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VENTURE
CAPITAL
VENTURE CAPITAL
Venture capital is a form of equity financing
especially designed for funding high risk and
high reward projects with the objective of
earning a high rate of return.
1.It promoted by technically or professionally
qualified but unproven entrepreneur
2. It seeking to harness commercially
unproven technology
3. High risk venture
Features of Venture Capital
High Degrees of Risk
Equity Participation
Long term Investment
Participation in Management
Achieve social objectives
Investment is Illiquid
Types of Venture Capital
Funds set up by angel investors.
Subsidies of Corporation
Private capital firms/funds
Modes of finance by venture capital
1.EQUITY 2.CONDITIONAL LOAN
3.CONVERTIBLE LOAN
STAGES OF FINANCING
A. EARLY STAGE FINANCING
Seed capital and research and development projects
Start ups
Second Round Finance
B. LATER STAGE FINANCING
Development Capital, expansion finance, replacement
capital, turn around, Buy outs
FACTORS AFFECTING
INVESTMENT DECISION
Strong mgt team
A Viable Idea
Business Plan
Project Cost and Return
Future Market Prospect
Existing Technology
Miscellaneous Factors
Procedure followed by VCs
Receipt of Proposal
Appraisal of Plan
Investment
Provide Value added Services
Exit
Venture Capital in India
It can be divided into following categories:-