Description
Venture Capital Concepts and Advantages
VENTURE CAPITAL
Presentation by : Prachii Garg Roll no. 6 M.B.A.4th SEM.
Concept Of Venture Capital
• In a narrow sense, it refers to, investment in new and untried enterprises that are lacking a stable record of growth. • In a broader sense, venture capital refers to the commitment of capital as shareholding, for the formulation and setting up of small firms specializing in new ideas or new technologies. It is not merely an injection of funds into a new firms, it is a simultaneous input of skill needed to set up the firm, design its marketing strategy and organize 2 and manage it.
Definition
Venture capital refers to investment in new and untried enterprises that are lacking a stable record of growth. • Definition Of Venture Capital Company It is defined as a financing institution which join an entrepreneur as a copromoter in a project and share the risks and rewards of the entrepreneur.
3
Meaning Of Venture Capital
Venture capital pool their resources including: • Managerial abilities to assist new entrepreneur in the early years of project. • Once project reaches the stage of profitability they sell their equity holding at high premium.
4
Feature Of Venture Capital
• Investment is usually made in small and medium scale enterprise. • Venture capital is usually in the form of equity participation. • Investment is made only in high risk but high growth potential project. • Venture capital is available only for commercialization of new ideas or new technology.
5
• Once the venture reaches to full potential the venture capitalist disturbs his holiday either to the promoter or in the market. • It is not just injecting of money but also an input modeal to set up to firm, design its market strategy and organizing and managing. • Venture capital join the entrepreneur as a co-promoter in project and share the risk and rewards. • There is a continuous involvement in business after making an investment by the investor
6
Scope Of Venture Capital
• Development of an idea – Seed finance • Implementation Stage - Startup finance • Fielding stage - Additional Finance • Establishment Stage - Establishment Financing
7
Stages Of Venture Capital
• Venture capital firms have different attribute and aptitude for different types of venture capital investment. Stages of Venture Capital • Early Stage Finance – Seed Capital – Start Up Capital – Early/First Stage Capital – Later/Third Stage Capital
8
Later Stage Finance
• • • • Expansion/Development Stage Capital Management Buy out and Buy Ins Turn Around Bridge Finance
9
Venture Capital Investment Process
• • • • • • Generating a Deal Due Diligence / Evaluation Investment Valuation Pricing & Structuring the Deal Value Addition & Nurturing Exit
10
Objective Of Venture Capitalization
• To ensure proper utilization of the assistance provided as per the program/appraisal • To ensure the implementation of the venture within the time and cost envisaged • To help find additional finance in case of time and cost overrun • To provide strategic inputs in technology production, finances, personal etc. • To anticipate likely problems and advice preventing remedial actions. • To ensure that the venture doesn’t default in 11any
Evaluation criteria for Venture Capitalists
A. Characteristics of an entrepreneur
Entrepreneur’s personality & experience. • Integrity, Competition . • Long term vision, Urge to grow • Familiarity with target market • Ability to evaluate & respond to risk • Reference of the trust worthy • Amenability to suggest and criticism • Record relevant to venture • Capability of sustained intense • Leadership orientations.
12
B. Characteristics of Product
• Indian venture capitalists stringy recommend product features • Features: • High technology product • Proprietary protect product • Demonstrated, market acceptance of product • Resistant to economic cycle • High profit margins
13
C) Characteristics of Market
• Not of much concern for Indian venture capitalistic. • India is an untapped market. • Features: – High market growth – Little threat of competition during initial year – Size of a market (easy market accessibility) – Familiarity of market
14
D) Financial Considerations
• Major area for venture capitalist Features: • Expected returns from venture • Ease for exit • Tax benefits • Liquidity • Indian venture capitalists • Strategy advocate financial consideration
15
E) venture management team
• • • • • Technical skills Management skills Financial skills Marketing skills Indian venture capitalists favor venture management team to be a balanced team, comprising above started factors
16
Types of Venture Capital Organization
? Captive venture capital funds ? Independent venture capital funds ? Government funds
17
IMPORTANCE
Advantages to Investing Public: • The investing public will be able to reduce risk significantly against unscrupulous mgmnt, if the public invest in venture fund who in turn will invest in equity of new business. • Investors have no means to vouch for the reasonableness of the claims made by the promoters about profitability of the business. • The investors do not have any means to ensure that the affairs of the business are conducted prudently. Bt now its possible.
18
Advantages to promoters:
• The entrepreneur for the success of public issues is require to convince terms of underwriters, brokers and thousands of investors but to obtain venture capital assistance, he will be required to sell his idea to justify the officials of the venture fund. • the new entrepreneurs find it very difficult to make underwriting arrangement nobody would take risk with them. • Cost of public issues of equity shares often range between 10 percent to 15 percent of nominal value of issue of moderate size, which are often even higher for small issues. 19
Exit route for Venture Capital
a. b. c. d. e. Going Public. Sale of shares to entrepreneurs. Sale of company to another company. Finding a new investor. Liquidation.
20
Any Questions?
Thanks…………
22
doc_615911849.pptx
Venture Capital Concepts and Advantages
VENTURE CAPITAL
Presentation by : Prachii Garg Roll no. 6 M.B.A.4th SEM.
Concept Of Venture Capital
• In a narrow sense, it refers to, investment in new and untried enterprises that are lacking a stable record of growth. • In a broader sense, venture capital refers to the commitment of capital as shareholding, for the formulation and setting up of small firms specializing in new ideas or new technologies. It is not merely an injection of funds into a new firms, it is a simultaneous input of skill needed to set up the firm, design its marketing strategy and organize 2 and manage it.
Definition
Venture capital refers to investment in new and untried enterprises that are lacking a stable record of growth. • Definition Of Venture Capital Company It is defined as a financing institution which join an entrepreneur as a copromoter in a project and share the risks and rewards of the entrepreneur.
3
Meaning Of Venture Capital
Venture capital pool their resources including: • Managerial abilities to assist new entrepreneur in the early years of project. • Once project reaches the stage of profitability they sell their equity holding at high premium.
4
Feature Of Venture Capital
• Investment is usually made in small and medium scale enterprise. • Venture capital is usually in the form of equity participation. • Investment is made only in high risk but high growth potential project. • Venture capital is available only for commercialization of new ideas or new technology.
5
• Once the venture reaches to full potential the venture capitalist disturbs his holiday either to the promoter or in the market. • It is not just injecting of money but also an input modeal to set up to firm, design its market strategy and organizing and managing. • Venture capital join the entrepreneur as a co-promoter in project and share the risk and rewards. • There is a continuous involvement in business after making an investment by the investor
6
Scope Of Venture Capital
• Development of an idea – Seed finance • Implementation Stage - Startup finance • Fielding stage - Additional Finance • Establishment Stage - Establishment Financing
7
Stages Of Venture Capital
• Venture capital firms have different attribute and aptitude for different types of venture capital investment. Stages of Venture Capital • Early Stage Finance – Seed Capital – Start Up Capital – Early/First Stage Capital – Later/Third Stage Capital
8
Later Stage Finance
• • • • Expansion/Development Stage Capital Management Buy out and Buy Ins Turn Around Bridge Finance
9
Venture Capital Investment Process
• • • • • • Generating a Deal Due Diligence / Evaluation Investment Valuation Pricing & Structuring the Deal Value Addition & Nurturing Exit
10
Objective Of Venture Capitalization
• To ensure proper utilization of the assistance provided as per the program/appraisal • To ensure the implementation of the venture within the time and cost envisaged • To help find additional finance in case of time and cost overrun • To provide strategic inputs in technology production, finances, personal etc. • To anticipate likely problems and advice preventing remedial actions. • To ensure that the venture doesn’t default in 11any
Evaluation criteria for Venture Capitalists
A. Characteristics of an entrepreneur
Entrepreneur’s personality & experience. • Integrity, Competition . • Long term vision, Urge to grow • Familiarity with target market • Ability to evaluate & respond to risk • Reference of the trust worthy • Amenability to suggest and criticism • Record relevant to venture • Capability of sustained intense • Leadership orientations.
12
B. Characteristics of Product
• Indian venture capitalists stringy recommend product features • Features: • High technology product • Proprietary protect product • Demonstrated, market acceptance of product • Resistant to economic cycle • High profit margins
13
C) Characteristics of Market
• Not of much concern for Indian venture capitalistic. • India is an untapped market. • Features: – High market growth – Little threat of competition during initial year – Size of a market (easy market accessibility) – Familiarity of market
14
D) Financial Considerations
• Major area for venture capitalist Features: • Expected returns from venture • Ease for exit • Tax benefits • Liquidity • Indian venture capitalists • Strategy advocate financial consideration
15
E) venture management team
• • • • • Technical skills Management skills Financial skills Marketing skills Indian venture capitalists favor venture management team to be a balanced team, comprising above started factors
16
Types of Venture Capital Organization
? Captive venture capital funds ? Independent venture capital funds ? Government funds
17
IMPORTANCE
Advantages to Investing Public: • The investing public will be able to reduce risk significantly against unscrupulous mgmnt, if the public invest in venture fund who in turn will invest in equity of new business. • Investors have no means to vouch for the reasonableness of the claims made by the promoters about profitability of the business. • The investors do not have any means to ensure that the affairs of the business are conducted prudently. Bt now its possible.
18
Advantages to promoters:
• The entrepreneur for the success of public issues is require to convince terms of underwriters, brokers and thousands of investors but to obtain venture capital assistance, he will be required to sell his idea to justify the officials of the venture fund. • the new entrepreneurs find it very difficult to make underwriting arrangement nobody would take risk with them. • Cost of public issues of equity shares often range between 10 percent to 15 percent of nominal value of issue of moderate size, which are often even higher for small issues. 19
Exit route for Venture Capital
a. b. c. d. e. Going Public. Sale of shares to entrepreneurs. Sale of company to another company. Finding a new investor. Liquidation.
20
Any Questions?
Thanks…………
22
doc_615911849.pptx