PREPARED BY:

NEHA (003)SHILPA (004)

Meaning

Funds made available for start up funds small businesses with exceptional growth potential.

Financial support to young, rapidly growing companies/individual that have potential to develop into significant economics contributors by the businessman/group to create a product or service which has a unique idea.

VC

Characteristics

Investment In Innovative Projects.High Risk.Participation In Management.Long Term Horizon.Lack Of LiquidityFinance To Smaller, Less Mature

Companies, New And Rapidly

Growing Companies.

To bridge the gap between CAPITAL and KNOWLEDGE.

Maximum utilization of available resources.

NEED FOR VENTURE CAPITAL

Advantages

• Injects long term equity finance

1

• The VC is a business partner, sharing both the risks and rewards

2

• The VC’s provide practical advice and assistance

3

• The VC may be capable of providing additional rounds of funding

4

•

VCs are experienced in the process of preparing a company

• for an IPO of its shares onto the stock exchanges or overseas

• like NASDAQ, facilitate a trade sale.

5

Founder loss of autonomy or control

Benefit from such financing can be realized in long run only.

Disadvantages

1

2

Lengthy and complex process 3

Stages of Financing

Seed stage

BRIDGE STAGE

THIRD STAGESECOND STAGESTART UP STAGE

SEED STAGE

To prove a concept

Prototype developed and fully

tested

Manufacturing funds

Expansion/ maturity

For going public process

Approval

Evaluation

Screening

VC investment

process

Market

Expected Return

Decision

ProductEntreprene-

urial(managerial

)

Product

Expected Risk

VC investment process

Methods of venture financing

Methods

Equity

Conditional loan

Income note

Other financing methods

Management teamsMarket trendsBarriers to successTimely exits

RISKS OF VENTURE CAPITAL INVESTMENTS

Initial public offer(IPOs) Trade sale Shares buy back Mergers and

Acquisition s

Exit Route

Critical factors for the success of VC

The regulatory, tax and legal environment

Resource raising, investment, management and exit should be simple

Should have global exposure and investment opportunities

Infrastructure in the form of incubators and R&D need to be promoted using government support

Why it is hard to find a VC !!!

How do contact a VC ?

Introductions are best:

• Attorney• Accountant• Banker• Angel Investor• Industry Executive

The concept of VC was formally introduced in India in 1987 by IDBI.

The government levied a 5 per cent cess on all know-how import payments to create the venture fund.

ICICI started VC activity in the same year

Later on ICICI floated a separate VC company - TDICI

Development of VC in INDIA

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

VC funds in India

4)Those promoted by private sectorcompanies. 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

VC can help in the rehabilitation of sick

units.

VC can assist small ancillary units to upgrade

their technologies

VCFs can play a significant role in

developing countriesProvide financial

assistance to people coming out of universities,

technical institutes, etc

Future Prospects of VC in INDIA

CASE

ON

VIRGINIA CAPITAL PARTNERS

Virginia Capital's private equity group invests from $500,000 to $10 million in growing companies in the South Atlantic U.S.

Focus on industries where our partners have considerable prior success: health care, media, communications, insurance, consumer and business services and specialty insurance.

Virginia Capital's funds are used to start, grow or buy businesses.

INVESTMENT CRITERIA

START UPShared tower sites: Virginia Capital assembled a group of investors to start and expand the business into one of the leading tower companies in the U.S. 

GROWTHPhysicians practice: Management used their capital to accelerate the growth of the core business and expand the company's online presence. This expanded the publication's distribution, increased advertising, and developed trade shows designed exclusively for practice management.

ACQUISITIONS

PRA International: Virginia Capital and a group of like-minded institutional investors provided capital for management to consummate this expansion plan which assembled one of the largest clinical research organizations in the U.S.

GEOGRAPHIC EXPANSION Hunt Assisted Living: Virginia Capital and a group of

other investors provided Hunt Assisted Living with the capital to expand its geographic footprint to include operations in Virginia, North Carolina, and South Carolina

RECAPITALIZATION Mid Atlantic DQ: Virginia Capital purchased a

controlling interest and subsequently provided additional growth capital to double the size of the business.

RESTRUCTURE

CASE

A family-owned enterprise was struggling after its founder's death. The surviving family members had attempted to operate the business, but they discovered that the founder had neglected to maintain the company's fixed assets, leaving a considerable capital expenditure need. In addition, competitors had made inroads during the founder's illness. Despite their best efforts, the company was foundering.

Virginia Capital purchased the business, recruited new leadership in the wake of the family's departure and provided capital to improve the facilities and regain the company's formerly dominant market position.

Thank You