Venture Capital Fund and Venture Capital Financing

Venture Capital Fund and Venture Capital Financing
Venture Capital is a private institutional investment made to start-up companies at

early stage. Venture capital funds are the investments made by the investors who
seek private equity stakes in small to medium business which are potent enough to
grow. These investments are generally high-risk/high-return opportunities. The
ventures involve risk in the expectation of sizable gain. The people who invest this
money become the financial partners are called venture capitalist (VCs). Venture
capital is the most suitable option for funding a costly capital source for companies
Venture capital is the most suitable option for funding a costly capital source for
companies and mostly for business that have huge capital requirement with no other
cheap alternatives. The most common cases of venture capital investments are seen
in the fields of Software and other Intellectual property as the value is unproven and
are considered to be the fastest growing.
Venture capital financing is a type of financing by venture capital. It is private
equity capital provided as seed funding to early-stage, high-potential, growth
companies (start-up) or more often it is after the seed funding round as a growth
funding round (also referred to as series A round). It is provided in the interest of
generating a return on investment through an eventual realization event such as
an IPO or trade sale of the company
Therefore from the above definition we can say that venture capital investments have
the following features:
It is a high risk investment made with an intention of making high profits
The investment made are based on long term goals
The investments are made in a start-up which are potential enough to grow
The start-ups have lack of funding
Money is invested by buying equity shares in the start-up company
Investments are generally done in innovative projects like in the fields of technology
and biotechnology
Supplier of venture capital participate in the management of the company
 Examples of venture capital funding
Kohlberg Kravis & Roberts (KKR)
One of the top-tier alternative investment asset managers in the world, has entered
into a definitive agreement to invest USD150 million (Rs 962crore) in Mumbai-
based listed polyester maker JBF Industries Ltd. The firm will acquire 20% stake in
JBF Industries and will also invest in zero-coupon compulsorily convertible
preference shares with 14.5% voting rights in its Singapore-based wholly owned
subsidiary JBF Global Pte Ltd. The funding provided by KKR will help JBF
complete the ongoing projects.
Pepperfry.com
India’s largest furniture e-marketplace, has raised USD100 million in a fresh round
of funding led by Goldman Sachs and Zodius Technology Fund. Pepperfry will use
the funds to expand its footprint in Tier III and Tier IV cities by adding to its
growing fleet of delivery vehicles. It will also open new distribution centres and
expand its carpenter and assembly service network. This is the largest quantum of
investment raised by a sector focused e-commerce player in India
Conclusion
In India, the venture capital plays a vital role in the development and growth of
innovative entrepreneurs. Venture capital activities were primarily done by only a
few institutions to promote entities in the private sector with funding for their
business. In India, funds were primarily raised by public which did not prove to be
fruitful in the long run to the small entrepreneurs. The need on venture capitals was
recognised in the 7th five year plan and long term fiscal policy of the government of
India.
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. The first private VC fund was sponsored by Credit Capital Finance
Corporation (CFC) and promoted by Bank of India, Asian Development Bank and
the Commonwealth Development Corporation viz. Credit Capital Venture Fund. At
the same time Gujarat Venture Finance Ltd. and APIDC Venture Capital Ltd. were
started by state level financial institutions. Sources of these funds were the financial
institutions, foreign institutional investors or pension funds and high net-worth
individuals. The venture capital funds in India are listed in Annexure I.
[1] Wikipedia
[2]http://www.yourarticlelibrary.com/financial-management/venture-
capital/process-of-venture-capital-financing-6-main-steps/72037/
Investment process describes the way in which venture capital

assistance is provided to the entrepreneurs. The entrepreneur who has
an idea which qualifies for venture capital assistance should contact
appropriate and right venture capitalists for assistance.
Selection of investment decision is very important both for the

entrepreneur and the capitalists. The proposal for assistance by the
entrepreneur to the venture capitalist is the first official step in the
investment process.
The venture capital investment process has two aspects,
(i) the assessment by the entrepreneur as to whom he should

contact for assistance and a comparison of the terms and
conditions of various venture capitalists and
(ii) assessment of the entrepreneur and his proposal by the

investor. Considering the type of industry, nature
investment and risk involved in it, the investors generally
apply some criteria for investment. Investors consider only
those proposals which qualify these stipulations.
The investment process involves the knowledge of the:
(A) Eligibility criteria for evaluating proposals,
(B) Screening of venture capitalist by the entrepreneur,
(C) Screening of entrepreneur and the proposal by the venture

capitalists,
(D) Stages of venture capital financing and

(E) Types of finance provided by venture capitalists.

Venture Capital Fund and Venture Capital Financing

Uploaded by

Copyright:

Available Formats

Venture Capital Fund and Venture Capital Financing

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Venture Capital Fund and Venture Capital Financing

Uploaded by

Copyright:

Available Formats

What are the main features of venture capital investments?

What are the main features of venture capital investments?

What are some examples of venture capital funding mentioned in the passage?

What are some examples of venture capital funding mentioned in the passage?

Venture Capital Fund and Venture Capital Financing

Venture Capital is a private institutional investment made to start-up companies at

It is a high risk investment made with an intention of making high profits

The investment made are based on long term goals

The start-ups have lack of funding

Money is invested by buying equity shares in the start-up company

Supplier of venture capital participate in the management of the company

 Examples of venture capital funding

Kohlberg Kravis & Roberts (KKR)

VC financing really started in India in 1988 with the formation of Technology

Investment process describes the way in which venture capital

Selection of investment decision is very important both for the

The venture capital investment process has two aspects,

(i) the assessment by the entrepreneur as to whom he should

(ii) assessment of the entrepreneur and his proposal by the

The investment process involves the knowledge of the:

(A) Eligibility criteria for evaluating proposals,

(B) Screening of venture capitalist by the entrepreneur,

(C) Screening of entrepreneur and the proposal by the venture

(D) Stages of venture capital financing and

You might also like