to finance hi-tech projects involving high risk and yet having strong potential of high profitability.

Features : - Invt. Made in equity, investors wait for 5 -7 years to reap the benefits of capital gain. Investments are made in innovative projects Investors does not interfere in day-to-day business affairs. Capital need not to be repaid in the course of business but realized through exist route (stock exchange) high degree of risk Achieve social objectives also.

Venture capital Investment process 1. Establishment of contact between the entrepreneur and the venture capitalist. 2. Preliminary Evaluation 3. Detailed approval. 4. Sensitivity analysis. 5. Investment in the project 6. Monitoring the project and post investment support.

Stages in Venture Capital financing 1. Early stage financing a. Seed Capital b. Start-up stage financing c. Second round financing 2. Later stage financing a. Development capital b. Expansion finance c. Replacement capital d. Buy -outs e. Turnarounds

Procedure followed by VC’S Ø Ø Ø Receipt of proposal Appraisal of plan Investment Provide value-added service Exit

Exit route for Venture Capital a. b. c. d. e. Going Public. Sale of shares to entrepreneurs. Sale of company to another company. Finding a new investor. Liquidation.

Venture Capital in India • It can be divided into following catogories v Specialized financial institutions and their financing schemes v Funds promoted by state level institutions v Funds promoted by Public sector banks v Private agencies v Overseas venture capital funds

Specialized financial institutions and their financing schemes • Risk capital scheme of IFCI • Technology Development &information company of India Ltd. (TDICI) of ICICI • SEED Capital scheme or venture capital fund of IDBI

Funds Promoted By State Level Institutions Ø APIDC Venture Capital Ltd. (AVCL) Ø Gujrat Venture Finance Ltd. (GVFL)

Funds Promoted By Public Sector Banks • CANARA BANK Venture Capital Fund (CVCF)

Private agencies • • • Credit capital venture fund (CCVF) 20 th century venture capital fund India Investment Fund Indus venture capital fund SBI Capital venture fund

Overseas Venture Capital FUNDS • PROMOTERS are: q. AIG q. NIKKO Scurities q. ADB q. George Sors