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    SEMINAR PRESENTATION

    ON

    VENTURE CAPITAL

    presented by

    Name : priyanka singh

    regd no:1001247110

    PGDM

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    Meaning Venture capital means funds made available

    for startup firms and small businesses withexceptional growth potential.

    Venture capital is money provided byprofessionals who alongside management investin young, rapidly growing companies that havethe potential to develop into significant economic

    contributors.

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    The SEBI has defined Venture CapitalFund in its Regulation 1996 as a fundestablished in the form of a company ortrust which raises money through loans,

    donations, issue of securities or units asthe case may be and makes or proposesto make investments in accordance withthe regulations.

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    Characteristics Long time horizon

    Lack of liquidity

    High risk

    Equity participation

    Participation in management

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    Advantages 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. Venturecapitalists are rewarded by business success andthe capital gain.

    The venture capitalist is able to provide practicaladvice and assistance to the company based onpast experience with other companies which werein similar situations.

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    Advantages (Cont.) The venture capitalist also has a network of contacts

    in many areas that can add value to the company.

    The venture capitalist may be capable of providing

    additional rounds of funding should it be required tofinance growth.

    Venture capitalists are experienced in the process ofpreparing a company for an initial public offering

    (IPO) of its shares onto the stock exchanges oroverseas stock exchange such as NASDAQ.They can also facilitate a trade sale.

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    Stages of financing1. Seed Money:

    Low level financing needed to prove a new idea.

    2. Start-up:

    Early stage firms that need funding for expensesassociated with marketing and productdevelopment.

    3. First-Round:

    Early sales and manufacturing funds.

    4. Second-Round:

    Working capital for early stage companies thatare selling product, but not yet turning a profit .

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    5. Third-Round:

    Also called Mezzanine financing, this isexpansion money for a newly profitable

    company6. Fourth-Round:

    Also called bridge financing, it is intended

    to finance the "going public" process

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    Methods of VentureFinancing

    The financing pattern of the deal is themost important element. Following are thevarious methods of venture financing:

    Equity Conditional loan Income note Participating debentures

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    DEVELPOMENT OF

    VENTURE CAPITALIN INDIA

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    The concept of venture capital was formallyintroduced in India in 1987 by IDBI.

    The government levied a 5 per cent cess on all

    know-how import payments to create the venturefund.

    ICICI started VC activity in the same year

    Later on ICICI floated a separate VCcompany - TDICI

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    India

    VCFs in India can be categorized intofollowing five groups:

    1) Those promoted by the Central

    Government controlled developmentfinance institutions. For example:- ICICI Venture Funds Ltd.- IFCI Venture Capital Funds Ltd (IVCF)- SIDBI Venture Capital Ltd (SVCL)

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    2) Those promoted by State Government

    controlled development financeinstitutions.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

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    4)Those promoted by private sector

    companies.For example:- IL&FS Trust Company Ltd- Infinity Venture India Fund

    5)Those established as an overseas venture capitalfund.For example:

    - Walden International Investment Group- HSBC Private Equity

    management Mauritius Ltd

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    The Income Tax Rule until now providedthat VCF shall invest only upto 40% of thepaid-up capital of VCU and also notbeyond 20% of the corpus of the VCF.

    After amendment VCF shall invest onlyupto 25% of the corpus of the venturecapital fund in a single company.

    There are sectoral restrictions under theIncome Tax Guidelines which provide thata VCF can make investment only inspecified companies.

    F t t f VC i

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    Future prospects of VC inIndia

    VC can help in the rehabilitation of sick units. VC can assist small ancillary units to upgrade

    their technologies VCFs can play a significant role in developing

    countries in the service sector includingtourism, publishing, health care etc.

    They can provide financial assistance topeople coming out of universities, technicalinstitutes, etc thus promoting entrepreneurialspirits

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