Presented By:

Anand Kumar (JU07019)

SEC- C
 CONCEPT

Venture capital is a type of private equity capital

typically provided by professional, outside investors to
new and growing businesses.
 FEATURES
Finance new and rapidly growing companies
Assist in the development of new products or
services
Add value to the company through active
participation
Take higher risks with the expectation of
higher rewards
Have a long-term orientation
 ORIGIN OF VENTURE
CAPITAL
In the 1920's & 30's, the wealthy families of an
individuals investors provided the start up money for
companies that would later become famous." Eastern
Airlines” and “Xerox” are the more famous ventures
they financed.
TYPES OF VENTURE CAPITAL
1) VCFs promoted by the central govt. controlled
development financial institutions:-
Industrial Finance
Corporation of India(IFCI)

2) VCFs promoted by the state government

controlled development finance institutions:-
Gujarat Industrial
Investment Corporation(GIIC)
 CNTD…..
3) VCFs promoted by Public Sector banks:-
SBI-Cap by State Bank of India

4) Promoted by the foreign banks or private sector

companies and financial institutions:-
Indus Venture Fund
 METHODS OF VENTURE
FINANCE
• EQUITY- All VCFs in India provide equity but
generally their contribution does not exceed 49%
of the total equity capital.

• CONDITIONAL LOAN - It is repayable in the

form of a royalty after the venture is able to
generate sales. No interest is paid on such loans.
 CNTD…
• INCOME NOTE- It is a hybrid security which
combines the features of both conventional loan
and conditional loan.

• OTHER FINANCING METHODS- A few venture

capitalists, particularly in the private sector, have
started introducing innovative financial securities
like Participating debentures.
RECOMMENDATIONS OF SEBI
COMMITTEE, 2000
SEBI appointed the Chandrasekhar Committee to
identify the impediments in the growth of venture
capital industry in the country and suggest suitable
measures for its rapid growth. Its report was
submitted in January, 2000.
 THE RECOMMENDATIONS
PERTAIN TO
VCF structures

 Resource raising

 Investments

 Exit
VENTURE CAPITAL
PROCESS
Generating a deal flow

Due diligence

Investment valuation

Pricing and structuring the deal

Value Addition and monitoring

Exit
 PRESENT SCENARIO OF
VENTURE CAPITAL IN INDIA
Some of the highlights of 2007 include
31% of all investments fell into the US$10-25
million category
Venture capital investments accounted for 25% of
the private equity deals (in volume terms). Late
stage deals accounted for 35% of all deals
PE firms obtained exit routes in 65 companies,
including 16 via initial public offering (IPO)
 LOOKING AHEAD
Some of the key sectors that private equity investors
will be looking at in 2008 onwards include:

alternative energy, infrastructure services, banking and

financial service and manufacturing.