WELCOME

SAMEER (PA1027) RATI (PA1025) RAKESH (PA1024)

OBTAINING VENTURE AND GROWTH CAPITAL

GROWTH CAPITAL

GROWTH CAPITAL


Growth capital (also called expansion capital and growth equity) is a type of private equity investment, investing in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business. Companies that seek growth capital, will often do so in order to finance a transformational event in their lifecycle.These companies are likely to be more mature than venture capital funded companies, able to generate revenue and operating profits but unable to generate sufficient cash to fund major expansions, acquisitions or other investments Growth capital is often structured as either common equity or preferred equity, although certain investors will use various hybrid securities that include a contractual return (i.e., interest payments) in addition to an ownership interest in the company.

VENTURE CAPITAL

INTRODUCTION
y

The venture capital investment helps for the growth of innovative entrepreneurships in India. Venture capital means risk capital The risk envisaged may be very high may be so high as to result in total loss or very less so as to result in high gains

ORIGIN OF VENTURE CAPITAL

In the 1920s and 30s, the wealthy families of and individual investors provided the startup money for companies that would later become famous y Eastern Airlines and Xerox are the more famous ventures they financed y In its early years VC may have been associated with high technology, over the years the concept has undergone a change and as it stands today it implies pooled investment in unlisted companies
y

MEANING
 Venture

capital means funds made available for startup firms and small businesses with exceptional growth potential. capital is money provided by professionals who alongside management invest in young, rapidly growing companies that have the potential to develop into significant economic contributors.

 Venture

What kind of businesses are attractive WHAT KIND OF BUSINESSES ARE to venture capitalists? CAPITALISTS? ATTRACTIVE TO VENTURE
 Venture

capitalist prefer to invest in "entrepreneurial businesses.  it is more about the investment's aspirations and potential for growth, rather than by current size.  Venture capital investors are only interested in companies with high growth prospects, which are managed by experienced and ambitious teams who are capable of turning their business plan into reality.

FEATURES
Investment made in equity, investors wait for 5-7 years to reap the benefits of capital gain y Investments are made in innovative projects y Investors does not interfere in day-to-day business y Capital need not be repaid in the course of business but realized through exist route (stock exchange)
y

ADVANTAGES
y

It injects long term equity finance which provides a solid capital base for future growth. The venture capitalist is a business partner, sharing both the risks and rewards. Venture capitalists are rewarded by business success and the capital gain. The venture capitalist is able to provide practical advice and assistance to the company based on past experience with other companies which were in similar situations.

WHO ARE VENTURE CAPITALIST

Venture capital comes from Institutional investor and High net worth individuals or families and is pooled by dedicated firms
A venture capitalist is a person or institutional firm that makes venture investment and these venture capitalist are expected to bring managerial and technical expertise as well as capital to their investment

VENTURE CAPITAL INVESTMENT PROCESS

Deal origination Screening Due diligence (Evaluation) Deal structuring Post investment activity Exit plan

PROCESS OF VENTURE CAPITAL INVESTMENT

DIFFERENCE FROM TRADITIONAL CAPITAL

Venture capital
    

Less fluid Requires high return rate Invested based on long-run future Concerned with product and market potential Venture capitalist and partner are co-workers More fluid Bears lower return Invested based on immediate future Concerned with past performance Loaning bank is creditor Requires collateral

Traditional capital
     

DEVELOPMENT OF VENTURE CAPITAL IN INDIA

VENTURE CAPITAL IN INDIA

The concept of venture capital introduced in India in 1987 by IDBI.

was

formally

The government levied a 5 per cent cess on all knowhow import payments to create the venture fund. ICICI started VC activity in the same year Later on ICICI floated a separateVC company - TDICI

CATEORIZATION OF VCFS
1)Those promoted by the Central Government controlled development finance institutions. For example: - ICICI Venture Funds Ltd. - IFCI Venture Capital Funds Ltd (IVCF) - SIDBI Venture Capital Ltd (SVCL)

2)Those promoted by State Government controlled development finance institutions. For example: - Punjab Infotech Venture Fund - Gujarat Venture Finance Ltd (GVFL) - Kerala Venture Capital Fund Pvt Ltd. 3) Those promoted by public banks. For example: - Canbank Venture Capital Fund - SBI Capital Market Ltd

VENTURE CAPITAL INDUSTRY WISE SEGMENTATION

Percentage
9.03 3.36 6.94 7.73 IT & ITES Energy Manufacturing 12.92 11.5 Media & Ent. BFSI Shipping & logistics
4.32

11.43

Eng. & Const.

Telecom

Health care 4.82 27.95 Others

Percentage calculated on the total VC investment- 14,234 USB (fig. of 2007)

TOP CITIES ATTRACTING VENTURE CAPITAL INVESTMENTS

CITIES MUMBAI SECTORS Software services, BPO, Media, Computer graphics, Animations, Finance & Banking All IP led companies, IT & ITES, Biotechnology Software services, ITES , Telecom IT ,Telecom IT & ITES, Pharmaceuticals Bio-technology, IT , BPO

BANGALORE

DELHI CHENNAI HYDERABAD PUNE

6 ~ BIGGEST MISTAKES IN RAISING START UP CAPITAL?

1.Half-baked business plans. 2. Focusing too much on the idea and too little on the management
3. Not asking for enough money 4. Having too many lenders or investors 5. Failing to get the proper legal agreements 6. Poor cash flow management

THANK YOU ..