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Ventrue capital PPT.pptx
- 1. Unit :V -Venture Capital Bharati Vidyapeeth (Deemed to be) University, Pune Abhijit Kadam Institute of Management & Social Sciences,Solapur
- 2. Introduction To promoteIndustrial development sector may Financial institutions set up in India, they are undertaken by new or unknown entrepreneurs. They evaluate projects, extend financial assistance by follow-up the criteria of Safety, Liquidity and Profitability and security but not potentiality. These institution do not mitigate the problems of new entrepreneurs who are risky and innovate ventures.
- 3. Introduction In India/world technological revaluation with emergence which required professional temperament and technical know –how. To support technological entrepreneurs support in all aspect but specially financial assistance is more essential. Venture capital : made investment in new and tried enterprises that are lacking a stable record of growth.
- 4. Introduction Commitment ofCapital as shareholding for formulation and setting up small firms in new ideas or technology. VCC not only assist the finance but input the skilled to; 1. To set up finance 2. Design market strategy 3. Organize and manage it It is an association who assist every development stage of project.
- 5. Meaning • Innovation VEN • Innovation+ Risk VENTURE • Risk TURE
- 6. Meaning VENTURE CAPITAL • Thecapital invested in a project in which there is a substantial element of risk, typically a new or expanding business VENTURE • Project Or Activity which involve risk CAPITAL • The Money or Fund require for Business
- 7. Venture capital Longterm risk capital to finance high technology project which involve high risk but have strong potential for growth. Pool their resources including managerial abilities to assist new entrepreneurs in early years / stage of the project. Once project reaches profitability they sell shareholding @ high premium.
- 8. Venture Capital Company Definedas; “Financial institution which join as a co-promoter in project and share the risk and rewards of the enterprises”. A venture capitalist (VC) is a person who makes such investments, these include wealthy investors, investment banks, other financial institutions other partnerships
- 9. 1. FINANCE NEWAND RAPIDLY GROWING COMPANIES 1. PURCHASE EQUITY SECURITIES 2. ASSIST IN THE DEVELOPMENT OF NEW PRODUCTS OR SERVICES 3. ADD VALUE TO THE COMPANY THROUGH ACTIVE PARTICIPATION. Venture Capitalists generally;
- 10. Features of VentureCapital 1. Venture capital is usually in the form of an equity participation. It may also take the form of convertible debt or long term loan. 2. Investment is made only in high risk but high growth potential projects. 1. Venture capital is available only for commercialization of new ideas or new technologies and not for enterprises which are engaged in trading ,booking , financial services, agency, liaison work or research development . 2. Venture capitalist joins the entrepreneur as a co-promoter in projects and share the risks and rewards of the enterprises. 3. The is continuous involvement in business after making an investment by the investor.
- 11. Features of VentureCapital …. Once the venture has reached the full potential, the venture capitalist disinvest his holding either to the promoters or in the market. The basic objective of investment is not profit but capital appreciation at the time of disinvestment. Venture capital is not just injection of money but also an input needed to setup the , design its marketing strategy and organized and manage it. Investment is usually made in small and medium scale enterprises.
- 12. History – Originof VC Venture Capital as new phenomenon originated in USA and developed spectacularly world wide since the second half of the seventies. American Research and Development corporation, founded by Gen. Doriot soon after the second World war, is believed to have heralded the institutionalization of venture capital in the USA. The real development of VC took place in 1958.When the Business Administration Act was passed by US Congress. Present day like Apple, Microsoft, Xerox et are the beneficiaries of Venture capital. Eugene Kleiner (third from left), one of Fairchild Semiconductor’s “traitorous eight”, went on to found Kleiner Perkins Caufield & Byers, the “largest and most established” venture capital firm in Silicon Valley
- 13. Railway Mania: manyinvestors lost money, but Victorian Britain inherited railroads The Mississippi Company: the first stock bubble
- 14. History of VCIN INDIA Indian tradition of VC for industry goes back more than 150 years when many of the managing agency houses acted as venture capitalists providing both finance and management skill to risky projects. It was the managing agency system through which TATA IRON and STEELS AND EMPRESS MILLS were able to raise equity capital from the investing public. The TATA also initiated a managing agency house , named investment corporation of India in 1937 which by acting as venture capitalist, successfully promoted hi-tech enterprises such as CEAT tyres , Associated Bearings, National Rayon etc.
- 15. Stages of VC I Development ofan Idea Seed Finance II Implementati on Stage Start up Finance III Fledging Stage Additional Finance IV Establishmen t Stage Establish ment Finance
- 16. • Translating anidea into business proposition • Making investigation is made in-depth which normally takes a year or more Seed Finance • Set up to manufacture a product or a service • The first and Second stage of capital used for full scale manufacturing and further business growth Start-up Finance • Established in the market and expected to expand at a rapid pace. • Need finance for expansion & Diversification to reap economies of scale and attain stability Additional Finance • Made some headway and entered the stage of manufacturing a product • Generating adequate funds for financing to develop the marking infrastructure Establishment Finance
- 17. Importance And Advantagesof VC Importance Advantages to Investing Public Advantages to Promoters Business Partner Alliance Mentoring
- 18. Process of VentureFinancing Deal origination Screening Due Diligence Deal Structuring Post Investment Activity Exit Plan
- 19. Guidelines of VentureCapitalist Public Sector Financial institutions, SBI, Scheduled Bank, foreign Bank &their subsidiaries are eligible • Minimum Size Rs-10 cr. • Debt –Equity ratio 1:1.5 VCC and VCF can be set up as joint venture between stipulated agencies • Equity holding not exceed 20% and should not be largest single holder
- 20. VC assistance shouldgo the enterprises with total investment not more than Rs-10cr The VCC/VCF should be managed by professionals should be independent of the parent organization The VCC will not be allowed to undertake activities such as trading , broking, money market operations, bill discounting. A person holding a position or full time chairman/President/CEO/MD in company will not be allowed to hold same position in VCC/VCF
- 21. Venture Capital inIndia The concept of venture capital 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.
- 22. Those promoted bypublic banks. e.g. : -SBI Capital Market Ltd 4)Those promoted by private sector companies. e.g.: - IL&FS Trust Company Ltd Infinity Venture India Fund 5)Those established as an overseas venture capital fund. e.g.: - Walden International Investment Group - HSBC Private Equity management Mauritius Ltd
- 23. Process - Stage–I ABC- 10 cr Stage - IDBI – Financial Institution Stage-III –IDBI-ABC by shareholding pattern IDBI- Rs- 1000 =1 share IDBI- Total no of Share purchase of ABC =1,00,000*1000= 10 cr. STAGE – ABC- - Primary Market – IPO IDBI – Rs- 1000 Bid Share – 1600/- Per Share Disinvestment – Rs-1000 Share Purchase - Rs- 1600 share selling Profit against 1 share = 600/- Total investment =10 cr Disinvestment = 1,00,000*1600= 16 cr Net profit = 6 cr