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8/11/2019 whatisventurecapitalventurecapitalinindia-131023232740-phpapp01

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WELCOME TO VENTURE CAPITAL PRESENTATION


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Presented By:-

Sandeep ManeAmol Waghmare

Nisha Negi

Rupali


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WHAT IS VENTURE CAPITAL

Money provided by investors to startup firms and small

businesses with perceived long-term growth potential.


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FEATURES OF VENTURE CAPITAL

Long-time horizon

Lack of liquidity

High risk High-tech

Equity participation and capital gains

Participation in management


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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

The business is not obligated to repay themoney


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DESADVANTAGES 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


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Stages & Risk of financing

Financial Stage Period (Funds locked

in years)

Risk Perception Activity to be

financed

Seed Money 7-10 Extreme

For supporting a

concept or idea or

R&D for product

development

Start Up 5-9 Very High

Initializing operations

or developing

prototypes

First Stage 3-7 High

Start commercials

production and

marketing


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Financial Stage Period (Funds locked

in years)

Risk Perception Activity to be

financed

Second Stage 3-5 Sufficiently high

Expand market and

growing workingcapital need

Third Stage 1-3 Medium

Market expansion,acquisition & product

development for

profit making

company

Fourth Stage 1-3 Low Facilitating public

issue


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VC INVESTMENT PROCESS

Deal origination

Screening

Due diligence (Evaluation)

Deal structuring

Post investment activity

Exit plan


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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

Quasi equity


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Exit route

Initial public offer(IPOs)

Trade sale

Promoter buy back

Acquisition by another company


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VENTURE CAPITAL FUNDING IN INDIA


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Promoted By

All India

Financial

Institutions

State Level

Financial

Institutions

Commercial

Banks

Private

Sector

Institutions

ForeignIndian

IFCI

Venture

Capital

Funds Ltd.

IDBIVenture

Capital

Fund

ICICI Venture

Fund

Management

Company Ltd.

SIDBIVenture

Capital Ltd.


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Venture capital funds in India

VCFs in India can be categorized into following fivegroups:

1) Those promoted by the Central Government

controlled development finance institutions. Forexample:- ICICI Venture Funds Ltd.- IFCI Venture Capital Funds Ltd (IVCF)

- SIDBI Venture Capital Ltd (SVCL)


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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


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4)Those promoted by private sectorcompanies.For example:

- IL&FS Trust Company Ltd- Infinity Venture India Fund

5)Those established as an overseas venture capitalfund.For example:

- Walden International Investment Group

- HSBC Private Equitymanagement Mauritius Ltd


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Rules by SEBI

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

The following are the various provisions:

A venture capital fund may be set up by acompany or a trust, after a certificate ofregistration is granted by SEBI on an applicationmade to it. On receipt of the certificate of

registration, it shall be binding on the venturecapital fund to abide by the provisions of theSEBI Act, 1992.


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A VCF may raise money from any investor, Indian,

Non-resident Indian or foreign, provided the money

accepted from any investor is not less than Rs 5

lakhs. The VCF shall not issue any document or

advertisement inviting offers from the public for

subscription of its security or units SEBI regulations permit investment by venture

capital funds in equity or equity related instruments

of unlisted companies and also in financially weak

and sick industries whose shares are listed orunlisted


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At least 80% of the funds should be invested in

venture capital companies and no other limits are

prescribed.

SEBI Regulations do not provide for any sectoral

restrictions for investment except investment in

companies engaged in financial services.


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REASONS FOR GROWTH OF VENTURECAPITAL

High Technology

Human Resource Capital

Scientific & Technical Research

Government Initiative

SEBI Initiative


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How does the Venture Capital work?

Venture capital firms typically source the majority oftheir 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 amerger/acquisition.

Their primary ROI comes from capital gains althoughthey also receive some return through dividend.


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Venture capital industry wise segmentation

6.94

7.73

11.5

4.32

27.95

4.82

11.43

12.92

3.36

9.03

Percentage

IT & ITES

Energy

ManufacturingMedia & Ent.

BFSI

Shipping & logistics

Eng. & Const.

Telecom

Health care

Others

T iti tt ti t it l


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Top cities attracting venture capital

investmentsCITIES 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


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