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In a narrow sense, it refers to
investment in new enterprises that
lack a stable record of growth.

In a broader sense, it refers to the

commitment of capital shareholding,
for setting up of small firms
specializing in new ideas or
technologiesð
÷enture capital as a new phenomenon originated in
USA and developed spectacularly world wide since
the second half of the seventies. American Research
and Development Corporation, is believed to have
heralded the institutionalisation of venture capital in
the USA. Since then the industry has developed in
many other countries in Europe, North America and
Asia. The real development of ÷C took place in 1958.
It is reported that some of the present day
giants like Apple, Microsoft, Xerox etc. are the
beneficiaries of venture capital.
1. ÷enture capital is usually in the form of an equity participation, may also be
in the form of convertible debt or long term loan.

2. Investments made on high risk high growth potential projects.

3. It is available only for commercialization of new ideas or new technologies.

4. ÷enture capitalist joins the entrepreneur as a co-promoter in projects and

share the risks and rewards of the enterprise.

5. There is continuous involvement in business after making an investment.

6. Once the venture has reached the full potential, the venture capitalist
disinvests his holdings.

7. It is not just an injection of money but also an input needed to set up the
firm, its marketing strategy and manage it.

8. Investment is usually made in small and medium scale enterprises.

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ß mrovide seed capital for industries and support a concept or idea
ß mrovide additional capital to new business at various stages of
growth
ß Bridge finance/project financing
ß Equity financing to management groups for taking over other
companies
ß Capital to new entrepreneurs in foreign operations
ß Capital for expansion, diversification and restructuring
ß Research and development financing for product development
ß Start up capital for initial production and marketing
ß Development financial for facilitating public issues
ß Acquisition or buy out financing for acquiring another firm
ß Turnaround financing for turning around a sick unit
 IMmLEMENTATION
DE÷ELOmMENT OF AN
STAGE- START Um
IDEA- SEED FINANCE
FINANCE

FLEDGING STAGE-
ESTABLISHMENT STAGE
ADDITIONAL FINANCE

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