Published on September 30, 2008
A Presentation onVENTURE CAPITAL : A Presentation onVENTURE CAPITAL Guided by : Ms. Himani Mittel Om Vindhyavasini Institute of Management Group Members : Group Members Vipul Gohil Chandresh Sathavara Jitendra Patel Rahul Patel Ghanshyam Sangani Satish Vadodariya Chintvansinh Rajpurohit Concept of Venture Capital : Concept of Venture Capital Venture capital finance is often though of as “the early stage financing of new and young enterprises seeking to grow rapidly” Features of Venture Capital : Features of Venture Capital Equity Participation: Venture financing is potential equity participation through direct purchase of shares, options or convertible securities. Long-term Investment: Venture financing requires long-term investment attitude that necessitates the Venture capital firms (VFCs) to wait for a long period, say 5 to 10 years, to make large profits. Participation in Management: Venture financing ensures continuing participation of the venture capitalist in the management of the entrepreneur’s business. Development in India : Development in India This concept was introduced in India in 1987. It was operated by “Industrial Development bank of India”. In the same year “Industrial Credit and Investment Corporation of India” was also started venture capital activity. Government started levied 5% cess on all payment related to venture fund. Venture Capital Fund in India can be categorized into following four groups. : Venture Capital Fund in India can be categorized into following four groups. VCFs promoted by central government controlled development finance institutions -IFCI -RCTFCI VCFs promoted by the state government controlled development finance institutions. -GVFCL -APVCL VCFs promoted by public sector banks such as Canfina (canara finance) by canara bank, SBI-cap by SBI. VCFs promoted by foreign bank and private sector companies and financial institutions. Cont… : Cont… Now a day there are steady increases in the number of ventures as well as amount invested in venture capital funds. Total estimated investment in 2003 was to be US $800 million. It is increase in 2004 near about US $1 billion. The support provided by such VCFs are use full for business plan development, formulation of marketing plan and strategy. Process of Venture Financing : Process of Venture Financing Venture capital investment process Market Product Product Entrepreneurial (managerial) Expected return Expected return Decision Screening Evaluation Approval Cont… : Cont… Deal Origination Screening Evaluation (due diligence) Deal Structuring Post-investment activity Exit Plan Methods of Venture Financing : Methods of Venture Financing Equity: A venture capitalist get the status of an owner, and becomes entitled to a share in the firm’s profits as much as he is liable foe losses. Conditional Loan: A conditional loan is repayable in the form of a royalty after the venture is able to generate sales. Income Note: It is a hybrid security combinations of conventional loan and conditional loan. Others: Participating Debenture Convertible Loan Preferred Ordinary Share Special Ordinary Share Etc. Fiscal Incentives : Fiscal Incentives Fiscal incentive have been found to play a central role in the growth of venture capital in the developed countries. For Example: in USA the reduction of capital gain tax rate from 49% to 28% and later on to 20% gave an unprecedented boost to the development of venture capital.