“STUDY OF VENTURE

CAPITAL IN INDIA”

(SYNOPSIS)
 INTRODUCTION TO PROJECT

OBJECTIVES OF THE STUDY

 Understand the concept of venture capital. Venture Capital funding is different

from traditional sources of financing. Venture capitalists finance innovation and
ideas which have potential for high growth but with inherent uncertainties. This
makes it a high-risk, high return investment.
 Study venture capital industry in India. Scientific, technology and knowledge
based ideas properly supported by venture capital can be propelled into a powerful
engine of economic growth and wealth creation in a sustainable manner. In various
developed and developing economies venture capital has played a significant
developmental role.
 Study venture capital industry in global scenario. Venture capital has played a
very important role in U.K., Australia and Hong Kong also in development of
technology growth of exports and employment.
 Study the evaluation & need of venture capital industry in India. India is still at
the level of ‘knowledge’. Given the limited infrastructure, low foreign investment
and other transitional problems, it certainly needs policy support to move to the next
stage. This is very crucial for sustainable growth and for maintaining India’s
competitive edge
 Understand the legal framework formulated by SEBI to encourage venture
capital activity in Indian economy. Promoting sound public policy on issues
related to tax, regulation and securities through representation to the Securities and
Exchange Board of India (SEBI), Ministry of Finance (MoF), Reserve Bank of India
(RBI) and other Government departments
 Find out opportunities that encourage & threats those hinder venture capital
industry in India.
 To know the impact of political & economical factors on venture capital
investment.

STATEMENT OF PROBLEMS

Venture capital is in its nascent stages in India. The emerging scenario of global
competitiveness has put an immense pressure on the industrial sector to improve the
quality level with minimization of cost of products by making use of latest
technological skills. The financing firms expect a sound, experienced, mature and
capable management team of the company being financed. Since the innovative
project involves a higher risk, there is an expectation of higher returns from the
project. The payback period is also generally high (5 - 7 years).

The various problems/ queries can be outlined as follows:

 Problems regarding the infrastructure details of production like plant

location, accessibility, relationship with the suppliers and creditors,
transportation facilities, labor availability etc.

 The limited infrastructure, low foreign investment and other transitional

problems, because of above three reasons availability of fund is very low in
market.

 Uncertainty regarding the success of the product in the market.

 As there is requirement of an experienced management team, Due to
unavailability of experienced and skilled people it is difficult to analyze the
future growth of the product in the market.

 Government has taken all the Initiatives in formulating policies to encourage

investors and entrepreneurs. A government policy has many rules and
regulation that can create problems in allocating the fund to the Organizations.

 Initiatives of the SEBI to develop a strong and vibrant capital market giving
the adequate liquidity and flexibility for investors for entry and exit. Due to
many rules and regulations from SEBI organization face lots of difficulties at
the time of entering in the market.

 Problem regarding requirement of an above average rate of return on

investment, also longer payback period. The returns on investment are high
but the probability of fund return is depending on the product success in
future.
 LIMITATION OF PROJECT

A study of this type cannot be without limitations. It has been observed those venture
capitals are very secretive about their investments. This attitude is a major hindrance
for data collection. However venture capital funds/companies that are members of
Indian venture capital association are to be included in the study.

SCOPE OF THE PROJECT

The scope of the research includes all types of venture capital firms set up as a
company & funds irrespective of the fact that they are registered with SEBI of India
or not part of this study
 RESEARCH DESIGN AND INSTRUMENTS

In India neither venture capital theory has been developed nor are there many
comprehensive books on the subject. Even the number of research papers available
is very limited. The research design used is descriptive in nature. (The attempt has
been made to collect maximum facts and figures available on the availability of
venture capital in India, nature of assistance granted, future projected demand for
this financing, analysis of the problems faced by the entrepreneurs in getting venture
capital, analysis of the venture capitalists and social and environmental impact on
the existing framework.)

The research is based on secondary data collected from the published material. The
data was also collected from the publications and press releases of venture capital
associations in India.

Scanning the business papers filled the gaps in information. The Economic times,
Financial Express and Business Standards were scanned for any article or news item
related to venture capital. Sufficient amount of data about the venture capital has
been derived from this project.