Nothing Special   »   [go: up one dir, main page]
Scribd Logo
Upload

Welcome to Scribd!

  • 16 views

    Lecture#29 2

    Uploaded by

    Nasira Idrees
    Venture capital refers to funding provided to startup companies and small businesses with potential for high growth. It involves risk but has potential for exceptional returns. Venture capital funding comes from venture capital firms and is typically invested in stages from seed funding to help prove an idea, through multiple rounds of funding as a company grows and may eventually go public. Venture capital firms are run by general partners who manage funds from limited partners. They identify promising new companies, perform due diligence, and often work closely with portfolio companies, providing management support and connections. Venture capital can benefit startups through financing, mentoring, and helping prepare companies for exit, but the process also involves founder loss of control and high costs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Lecture#29 2

    Uploaded by

    Nasira Idrees
    16 views14 pages
    Venture capital refers to funding provided to startup companies and small businesses with potential for high growth. It involves risk but has potential for exceptional returns. Venture capital funding comes from venture capital firms and is typically invested in stages from seed funding to help prove an idea, through multiple rounds of funding as a company grows and may eventually go public. Venture capital firms are run by general partners who manage funds from limited partners. They identify promising new companies, perform due diligence, and often work closely with portfolio companies, providing management support and connections. Venture capital can benefit startups through financing, mentoring, and helping prepare companies for exit, but the process also involves founder loss of control and high costs.

    Original Description:

    Original Title

    Lecture#29-2.pptx

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Venture capital refers to funding provided to startup companies and small businesses with potential for high growth. It involves risk but has potential for exceptional returns. Venture capital funding comes from venture capital firms and is typically invested in stages from seed funding to help prove an idea, through multiple rounds of funding as a company grows and may eventually go public. Venture capital firms are run by general partners who manage funds from limited partners. They identify promising new companies, perform due diligence, and often work closely with portfolio companies, providing management support and connections. Venture capital can benefit startups through financing, mentoring, and helping prepare companies for exit, but the process also involves founder loss of control and high costs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    16 views14 pages

    Lecture#29 2

    Uploaded by

    Nasira Idrees
    Venture capital refers to funding provided to startup companies and small businesses with potential for high growth. It involves risk but has potential for exceptional returns. Venture capital funding comes from venture capital firms and is typically invested in stages from seed funding to help prove an idea, through multiple rounds of funding as a company grows and may eventually go public. Venture capital firms are run by general partners who manage funds from limited partners. They identify promising new companies, perform due diligence, and often work closely with portfolio companies, providing management support and connections. Venture capital can benefit startups through financing, mentoring, and helping prepare companies for exit, but the process also involves founder loss of control and high costs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 14

    VENTURE CAPITAL”

    Lecture#29
    INTRODUCTION
    CAPITAL

     Fund employed in any business activity.


     Most important factor for production.
     No economic entity can function without capital.
    Venture capital

    Venture capital is significant innovation of 20th century. It is generally consider as


    synonym of risky capital.
    Venture capital is a new financial service, the emergence of which wants towards
    developing strategies to help a new class of new entrepreneurs to translate their
    business ideas into realities.
    What is venture capital?
    Venture capital means funds made available for startup firms and small
    businesses with exceptional (unusual)growth potential.

    Venture capital is long term risk capital


    to finance high technology projects
    which involve risk but atthe same time
    has strong potential for growth.
    Endowment: facility
    Sovereign: supreme ruler
    Stages in venture capital
     1. Seed Money:
    Low level financing needed to prove a new idea.
     2. Start-up:
    Early stage firms that need funding for expenses associated with marketing and product
    development.
     3. First-Round:
    Early sales and manufacturing funds.
     4. Second-Round:
    Working capital for early stage companies that are selling product, but not yet turning a profit.
     5. Third-Round:
    Also called Mezzanine(intermediate floor) financing, this is expansion money for a newly
    profitable company
     6. Fourth-Round:
     Also called bridge financing, it is intended to finance the "going public process”
    ROLES WITHIN AVENTURE CAPITAL FIRM
     1. Venture capital general partners: Also known in this case as "venture
    capitalists" or "VCs" are the executives in the firm.
     2. Limited partners: Investors in venture capital funds are known as limited
    partners.
     3. Venture partners: Venture partners "bring in deals" and receive income only
    on deals they work on.
     4. Entrepreneur in residence: EIRs are experts in a particular domain and
    perform due diligence (effort) on potential deals. EIRs are engaged by VC
    firms Some EIR's move on to roles such as Chief Technology Officer (CTO)
    at a portfolio company
    FEATURES OF VENTURE CAPITAL
     The main features of venture capital are:
     Long-time horizon(range of vision): In general, venture capital undertakings take a longer time
    say, 5-10 years at a minimum to come out commercially successful; one should, thus, be able
    to wait patiently for the outcome of the venture.
     Lack of liquidity(the quality of being capable of exchange or interchange.): Since the project
    is expected to run at start-up stage for several years, liquidity may be a greater problem.
     High risk: The risk of the project is associated with management, product and operations.
     High-tech: However, a venture capitalist looks not only for high-technology but
    the innovativeness through which the project can succeed.
     Equity(fairness) participation and capital gains: A venture capitalist invests his money in
    terms of equity. He does not look for any dividend(a sum of money paid regularly) or other
    benefits, but when the project commercially succeeds, then he can enjoy the capital gain
    which is his main benefit.
     Participation in management: Unlike the traditional financier or banker, the venture capitalist
    can provide managerial expertise to entrepreneurs besides money.
    Advantages of Venture Capital
    Economy
    oriented

    Entrepreneur
    Investor
    oriented
    Oriented(aim)
    ADVANTAGES OF CAPITAL
    VENTURE
    Economy Oriented-
     Helps in industrialization of the country
     Helps in the technological development of the country
     Generates employment
     Helps in developing entrepreneurial skills

    Investor oriented-
     Benefit to the investor is that they are invited to invest only after company starts earning profit,
    so the risk is less and healthy growth of capital market is entrusted (assign).
     Profit to venture capital companies.
     Helps them to employ their idle funds into productive avenues(line, path, direction, route).
    Entrepreneur oriented-
     Finance - The venture capitalist injects long-term equity finance, which provides a solid capital
    base for future growth.
     Business Partner - The venture capitalist is a business partner, sharing the risks and rewards.

     Mentoring (adviser)
     Alliances(a union or association formed for mutual benefit) - The venture capitalist
    also has a network of contacts in many areas that can add value to the company
    Facilitation of Exit - The venture capitalist is experienced in the process of preparing a company for
    an initial public offering (IPO) and facilitating in trade sales.
    Methods of venture capital
     equity

     Conditional loan Income note

     Other financing method


    • Deal origination
    1 • Screening

    • evaluation(due diligence)
    2 • Deal structuring

    • Post investment activity


    3 • Exist plan
    ADVANTAGES OF VENTURE CAPITAL
     provide large sum of equity finance.
     Venture Capitalist are rewarded by business success &
    the capital gain.
     Able to bring wealth and expertise to your company
     The Venture Capitalist also has a wide network of contacts.
     Providing additional funds.

    A capital gain refers to profit that results from a sale of a capital asset, such as stock, bond or
    real estate, where the sale price exceeds the purchase price.
    DISADVANTAGES OF VC
     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

    You might also like