VENTURE CAPITAL

PRESENTED BY: DEEPAK SRIVASTVA

FEATURES
Investment in risky projects Financial support not in the form of loan only but as an investment. After the enterprise settles down the investors and bankers are ready to help at that time venture capitalist exit by selling his share holding in the company. Equity participation is generally not more than 49%. Also provides conditional loans which are repaid from royalties on sale.

DEFINITION OF A VENTURE CAPITAL FUND

Has a dedicated pool of capital. Raised in a manner specified in the regulations. Invests in the venture capital undertakings in accordance with these regulations. A venture capital undertaking means a domestic company whose shares are not listed on the stock exchange in India and which is engaged in the business for providing services productions or manufacture of articles or things and does not include such activities or sectors which have been included in the negative list by the board.

MINIMUM INVESTMENT IN A VENTURE

CAPITAL FUND A venture capital fund may raise money from any investor Indian foreign or non resident Indian by way of issue of units provided that money accepted from ay investor is not less than Rs 5 lakh. Before a Venture capital fund starts its operation each scheme launched or fund set up by a venture capital fund shall have firm commitment from the investors or contributions of at least Rs 5 Cr.

INVESTMENT CONDITIONS AND

RESTRICTIONS A VCF will disclose the investment strategy at the time of application for registration. Not more than 25% of corpus in one investment. No investment in associated companies. At least 75% of the investible funds shall be invested in unlisted equity shares or equity linked instruments. Not more than 25% of the investible funds by way of subscription to IPO. The securities or units issued by a venture capital fund shall not be listed on any recognised stock exchange till the expiry of 3 years from the date of issuance.

INVESTMENT CONDITIONS AND

RESTRICTIONS

May receive money through private placement of its securities /units.

Before issuing or making an offer inviting any subscription the venture capital fund or company shall issue a placement memorandum specifying the terms and conditions for raising money.