WHAT IS VENTURE CAPITAL Money provided by investors to startup firms and small businesses with perceived long-term growth potential.
FEATURES OF VENTURE CAPITAL • • • • • • Long-time horizon Lack of liquidity High risk High-tech Equity participation and capital gains Participation in management
ADVANTAGES OF VENTURE CAPITAL • They can provide large sum of equity finance • Able to bring wealth and expertise to your company • Easier to secure future funding from other sources • The business is not obligated to repay the money
DESADVANTAGES OF VENTURE CAPITAL • Lengthy and complex process (needs detailed business plan, financial projections and etc.) • In the deal negotiation stage, you will have to pay for legal and accounting fees • Investors become part owners of your business - founder loss of autonomy or control
In the 1920's & 30's, the wealthy families of and 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. Among the early VC funds set up was the one by the Rockfeller Family which started a special fund called VENROCK in 1950, to finance new technology companies.
In India , the need for VC was recognised in the 7th five year plan and long term fiscal policy of GOI. In 1973 a committee on Development of small and medium enterprises highlighted the need to faster VC as a source of funding new entrepreneurs and technology. VC financing really started in India in 1988 with the formation of Technology Development and Information Company of India Ltd. (TDICI) - promoted by ICICI and UTI.
Current Scenario Of Venture Capital In India
For Beginners, a venture is a business or any other project that has risk associated with it. Venture capital is a type of private equity financing option that is invested in high-potential startups and venture capital firms are the organizations run by venture capitalists
who take the risk of investing in startups that show huge market potential. Venture capital is not only beneficial for entrepreneurs but even the investors and the economy too benefits hugely from type of financing.