A PROJECT REPORT

ON
"VENTURE CAPITAL"
AT
KRISHU SECURITIES PVT LTD
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF

BACHELOR OF COMMERCE (GENERAL)

Submitted by
MD ABDUL SALAM
1062-20-401-705
KHAJA SOFIYAN UDDIN
1062-20-401-708
MOHAMMED ABDUL MALIK
1062-20-401-638
MOHAMMED ANWAR
1062-20-401-706

Under the Guidance of

Ms. RUQIA FATIMA
(ASSISTANT PROFESSOR)

DEPARTMENT OF BUSINESS ADMINISTRATION

ANWAR-UL- ULOOM DEGREE COLLEGE (AUTONOMOUS)
(AFFILIATED TO OSMANIA UNIVERSITY)
NEW MALLEPALLY, HYDERABAD
(2020-2023)
ANWARUL ULOOM DEGREECOLLEGE
An Autonomous Muslim Minority Institution
(Affiliated to Osmania University)
# 11-3-918, New Mallepally, Hyderabad – 500 001., A.P., INDIA
Tel : 23340134, 30582660, 30582678, 30582666, 23342285 Fax: 23342750

Ref No………………………………. Date:……………………………..

CERTIFICATE

This is to certify that MD ABDUL SALAM bearing Roll No: 1062-20-401-705 ,

KHAJA SOFIYAN UDDIN bearing Roll No: 1062-20-401-708 , MOHAMMED
ABDUL MALIK bearing Roll No: 1062-20-401-638 & MOHAMMED ANWAR
bearing Roll No: 1062-20-401-706 has successfully completed they project work
entitled “VENTURE CAPITAL., and submitted in partial fulfillment of the
requirement for the award of the Degree of Bachelor of Commerce (General)
Administration by Osmania University, Hyderabad.

This is a bonafide work completed under my guidance and supervision.

Signature of Internal Guide Signature of H.O.D

Signature of Principal
 DECLARATION

We, MD ABDUL SALAM bearing Roll No: 1062-20-401-705 , KHAJA

SOFIYAN UDDIN bearing Roll No: 1062-20-401-708 , MOHAMMED
ABDUL MALIK bearing Roll No: 1062-20-401-638 &
MOHAMMED ANWAR bearing Roll No: 1062-20-401-706 the
undersigned, hereby declare that the project report entitled
"VENTURE CAPITAL " carried out at KRISHU SECURITIES PVT LTD
is our original work written and submitted by us in partial fulfillment
of the award of the degree of Bachelor of Commerce (General) from
Anwar-Ul-Uloom Degree College, (Autonomous). We are also declare
that this project has not been submitted earlier in any other university
or institution.

Date:

MD ABDUL SALAM
1062-20-401-705

KHAJA SOFIYAN UDDIN

1062-20-401-708

MOHAMMED ABDUL MALIK

1062-20-401-638

MOHAMMED ANWAR
1062-20-401-706
 ACKNOWLEDGEMENT
We would like to acknowledge, our sincere thanks to Mr. Mohammed Abdul
Razzak, Principal of "Anwar-UI-Uloom Degree College (Autonomous)" for the
extended helping hand for the development of our career.
We wish to express our sincere thanks to Dr. Mohammed Ahmed Mohiuddin
H.O.D and our express and sincere thanks to our Project Guide
Ms. RUQIA FATIMA for sharing her valuable dine in providing her valuable
Knowledge, guidance and excellent support for the successful completion of my
project.

We express our sincere thanks to Mr. SATONI BAWEJA of KRISHU

SECURITIES PVT LTD for sharing his valuable time in providing his valuable
suggestions, information and excellent co-operation for the successful completion of
my Project.

We would like to acknowledge, our sincere thanks to all faculty members of "Anwar-
UI-Uloom Degree College (Autonomous)" who have extended helping hand in
giving the information being part of the study. We would like to express our gratitude
for all the people, who extended unending support at all stages of the project.

MD ABDUL SALAM
1062-20-401-705

KHAJA SOFIYAN UDDIN

1062-20-401-708

MOHAMMED ABDUL MALIK

1062-20-401-638

MOHAMMED ANWAR

1062-20-401-706
 ABSTRACT

Venture capital is a unique form of finance capital with special implications for high-
technology economic development. Conventional wisdom suggests that venture
capital will stimulate high-technology development. This is reflected in state policies
that seek to generate local high technology by overcoming regional venture capital
gaps. Here the authors report findings from a two-year study, supported by the U.S.
Economic Development Administration that resulted in a new data base on venture
capital supply and investment. The findings of the research indicate that venture
capital is not sufficient to stimulate high- technology development. In fact, U.S.
venture capital exhibits a strong flow toward established high-technology regions
such as Silicon Valley and Route 128. This fact leads to the conclusion that venture
capitalists are proficient in locating high-technology investment opportunities where
they exist and that, as such, capital gaps are a reflection of underlying structural
weaknesses in an area's technology base. Policymakers should turn their attention
away from finance capital programs and return to the basics of building a strong
technological infrastructure and integrated industrial base.

Venture capital (VC) is money provided to seed early-stage, emerging and emerging
growth companies. Venture capital funds invest in companies in exchange for equity
in the companies they invest in, which usually have a novel technology or business
modelin high technology industries, such as biotechnology and IT. The typical
venture capital investment occurs after a seed funding round as the first round of
institutional capital to fund growth (also referred to as Series A round) in the interest
of generating a return through an eventual exit event, such as an IPO or trade sale of
the company. Venture capital is a type of private equity.
 TABLE OF CONTENTS

CHAPTER NO DESCRIPTION PAGE NO

CHAPTER - I INTRODUCTION 1

CHAPTER - II REVIEW OF LITERATURE 10

CHAPTER - III RESEARCH METHODOLOGY 17

CHAPTER - IV THEORETICAL FRAME WORK 23

CHAPTER – V COMPANY PROFILE 28

CHAPTER - VI DATA ANALYSIS AND INTERPRETATION 34

CHAPTER - VII RESEARCH FINDINGS & SUGGESTIONS 45

CHAPTER -VIII SUGGESTIONS & RECOMMENDATIONS 50

BIBLIOGRAPHY 52
 CHAPTER – I
INTRODUCTION

1
 1.1 INTRODUCTION

The Venture capital sector is the most vibrant industry in the financial market
today. Venture capital is money provided by professionals who invest alongside
management in young, rapidly growing companies that have the potential to develop into
significant economic contributors. Venture capital is an important source of equity for
start-up companies. Venture capital can be visualized as “your ideas and our money”
concept of developing business. Venture capitalists are people who pool financial
resources from high networth individuals, corporates, pension funds, insurance
companies, etc. to invest in high risk - high return ventures that are unable to source funds
from regular channels like banks and capital markets.

Five critical success factors have been identified for the growth of VC in India,
namely:

 The regulatory, tax and legal environment should play an enabling role as
internationally
venture funds have evolved in an atmosphere of structural flexibility, fiscal neutrality
and operational adaptability.
 Resource raising, investment, management and exit should be as simple and flexible
as needed and driven by global trends.
 Venture capital should become an institutionalized industry that protects investors and
investee firms, operating in an environment suitable for raising the large amounts of
risk capital needed and for spurring innovation through start-up firms in a wide range
of high growth areas.
 In view of increasing global integration and mobility of capital it is important that
Indian venture capital funds as well as venture finance enterprises are able to have
global exposure and investment opportunities
 Infrastructure in the form of incubators and R&D need to be promoted using
government support and private management as has successfully been done by
countries such as the US, Israel and Taiwan. This is necessary for faster conversion of
R&D and technological innovation into commercial products.

2
Venture capital is a form of private equity and a type of financing that investors provide
to startup companies and small businesses that are believed to have long-term
growth potential. Venture capital generally comes from well-off investors, investment
banks and any other financial institutions. However, it does not always take a monetary
form; it can also be provided in the form of technical or managerial expertise. Venture
capital is typically allocated to small companies with exceptional growth potential, or to
companies that have grown quickly and appear poised to continue to expand.

Though it can be risky for investors who put up funds, the potential for above-average
returns is an attractive payoff. For new companies or ventures that have a limited
operating history (under two years), venture capital funding is increasingly becoming a
popular – even essential – source for raising capital, especially if they lack access
to capital markets, bank loans or other debt instruments. The main downside is that the
investors usually get equity in the company, and, thus, a say in company decisions.

Venture Capital

Basics of Venture Capital

In a venture capital deal, large ownership chunks of a company are created and sold to a
few investors through independent limited partnerships that are established by venture
capital firms. Sometimes these partnerships consist of a pool of several similar
enterprises. One important difference between venture capital and other private
equity deals, however, is that venture capital tends to focus on emerging companies
seeking substantial funds for the first time, while private equity tends to fund larger, more
established companies that are seeking an equity infusion or a chance for company
founders to transfer some of their ownership stakes.

KEY TAKEAWAYS

 Venture capital financing is funding provided to companies and entrepreneurs. It

can be provided at different stages of their evolution.
 It has evolved from a niche activity at the end of the Second World War into a
sophisticated industry with multiple players that play an important role in spurring
innovation.

History of Venture Capital

Venture capital is a subset of private equity (PE). While the roots of PE can be traced
back to the 19th century, venture capital only developed as an industry after the Second
World War. Harvard Business School professor Georges Doriot is generally considered
the "Father of Venture Capital". He started the American Research and Development
Corporation (ARDC) in 1946 and raised a $3.5 million fund to invest in companies that
commercialized technologies developed during WWII. ARDC's first investment was in a
company that had ambitions to use x-ray technology for cancer treatment. The $200,000
that Doriot invested turned into $1.8 million when the company went public in 1955.

Location of the VC
Although it was mainly funded by banks located in the Northeast, venture capital became
concentrated on the West Coast after the growth of the tech ecosystem. Fairchild
Semiconductor, which was started by the traitorous eight from William Shockley's lab, is
generally considered the first technology company to receive VC funding. It was funded
by east coast industrialist Sherman Fairchild of Fairchild Camera & Instrument Corp.

3
Arthur Rock, an investment banker at Hayden, Stone & Co. in New York City, helped
facilitate that deal and subsequently started one of the first VC firms in Silicon Valley.
Davis & Rock funded some of the most influential technology companies, including Intel
and Apple. By 1992, 48% of all investment dollars were on the West Coast and the
Northeast coast accounted for just 20%. According to the latest data from Pitchbook and
National Venture Capital Association (NVCA), the situation has not changed much.
During the third quarter of 2020, west coast companies accounted for 38.3% of all deals
(and a massive 54.7% of deal value) while the Mid-Atlantic region had 20.4% of all deals
(or approximately 20.1% of all deal value).

Help From Innovations

A series of regulatory innovations further helped popularize venture capital as a funding
avenue. The first one was a change in the Small Business Investment Act (SBIC) in 1958.
It boosted the venture capital industry by providing tax breaks to investors. In 1978, the
Revenue Act was amended to reduce the capital gains tax from 49.5% to 28%. Then, in
1979, a change in the Employee Retirement Income Security Act (ERISA) allowed
pension funds to invest up to 10% of their total funds in the industry.

Called the Prudent Man Rule, it is hailed as the single most important development in
venture capital because it led to a flood of capital from rich pension funds. Then the
capital gains tax was further reduced to 20% in 1981. Those three developments catalyzed
growth in venture capital and the 1980s turned into a boom period for venture capital,
with funding levels reaching $4.9 billion in 1987. The dot com boom also brought the
industry into sharp focus as venture capitalists chased quick returns from highly-valued
Internet companies. According to some estimates, funding levels during that period
peaked at $119.6 billion. But the promised returns did not materialize as several publicly-
listed Internet companies with high valuations crashed and burned their way to
bankruptcy.

Krishu Investors
For small businesses, or for up-and-coming businesses in emerging industries, venture
capital is generally provided by high net worth individuals (HNWIs) – also often known
as ‗Krishu investors‘ – and venture capital firms. The National Venture Capital
Association (NVCA) is an organization composed of hundreds of venture capital firms
that offer to fund innovative enterprises.

Krishu investors are typically a diverse group of individuals who have amassed their
wealth through a variety of sources. However, they tend to be entrepreneurs themselves,
or executives recently retired from the business empires they've built.

Self-made investors providing venture capital typically share several key characteristics.
The majority look to invest in companies that are well-managed, have a fully-
developed business plan and are poised for substantial growth. These investors are also
likely to offer to fund ventures that are involved in the same or similar industries or
business sectors with which they are familiar. If they haven't actually worked in that field,
they might have had academic training in it. Another common occurrence among Krishu
investors is co-investing, where one Krishu investor funds a venture alongside a trusted
friend or associate, often another Krishu investor.

The Venture Capital Process

The first step for any business looking for venture capital is to submit a business plan,
either to a venture capital firm or to an Krishu investor. If interested in the proposal, the

4
firm or the investor must then perform due diligence, which includes a thorough
investigation of the company's business model, products, management, and operating
history, among other things.

Since venture capital tends to invest larger dollar amounts in fewer companies, this
background research is very important. Many venture capital professionals have had prior
investment experience, often as equity research analysts; others have a Master in Business
Administration (MBA) degrees. Venture capital professionals also tend to concentrate in
a particular industry. A venture capitalist that specializes in healthcare, for example, may
have had prior experience as a healthcare industry analyst.

Once due diligence has been completed, the firm or the investor will pledge an
investment of capital in exchange for equity in the company. These funds may be
provided all at once, but more typically the capital is provided in rounds. The firm or
investor then takes an active role in the funded company, advising and monitoring its
progress before releasing additional funds.

The investor exits the company after a period of time, typically four to six years after the
initial investment, by initiating a merger, acquisition or initial public offering (IPO).

A Day In The Life

Like most professionals in the financial industry, the venture capitalist tends to start his or
her day with a copy of The Wall Street Journal, the Financial Times and other respected
business publications. Venture capitalists that specialize in an industry tend to also
subscribe to the trade journals and papers that are specific to that industry. All of this
information is often digested each day along with breakfast.

For the venture capital professional, most of the rest of the day is filled with meetings.
These meetings have a wide variety of participants, including other partners and/or
members of his or her venture capital firm, executives in an existing portfolio company,
contacts within the field of specialty and budding entrepreneurs seeking venture capital.

At an early morning meeting, for example, there may be a firm-wide discussion of

potential portfolio investments. The due diligence team will present the pros and cons of
investing in the company. An "around the table" vote may be scheduled for the next day
as to whether or not to add the company to the portfolio.

An afternoon meeting may be held with a current portfolio company. These visits are
maintained on a regular basis in order to determine how smoothly the company is running
and whether the investment made by the venture capital firm is being utilized wisely. The
venture capitalist is responsible for taking evaluative notes during and after the meeting
and circulating the conclusions among the rest of the firm.

After spending much of the afternoon writing up that report and reviewing other market
news, there may be an early dinner meeting with a group of budding entrepreneurs who
are seeking funding for their venture. The venture capital professional gets a sense of
what type of potential the emerging company has, and determines whether further
meetings with the venture capital firm are warranted.

After that dinner meeting, when the venture capitalist finally heads home for the night,
they may take along the due diligence report on the company that will be voted on the

5
next day, taking one more chance to review all the essential facts and figures before the
morning meeting.

Trends in Venture Capital

The first venture capital funding was an attempt to kickstart an industry. To that end,
Doriot adhered to a philosophy of actively participating in the startup's progress. He
provided funding, counsel, and connections to entrepreneurs.

An amendment to the SBIC Act in 1958 led to the entry of novice investors, who
provided little more than money to investors. The increase in funding levels for the
industry was accompanied by a corresponding increase in the numbers for failed small
businesses. Over time, VC industry participants have coalesced around Doriot's original
philosophy of providing counsel and support to entrepreneurs building businesses.

Growth of Silicon Valley

Due to the industry's proximity to Silicon Valley, the overwhelming majority of deals
financed by venture capitalists are in the technology industry. But other industries have
also benefited from VC funding. Notable examples are Staples and Starbucks, which both
received venture money. Venture Capital is also no longer the preserve of elite firms.
Institutional investors and established companies have also entered the fray. For example,
tech behemoths Google and Intel have separate venture funds to invest in emerging
technology. Starbucks also recently announced a $100 million venture fund to invest in
food startups.

With an increase in average deal sizes and the presence of more institutional players in
the mix, venture capital has matured over time. The industry now comprises an
assortment of players and investor types who invest in different stages of a startup's
evolution, depending on their appetite for risk.

Hit From the 2008 Financial Crisis

The 2008 financial crisis was a hit to the venture capital industry because institutional
investors, who had become an important source of funds, tightened their purse strings.
The emergence of unicorns, or startups that are valued at more than a billion dollars, has
attracted a diverse set of players to the industry. Sovereign funds and notable private
equity firms have joined the hordes of investors seeking return multiples in a low-interest
rate environment and participated in large ticket deals. Their entry has resulted in changes
to the venture capital ecosystem.

Growth in Dollars
Data from the NVCA and PitchBook indicated that VC firms funded US$131 billion
across 8949 deals in 2020. That figure represented a jump of more than 57% from the
previous year. But the increase in funding did not translate into a bigger ecosystem as
deal count, or the number of deals financed by VC money fell by 5%. Late-stage
financing has become more popular because institutional investors prefer to invest in less-
risky ventures (as opposed to early-stage companies where the risk of failure is high).
Meanwhile, the share of Krishu investors has remained constant or declined over the
years.

1. SELECTION OF VENTURE CAPITAL FUND

After the business plan is completed, the next step is to select the venture capital fund,
which is suitable to your proposal. The entrepreneur should first ascertain as to the

6
investment strategy of the VC with regards to the sector in which the VC is interested as
well as the stage at which he chooses to fund the project. Based on this information the
entrepreneur should shortlist the suitable VCs who match his requirement and then
approach them.

Financing from venture capital funds is available at various stages and different VCs
provide funding in some or all of the stages. The various stages of financing are detailed
below.

Stages of Financing
Venture capital can be provided to companies at different stages. These include:

I. Early-stage Financing
 Seed Financing: Seed financing is provided for product development &
research and to build a management team that primarily develops the business
plan.

 Startup Financing: After initial product development and research is through,

startup financing is provided to companies to organise their business, before
the commercial launch of their products.

 First Stage Financing: Is provided to those companies that have expended

their initial capital and require funds to commence large-scale manufacturing
and sales.

II. Expansion Financing

 Second Stage Financing: This type of financing is available to provide
working capital for initial expansion of companies, that are experiencing
growth in accounts receivable and inventories, and is on the path of
profitability.

 Mezzanine Financing: When sales volumes increase tremendously, the

company, through mezzanine financing is provided with funds for further

7
 plant expansion, marketing, working capital or for development of an
improved product.

 Bridge Financing: Bridge financing is provided to companies that plan to go

public within six to twelve months. Bridge financing is repaid from
underwriting proceeds.

VENTURE CAPITAL INVESTMENT PROCESS

In generating a deal flow, the venture capital investor creates a pipeline of ‗deals‘ or
investment opportunities that he would consider investing in. This is achieved primarily
through plugging into an appropriate network. The most popular network obviously is the
network of venture capital funds/investors. It is also common for venture capitals to
develop working relationships with R&D institutions, academia, etc, which could
potentially lead to business opportunities.

Understandably the composition of the network would depend on the investment focus of
the venture capital funds/company. Thus venture capital funds focussing on early stage
technology based deals would develop a network of R&D centers working in those areas.
The network is crucial to the success of the venture capital investor. It is almost
imperative for the venture capital investor to receive a large number of investment
proposals from which he can select a few good investment candidates finally.

First, you need to work out a business plan. The business plan is a document that outlines
the management team, product, marketing plan, capital costs and means of financing and
profitability statements.

1. Initial Evaluation: This involves the initial process of assessing the feasibility of the
project.

2. Due diligence: In this stage an in-depth study is conducted to analyse the feasibility
of the project.

3. Deal structuring and negotiation: Having established the feasibility, the instruments
that give the required return are structured.

8
4. Investment valuation

5. Documentation: This is the process of creating and executing legal documents to

protect the interest of the venture.

6.Monitoring and Value addition: In this stage, the project is monitored by executives
from the venture fund and undesirable variations from the business plan are dealt with.

7.Exit: This is the final stage where the venture capitalist devises a method to come out
of the project profitably.

9
 CHAPTER – II
REVIEW OF LITERATURE

10
 INTRODUCTION TO VENTURE CAPITAL

Venture Capital is defined as providing seed, start-up and first stage finance to companies
and also funding expansion of companies that have demonstrated business potential but
do not have access to public securities market or other credit oriented funding institutions.

Venture Capital is generally provided to firms with the following characteristics:

 Newly floated companies that do not have access to sources such as equity capital
and/or other related instruments.
 Firms, manufacturing products or services that have vast growth potential.
 Firms with above average profitability.
 Novel products that are in the early stages of their life cycle.
 Projects involving above-average risk.
 Turnaround of companies.

Venture Capital derives its value from the brand equity, professional image, constructive
criticism, domain knowledge, industry contacts, they bring to table at a significantly
lower management agency cost.

A Venture Capital Fund (VCF) strives to provide entrepreneurs with the support they
need to create up-scalable business with sustainable growth, while providing their
contributors with outstanding returns on investment, for the higher risks they assume.

The three primary characteristics of venture capital funds which make them
eminently suitable as a source of risk finance are:
 that it is equity or quasi equity investment
 it is long term investment and
 it is an active form of investment.

Difference between a Venture Capitalist and Bankers/Money Managers

 Banker is a manager of other people's money while the venture capitalist is basically
an investor.

11
 Venture capitalist generally invests in new ventures started by technocrats who
generally are in need of entrepreneurial aid and funds.

 Venture capitalists generally invest in companies that are not listed on any stock
exchanges. They make profits only after the company obtains listing.

 The most important difference between a venture capitalist and conventional investors
and mutual funds is that he is a specialist and lends management support and also
• Financial and strategic planning
• Recruitment of key personnel
• Obtain bank and other debt financing
• Access to international markets and technology
• Introduction to strategic partners and acquisition targets in the region
• Regional expansion of manufacturing and marketing operations
• Obtain a public listing

Difference between Venture Finance & Debt Finance

Venture Finance Debt Finance

Interest payment
Objective Maximize Return

Holding Period 2-5 years Short/Long term

Common shares, Convertible bonds,
Instruments Loan, Factoring,leasing
Options, Warrants
Pricing Price earnings ratio, net tangible assets Interest spread

Collateral Very Rare Yes

Ownership Yes No
Minority shareholders, rights protection,
Control Covenants
board members
Impact on B/S Reduced Leverage Increased Leverage
Public offering, Sale to third party, Sale to
Exit Mechanism Loan repayment
entrepreneur

12
CATEGORIZATION OF VC INVESTORS
The "venture funds" available could be from
 Incubators
 Krishu Investors
 Venture Capitalists (VCs)
 Private Equity Players

Incubators
An incubator is a hardcore technocrat who works with an entrepreneur to develop a
business idea, and prepares a Company for subsequent rounds of growth & funding.
eVentures, Infinity are examples of incubators in India.

Krishu Investors
An Krishu is an experienced industry-bred individual with high net worth.
Typically, an Krishu investor would:
 invest only his chosen field of technology
 take active participation in day-to-day running of the Company
 invest small sums in the range of USD 1 - 3 million
 not insist on detailed business plans
 sanction the investment in up to a month
 help company for "second round" of funding

Venture Capitalists (VCs)

VCs are organizations raising funds from numerous investors & hiring experienced
professional mangers to deploy the same. They typically:
 invest at ―second‖ stage
 invest over a spectrum over industry/ies
 have hand-holding ―mentor‖ approach
 insist on detailed business plans
 invest into proven ideas/businesses
 provide ―brand‖ value to investee
 invest between USD 2 – 5 million
Private Equity Players
They are established investment bankers. Typically:
13
  invest into proven/established businesses
 have ―financial partners‖ approach
 invest between USD 5 –100 million

CLASSIFICATION OF VENTURE FUNDS

Venture funds in India can be classified on the basis of

 Base formation
Financial Institutions
1. Private venture funds like Indus, etc.
2. Regional funds like Warburg Pincus, JF Electra (mostly operating out of Hong
Kong).
3. Regional funds dedicated to India like Draper, Walden, etc
4. Offshore funds like Barings, TCW, HSBC, etc.
5. Corporate ventures like Intel.

To this list we can add Krishus like Sivan Securities, Atul Choksey (ex Asian Paints)
and others. Merchant bankers and NBFCs who specialized in "bought out" deals also
fund companies. Most merchant bankers led by Enam Securities now invest in IT
companies.

 Invested Amount
The amount invested is generally between US$1mn or US$10mn. As most funds are
of a private equity kind, size of investments has been increasing. IT companies
generally require funds of about Rs30-40mn in an early stage which fall outside
funding limits of most funds and that is why the government is promoting schemes to
fund start ups in general, and in IT in particular.

14
 Investment Philosophy
Early stage funding is avoided by most of the venture capital firms since the amount
of risk associated with it is higher and private capital cannot be invested. So to bring
down this gap the seed capital or the early stage financing is provided by ICICI,
Draper, SIDBI etc.

 Value Addition
The infusion of funds by overseas funds, private individuals, ‗Krishu‘ investors and a
host of financial intermediaries and the total pool of Indian Venture Capital today,
stands at Rs50bn, according to industry estimates. In the last two years, there have
been just 74 initial public offerings (IPOs) at the stock exchanges, leading to an
investment of just Rs14.24bn. That‘s less than 12% of the money raised in the
previous two years. That makes the conservative estimate of Rs36bn invested in
companies through the Venture Capital/Private Equity route all the more significant.

 Consortium Financing
Where the project cost is high (Rs 100 million or more) and a single fund is not in a
position to provide the entire venture capital required then venture funds may act in
consortium with other funds and take a lead in making investment decisions. This
helps in diversifying risk but however it has not been very successful in the India
case.

Some of the companies that have received funding through this route include:
 Mastek one of the oldest software houses in India

 Geometric Software a producer of software solutions for the CAD/CAM market

 SQL Star, Hyderabad based training and software development company

 Satyam Infoway, the first private ISP in India
 Rediff on the Net, Indian website featuring electronic shopping, news, chat, etc
 Planetasia.com, Microland‘s subsidiary, one of India‘s leading portals
 Torrent Networking, pioneer of Gigabit-scaled IP routers for inter/intra nets
 Selectica, provider of interactive software selection
 Yantra, ITLInfosys‘ US subsidiary, solutions for supply chain management.

15
The infotech companies are the most favored by venture capitalists, companies from other
sectors also feature equally in their portfolios. The other sectors such as pharmaceutical,
medical appliances and biotechnology industries also get much preference. With the
deregulation of the telecom sector, telecommunications industries have joined the list of
favorites. However, recent developments have shown that India is maturing into a more
developed marketplace, unconventional investments in a gamut of industries have sprung
up all over the country.

1. INITIAL EVALUATION:

Before any in depth analysis is done on a project, an initial screening is carried out to
satisfy the venture capitalist of certain aspects of the project. These include

 Competitive aspects of the product or service

 Outlook of the target market and their perception of the new product
 Abilities of the management team
 Availability of other sources of funding
 Expected returns
 Time and resources required from the venture capital firm

Through this screening the venture firm builds an initial overview about the

 Technical skills, experience, business sense, temperament and ethics of the

promoters
 The stage of the technology being used, the drivers of the technology and the
direction in which it is moving.
 Location and size of market and market development costs, driving forces of the
market, competitors and share, distribution channels and other market related
issues
 Financial facts of the deal
 Competitive edge available to the the company and factors affecting it
significantly
 Advantages from the deal for the venture capitalist
 Exit options available

16
 CHAPTER – III
RESEARCH METHODOLOGY

17
 NEED OF THE STUDY
1. The venture capital industry in India has really taken off in.
2. Venture capitalists not only provide monetary resources but also help the
entrepreneur with guidance in formalizing his ideas into a viable business venture.
With technology and knowledge based ideas set to drive the global economy in
the coming millennium, and given the inherent strength by way of its human
capital, technical skills, cost competitive workforce, research and
entrepreneurship,
3. India can unleash a revolution of wealth creation and rapid economic growth in a
sustainable manner.
4. However, for this to happen, there is a need for risk finance and venture capital
environment which can leverage innovation, promote technology and harness
knowledge based ideas.
5. Don‘t have dedicated revenue streams

6. Don‘t have enough customers and need to market

7. Spend a lot on technology to build a great product

18
 OBJECTIVES OF THE STUDY

1. To understand the concept of Venture Capital

2. To understand the importance of Venture Capital in developing countries like

India.

3. To study the trend of Venture Capital deals in India over the last five years.

4. To study the Top Sectors and Top Companies attracting Venture Capital in 2021.

5. To review the major institutions providing Venture Capital in India.

6. To suggest measures for increasing the growth of Venture Capital in India

19
 SCOPE OF THE STUDY

1. The study of Venture Capital trends in India will be helpful in understanding the
concept of Venture Capital and to understand the importance of Venture Capital
in developing countries like India.

2. The study will also throw light on the major institutions providing Venture
Capital in India.

3. The review of trend of Venture Capital deals in India will help the VC firms to
identify the developing sectors in the country.

4. The report will also help the start up companies in identifying the Venture Capital
firms which can provide financing for their growth.

5. When the firm is set up to manufacture a product or provide a service, start up

finance provide by the venture capitalist.

6. The firm has made headway and entered the stage of manufacturing a product but
faces teething problems

20
 LIMITATIONS
Though the project is completed successfully a few limitations may be there.

1. Since the procedure and policies of the company will not allow disclosing
confidential financial information, the project has to be completed with the
available data given to us.

2. The period of study that is 6 weeks is not enough to conduct detailed study
of the project.

3. The study is carried basing on the information and documents provided by

the Organization and based on the interaction with the various employees.

4. Benefits from such investments may be realized in the long run.

5. Suppliers of venture capital invest money in the form of equity capital.
6. As investment is made through equity capital, the suppliers of venture capital
participate in the management of the company.

21
 RESEARCH METHODOLOGY

Ho. There is no difference between observed and expected frequencies.

H1: there i s difference between observation and expectation

Methodology is a systematic procedure of collecting information in order to
analyze and verify a phenomenon. The collection of information is done through
two principal sources.

1. Primary Data.

2. Secondary Data.

PRIMARY DATA

It is the information collected directly from operations team for further studies. It
was mainly through interviews with concerned officers and staff, either
individually or collectively, sum of the information has been verified or
supplemented with personal observation.

SECONDARY DATA

This is taken from the annual reports, websites, company journals, magazines and
other sources of information.

Proposed statistical Tools for the study

Descriptive statistics- mode , percentages, frequencies, bar graphs and pie charts

Mann-Whitney Test

Correlation Analysis

Chi-square

Ratio Analysis

TOOLS USED IN THE ANALYSIS

 Statistical tools

 Financial tools

Research gap

Period of study
4 years data Time gap 2016 completed study from 2016_2021

22
 CHAPTER – IV
THEORETICAL FRAME WORK

23
Venture capital defined
Simply put, VC firms comprise minority investors that bet on the future growth of early-
stage firms. These are often pre-profit, pre-revenue, and sometimes even pre-product
startups. Despite lack of a controlling stake, VCs use their capital, experience,
knowledge, and networks to nurture and grow companies. They may invest in specific
verticals, technologies, and geographies and often specialize in a particular substage of
investment, referred to as early-stage, growth-stage or late-stage VC funding. Although
every VC company is unique, few defining attributes apply to most, as detailed below.
How, when, and why did the VC industry emerge
To get the full picture let us go around 200 years back. Before the introduction of
shareholders‘ limited liability, which took place 1811 in the State of New York, lending
money was considered much safer than buying shares and investing in equity was indeed
marginal. Even afterwards with reliable information systems available, buying stocks in
new ventures remained a privilege for the wealthy. The general public preferred to own
shares in existing, listed companies making it difficult for entrepreneurs to advertise their
new ventures. The solution to the situation came from the US government during World
War II. Although the American military was in desperate need of researchers, it was
unable to lure them as they preferred to join academia rather than enroll in the military.
The solution in the form of allocating public funds to the best universities in the country
was introduced, and elite universities on the East Coast started receiving vast amounts of
money dedicated to research related to the military interests.
After the war ended, a new challenge arose: US industry had to convert from
manufacturing weapon systems to manufacturing consumer goods. In the meantime, a
few wealthy families created their own investment firms trying to take advantage of
opportunities created by the end of the wartime economy. Families such as The Whitneys
founding J.H. Whitney & Co. and the Rockefellers with Rockefeller Brothers, Inc. took
investing in technology companies to the next level and paved the way for development
of private equity as an asset class. The firms, rather than acting as co-investors like old-
fashioned merchant bankers, began hiring professional management teams that took
charge of sourcing opportunities, evaluating risks, and negotiating deals on behalf of their
shareholders. Shortly after, in 1946, Georges Doriot, now considered ―the father of
venture capital‖, established the first self-proclaimed venture capital firm: the American
Research & Development Corporation (ARD). As a public company, ARD was able to
attract institutional investors in private equity for the first time. Unfortunately, the

24
misalignment between shareholders and management resulted in only a few profitable
investments for ARD and its shareholders.
Another major turning point was the Small Business Investment Act of 1958, which was
part of a response to Soviet Union‘s launch of the Sputnik. The act allowed the
government to lend money to newly formed investment firms called Small Business
Investment Companies (SBIC). Although many of its goals were not achieved, it helped
younger management teams to start up their businesses and improved evaluation methods
of risks in the technology field, giving rise to legendary venture capitalists like Franklin
―Pitch‖ Johnson. Additionally, a limited partnership legal form was introduced around the
same time along with carried interest to incentivize managing partners and thus solve the
previously mentioned misalignment problem between shareholders and management.
With now less paperwork and better understanding between limited partners and
managing partners, venture capital started growing and finally in 1972 Kleiner Perkins
Caufield & Byers – largest and most established venture capital firm – was founded.
Soon afterwards, the Department of Labor introduced new regulation which allowed
pension funds to invest directly in venture capital funds, thus opening the doors for
significant amounts of new capital. The number of firms increased from just a few dozen
at the start of the 1970s to over 650 firms by the end of the 1980s while the capital
managed by these firms grew from $3bn to $31bn. However, in the mid 80s returns began
to decline and some of the venture firms started facing losses for the first time. It came as
a result of increased competition among firms, declining market of initial public offerings
and foreign corporations, mainly from Japan and Korea, bringing in capital for early-stage
companies. At the time, newly emerging leveraged buyouts attracted billions while
venture capital deals were still counted in millions and the growth in the industry
remained limited.
Early 1990s brought a change as investors saw companies with huge potential being
formed. The well-known giants such as Google, Netscape, Amazon and Yahoo! were all
funded by venture capital before any of them turned a profit and IPOs of AOL, Netcom,
Spyglass, CompuServe and Amazon among others, generated enormous returns for their
venture capital investors. Following these successes, the amount of money committed to
the sector climbed from $1.5bn in 1991 to more than $90bn in 2000. Unfortunately, the
bursting of the Dot-com bubble in 2000 impacted the entire venture capital industry as
valuations for technology startups collapsed causing many venture capital firms to fail.
The 21st century saw the global development of venture capital which can be observed on
the graph below. The deepest and most developed VC ecosystems can still be found in the

25
US, Silicon Valley in particular, but other parts of the world such as China, India, Europe
and Israel have seen active clusters emerging. On the other hand, in the US, part of a
growing wave of VC professionals began leaving the congested, costly coasts for quieter,
less expensive locations in Montana, Nebraska, New Mexico and North Carolina. This
comes as a result of entrepreneurs not being forced to relocate to California or New York
to build their businesses as startup ecosystems have experienced a surge in small
businesses spread more evenly across the US. Yet, as for now 67% of VC firms are still
located in the San Francisco Bay Area, New York and Boston metro areas and cities such
as Chicago, Los Angeles, Seattle, and Washington. These combined hold 85% of US
assets under management.
Incubators, first gaining traction in the late 1960s with ‗Idealab‘, created a subsector of
early-stage financing, called ‗incubation industry‘. This involved more service-focused
support, where portfolio firms wouldn‘t necessarily receive funding. This worked well in
parallel with venture capital and therefore spawned a whole aspect of startup consultancy,
which has diverted significantly from the core raison d‘être of capital provision towards
service provision to decrease the startup failure rate. As such, most business incubators,
while influencing VC firms to be more hands-on, did not fundamentally change VC as an
industry.
Growth of the Incubator Ecosystems
In the UK for instance, this ecosystem has grown rapidly, with government estimates
from post-Brexit Britain suggesting that there are currently over 300 incubators directly
working with 12,000+ businesses, providing an ecosystem for growth without a guarantee
of funding or hands-on service provision.
Formation of Accelerators
Accelerators grew to form a bridge between the early-stage work of incubators, venture
capital firms and later-stage PE funding. Unlike incubators, which existed to help early-
stage ideas develop, accelerators provided access to investors, support and mentorship to
stabilise businesses, with most business accelerator companies being post-MVP stage
startups hoping to enter the next stage of their lifetime. Acceleration, like incubation,
varied significantly from venture capital‘s core investment focus, as the main premise laid
in the provision of service or service in kind, rather than financing. At the same time,
most accelerators (with notable exceptions) would also take a stake in the company‘s
ownership, usually ranging between 7–10%.
Powered by an increasing number of startups, this complementary industry to venture
capital has thus also grown significantly all over the world. As suggested by Ester, driven

26
by the success of the startup-accelerator-vc relationship in the US, and especially in
Silicon Valley, accelerators have been appearing all over the world and scaling their
operations. Just using the UK as an example, the number of startups going through
accelerators has grown from 1,100 in 2014 to 3,660+ by 2017, even as new models of
product-specific or BD specific accelerators have been introduced driven by the # of
successful track records of Y Combinator and TechStars, with accelerators like Newchip
Accelerator and Open Water Accelerator — bootstrapped remote accelerators, operating
with firms across the world and deploying predominantly human capital to grow already
‗established‘ startups, showcasing the latest evolution in the VC — Accelerator crossover
space. While the benefits of such crossover in the de-risking area clear, not all VCs have
accepted the value in adopting acceleration methodologies. That said, based on the
growing adoption of synergies between the Accelerator and VC models, it seems likely
that more VCs will pick up elements of accelerator support, even as more accelerators
seek to develop a financing arm.

27
 CHAPTER - V
COMPANY PROFILE

28
Krishu Securities Private Limited is a Private incorporated on 11 July 2021. It is
classified as Non-govt company and is registered at Registrar of Companies, Kolkata. Its
authorized share capital is Rs. 1,000,000 and its paid up capital is Rs. 200,000. It is
inolved in Monetary Intermediation [This group includes the obtaining of funds in the
form of deposits]

Krishu Securities Private Limited's Annual General Meeting (AGM) was last held on N/A
and as per records from Ministry of Corporate Affairs (MCA), its balance sheet was last
filed on N/A.
Directors of Krishu Securities Private Limited are Susmita Bhowmick and Aparna
Ghoshal.

Krishu Securities Private Limited's Corporate Identification Number is (CIN)

U65100WB2021PTC237958 and its registration number is 237958.Its Email address is
susmitabhowmick16@gmail.com and its registered address is C/O SUSMITA
BHOWMICK 72 GANDI PARA ROAD P.O. KODALIA KOLKATA Kolkata WB
700147 IN , - , .

Current status of Krishu Securities Private Limited is - Active.

Company Details

CIN U65100WB2021PTC237958

Company Name KRISHU SECURITIES PRIVATE LIMITED

Company Status Active

RoC RoC-Kolkata

Registration 237958
Number

Company Company limited by Shares

Category

Company Sub Non-govt company

29
CIN U65100WB2021PTC237958

Category

Class of Private
Company

Date of 11 July 2021

Incorporation

Age of 0 years, 7 month, 1 days

Company

Activity Monetary Intermediation [This group includes the

obtaining of funds in the form of deposits]
Click here to see other companies involved in
same activity.

PRODUCTS AND SERVICES

We are a one-stop financial services shop, most respected for quality of its advice,
personalized service and cutting-edge technology.

Equities
Krishu Securities provided the prospect of researched investing to its clients,
which was hitherto restricted only to the institutions. Research for the retail investor did
not exist prior to CD. CD leveraged technology to bring the convenience of trading to the
investor‘s location of preference (residence or office) through computerized access. CD
made it possible for clients to view transaction costs and ledger updates in real time.

PMS
Our Portfolio Management Service is a product wherein an equity investment
portfolio is created to suit the investment objectives of a client. We at Krishu Securities
invest your resources into stocks from different sectors, depending on your risk-return
profile. This service is particularly advisable for investors who cannot afford to give time
or don't have that expertise for day-to-day management of their equity portfolio.

Research

30
 Sound investment decisions depend upon reliable fundamental data and stock
selection techniques. Krishu Securities Equity Research is proud of its reputation for, and
we want you to find the facts that you need. Equity investment professionals routinely use
our research and models as integral tools in their work. They choose Ford Equity
Research when they can clear your doubts.

Commodities
Krishu Securities extension into commodities trading reconciles its strategic intent
to emerge as a one-stop solutions financial intermediary. Its experience in securities
broking has empowered it with requisite skills and technologies. The Company‘s
commodities business provides a contra-cyclical alternative to equities broking. The
company was among the first to offer the facility of commodities trading in India‘s young
commodities market (the MCX commenced operations only in 2003). Average monthly
turnover on the commodity exchanges increased from Rs 0.34 bn to Rs 20.02 bn. The
commodities market has several products with different and non-correlated cycles. On the
whole, the business is fairly insulated against cyclical gyrations in the business.

Invest Online
Krishu Securities has made investing in Mutual funds and primary market so
effortless. All you have to do is register with us and that‘s all. No paperwork no queues
and No registration charges.

INVEST IN Mutual Fund

Krishu Securities offers you a host of mutual fund choices under one roof,
backed by in-depth research and advice from research house and tools configured as
investor friendly.

APPLY IN IPOs
You could also invest in Initial Public Offers (IPO‘s) online without going
through the hassles of filling ANY application form/ paperwork

Insurance

31
 An entry into this segment helped complete the client‘s product basket;
concurrently, it graduated the Company into a one-stop retail financial solutions provider.
To ensure maximum reach to customers across India, we have employed a multi pronged
approach and reach out to customers via our Network, Direct and Affiliate channels.
Following the opening of the sector in 1999-2000, a number of private sector insurance
service providers commenced operations aggressively and helped grow the market. The
company‘s entry into the insurance sector de-risked the company from a predominant
dependence on broking and equity-linked revenues. The annuity based income generated
from insurance intermediation result in solid core revenues across the tenure of the
policy.

Wealth Management Service

Imagine a financial firm with the heart and soul of a two-person organization. A
world-leading wealth management company that sits down with you to understand your
needs and goals. We offer you a dedicated group for giving you the most personal
attention at every level.

ROLES AND RESPONCIBILITIES IN ORGANISATION:

We will give updates to customers in

 Economic Outlook and Updates

 Sector & Company Reports
 Technical Recommendations
 Daily Market Report
 Daily Technical Outlook
 Reports on New Fund Offerings
 Weekly analysis of mutual funds – Fund Focus
 Weekly debt report: Debt Dose

Offer daily technical calls through SMS to our clients

KEY LEARNINGS IN ORGANISATION:

 EQUITY
 MUTUAL FUNDS
 TAX SAVENGS SCHEMES IN MUTUAL FUNDS
32
  ONLINE AND OFFLINE TRADING
 IPO (INITIAL PUBLIC OFFER)
 DERIVATIVES
 FOREX MARKET
 CURRENCY
 COMMODITIES

SWOT ANALYSIS
A SWOT analysis focuses on the internal and external environments, examining
strengths and weaknesses in the internal environment and opportunities and threats in the
external Environment

STRENGTH
· Service· Distribution network · Marketing· Products

WEAKNESS
· Customer Satisfaction· Branding· Competition from Banks

OPPORTUNITIES
· Ever increasing market· Improving technology · Unfulfilled needs
of Customers· Education level

THREATS
· New competitors· Technology based business

33
 CHAPTER - VI

DATA ANALYSIS &

INTERPRETATION

34
CUMULATIVE NET INVESTMENTS BY ALL VENTURE CAPITAL
FUNDS AT THE END OF THE QUARTER

Cumulative net Cumulative net

investments by all investments by all
VCFs as at the end FVCIs at the end of
of the quarter(Rs. in the quarter(Rs. in Total investment
Quarter Crore) Crore) (Rs. in Crore)

Mar-2020 18731 29352 48083

Jun-2020 22069 31291 53360
Sep-2020 23657 33782 57439
Dec-2020 23804 34022 57826
Mar-2021 26468 36485 62953
Jun-2021 27223 38099 65322
Sep-2021 28008 38747 66755
Dec-2021 28630 39952 68582

80000
70000
Cumulative net
60000 investments by all VCFs
as at the end of the
50000
quarter(Rs. in Crore)
40000 Cumulative net
investments by all FVCIs
30000 at the end of the
quarter(Rs. in Crore)
20000
Total investment (Rs. in
10000 Crore)
0
Sep-21
Nov-21
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21

35
 INDUSTRY WISE CUMULATIVE INVESTMENT DETAILS OF SEBI
REGISTERED VENTURE CAPITAL FUNDS (VCF) AND FOREIGN CAPITAL
INVESTORS (FVCI)

as on December 31, 2021

Particulars (Rs. in Crore)
Sectors of Economy VCF FVCI Rs in Cr.
Information Technology 578 3813 4391
Telecommunication 1185 6778 7963
Pharmaceuticals 469 775 1244
Biotechnology 188 140 328
Media/Entertainment 911 720 1631
Services Sector 1443 2256 3699
Industrial Products 1110 1217 2327
Real estate 9373 2725 12098
Others 12336 20307 32643
Total 27592 38730 56868

25000

20000

15000

10000

5000 VCF
FVCI
0

INTERPRETATION:
It is clear from the above presentation that, the VCF and FVCI in 2021 has proved to be
good for real estate sector. However, the other sectors also showed good investments but
trailing to real estate, services sector show good mark then telecommunications and then
industrial products sector. Also, Media and IT sector also witnessed a good investment,
later with pharmaceuticals and biotechnology sectors.

36
 MOST ACTIVE VENTURE CAPITAL FIRMS IN 2021

S.No Parameter Amount in $

1 Sequoia Capital India

$80.60
2 Intel Capital
$77.30
3 Nexus Venture Partners
$73.00
4 Canaan Partners
$67.30
5 Tiger Global Management
$56.90

$90.00
$80.00
$70.00
$60.00
$50.00
$40.00
$30.00
$20.00
$10.00 Series1
$0.00

Sequoia Capital India $80.60 million):

Sequoia Capital, the US-based marquee venture capital firm which backed companies like
Google and Apple, kept up the investment pace in spite of the departure of all four
founding MDs of its India office. The venture capital firm, currently investing from a
$300 million fund raised in 2010, continued to invest in the e-commerce space besides
focusing on areas like mobile and healthcare. Most recently, Sequoia invested $4 million
in Freecultr, an apparel e-com venture backed by the Smile Group. It also completed
several follow-on rounds in 2020. While the venture firm is focusing on India consumer
Internet, it also has a big focus area of Cloud and Big Data globally.

37
Intel Capital $77.30 million):

The corporate venture capital arm of the world‘s largest chipmaker Intel Corporation had
a fairly busy 2020. Besides closing nearly half a dozen deals, Intel Capital is also looking
to allocate a new corpus to India. The firm currently invests from the $250 million Intel
Capital India Technology Fund set up in December 2005.

Some of Intel Capital‘s fresh investments in 2020 included Saankhya Labs, a fabless
semiconductor company; Testing Czars, an independent test engineering and solutions
provider for mobile applications; What‘s on India, a television programme guide;
enStage, an electronic payment solutions company and Duron Energy, an affordable solar
power products designer for off-grid use. It also made several bets on consumer Internet
and e-commerce space, backing Smile Group firms Fashionandyou.com and
Dealsandyou.com, in addition to InfoEdge-backed insurance aggregator portal
PolicyBazaar.com.

Nexus Venture Partners ($73 million):

Nexus Venture Partners continued to focus on technology and Internet start-ups in 2020,
completing 10 transactions in the process. It also went on investing in Indo-US start-ups
through its office in Silicon Valley. The venture firm made multiple bets on Indian e-
commerce firms and Cloud-based companies during the year.

Its investments included Craftsvilla.com (largest online wholesaler for unique handmade
luxury products) and Snapdeal.com (largest group buying site), besides a follow-on round
in Big shoe Bazaar. Nexus also backed Aryaka Networks that delivers Cloud-based
application acceleration and WAN optimisation, and Genwi, a Cloud publishing firm on
mobile. Nexus also saw quite a few exits as Gluster was acquired by Red Hat, DimDim
was sold to Salesforce, Cloud.com to Citrix and MagicRooms to Yatra Online.

Canaan Partners ($67.30 million):

Silicon Valley-based Canaan Partners invested in two fresh deals in 2020 while it
participated in four follow-on rounds of its portfolio companies. Canaan Partners led a
$45 million round in Happiest Minds Technologies, an IT solutions and services start-up
founded by former MindTree Ltd chairman and co-founder Ashok Soota.

38
The deal was one of the most sought after, with reports suggesting that firms like the
Carlyle Group, IDG Ventures, Walden International and Sequoia Capital were in the fray
for the deal.

It also invested $4.4 million in Mumbai-based Loylty Rewardz Mngt Pvt Ltd, engaged in
the development and management of consumer loyalty programmes. Although Canaan
stayed away from consumer Internet this year, it participated in the fresh rounds of its
portfolio firms Naaptol, MotorExchange.in and Consim Info. One of its portfolio firms,
Bollywood portal Chakpak, was acquired by Flipkart.

Tiger Global Management ($56.9 million):

After a hiatus, Tiger Global Management returned to India with focus on the fast-growing
e-commerce sector and closed over half a dozen investments in that space. Tiger Global,
which had participated in large rounds of social networking companies like Facebook and
LinkedIn, also changed its strategy from private equity/hedge fund-type transactions
(done for NSE, JM Financial, Shriram Transport) to venture-stage investments.

Besides making fresh investments in companies like electronics e-tailer Letsbuy.com and
apparel & shoe e-tailer Myntra.com, it also invested in follow-on rounds of Flipkart.com
and MakeMyTrip.

Top Firms By No of Deals

Value of Co.
S.No Parameter
Deals
1 Intel Capital 11
2 Nexus Venture Partners 10
3 Blume Ventures 9
4 Accel Paretnes 8
5 IDG Ventures Inida 6
6 Tiger Global Management 6

39
 Top VC Firms by # of Deals

11
12 10
9
10 8
# of Deals
8 6 6
6
4
2
0 Intel Capital

IDG Ventures

Management
Partners

Ventures

Partners

Tiger Global
Venture
Nexus

Blume

Accel

India
VC Firms

Intel Capital: 11 Deals

Intel Capital invested in more than 11 new start-ups besides follow-on rounds in five
other portfolio companies in 2020. The firm also scored an exit by selling its decade-old
investment in software development firm Persistent Systems with 6x returns.

Nexus Venture Partners: 10 Deals

Besides being a prolific investor with 10 deals, Nexus Venture Partners also completed
over half a dozen follow on rounds in its existing portfolio companies with new investor.
The firm currently has $320 million under management across two funds and is now
reportedly looking at a third fund.

Blume Ventures: 9 Deals

Blume Ventures, a seed-stage venture capital firm set up in 2010, completed nine deals in
2020 across Internet and software space. The firm has been set up by two members of
Mumbai Krishus, Sanjay Nath and Karthik Reddy, and it is currently raising a $20 million
fund. Blume typically invests $100K-$250K in each company. It also makes larger
investments along with Krishu investors like InMobi CEO & co-founder Naveen Tewari.

Blume invested in Cloud computing provider E2E Networks, social commerce platform
Trol.ly and holiday comparison site Polama.com, among others. Most recently, it invested
in Sports Nest Retail (India) Pvt Ltd that runs the six-month-old e-commerce website
SportsNest, focused on retailing sporting, fitness and adventure gear.

40
Accel Partners: 8 Deals

Accel Partners, which has backed global Internet majors like Facebook and Groupon,
made eight new disclosed investments in 2020, mostly in the Internet space. Accel, which
is reportedly sitting on a multi-bagger with Flipkart.com, upped its bet on the e-commerce
sector by investing in specialised e-tailers like Babyoye and Letsbuy.

It also invested in Pristine Careers, a financial training firm for certifications like CFA;
investment research firm Probe Equity and digital media technology company
SureWaves. Accel recently invested in SaaS-based social customer support start-up
Freshdesk and digital media & content services company Trivone Digital.

Accel Partners also raised a new $155 million venture capital fund for India. Accel India
III is nearly two-and-a-half times its predecessor Accel India Venture Fund II, which
raised $60 million three years ago. With the inception of the new fund, the assets under
management of Accel India reached $235 million across its three early-stage funds.

IDG Ventures India: 6 Deals

IDG Ventures had its busiest year since setting up shop in India in 2006 as it closed six
transactions across e-commerce, software and education space. This comes even as the
firm plans to launch growth and mezzanine investment funds for India by 2020-14, thus
expanding from its early-stage technology focus.

IDG led a $5.7 million round in Agile Financial Technologies, a BFSI software products
company. It also invested in iProf Learning Solutions, a Noida-based e-learning company.
Other investments included mobile software firm Sourcebits and mobile phone
advertisement firm Vserv Digital. More recently, it has been focusing on e-commerce
with deals like Valyoo Technologies (it owns and operates portals for eyewear, watches
and bags) and eShakti.com (an online western fashion retailer).

41
Tiger Global Management: 6 Deals

Tiger Global Management, set up by former technology analyst Chase Coleman, used a
shock and awe strategy backing over half a dozen e-commerce start-ups in the country in
a matter of seven months. It also significantly increased its bet on travel portal
MakeMyTrip, buying into the company when its other venture capital investors were
exiting through a follow-on offer.

TOP FIVE VENTURE CAPITAL DEALS OF 2021 BY DEAL VALUE

S.No Parameter Value

1 Happiest Minds Technologies 46

2 Fashionandyou.com 41

3 SnapDeal.com 41

4 Naptol online shopping 26

5 TV18Home Shopping 26

Top Five Venture Capital Deals in 2020

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45
40
35
30
25
20
15
10
5
0

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Happiest Minds Technologies: The largest deal in the venture capital space came when
Happiest Minds Technologies Pvt Ltd, an IT solutions and services start-up founded by
former MindTree Ltd chairman and co-founder Ashok Soota, raised $46 million (Rs 229
crore) in its first round of funding, led by Canaan Partners. Intel Capital, Soota and other
founders of Happiest Minds also invested in the round. The deal would make the five-
month-old company one of the most highly capitalised start-ups in the Indian technology
landscape. The deal was one of the most sought after, with reports suggesting that firms
like the Carlyle Group, IDG Ventures, Walden International and Sequoia Capital were in
the fray for the deal.

Soota had quit MindTree in April 2021 and launched his own start-up in August.
Happiest Minds focuses on IT services, research & development, software product
engineering, remote infra, testing and consulting.

Snapdeal.com: India‘s largest group buying portal Snapdeal.com (owned by Jasper

Infotech Pvt Ltd) raised $41 million in series B funding, led by Bessemer Venture
Partners, along with existing investors Nexus Venture Partners and Indo-US Venture
Partners. The investment came barely six months after the company had announced a $12
million series A round from Nexus and Indo-US Venture Partners in January 2020. With
$52 million in its kitty, Snapdeal has raised most VC funding in 2020. Incidentally,
Snapdeal claims to have used only up to 20 per cent of the capital raised. Also, unlike
other e-commerce ventures, Snapdeal doesn‘t own inventory and hence, does not block so
much of cash.

According to Kunal Bahl, founder and CEO of Snapdeal, the company has 11 million
registered users and about one in eight online users ‗browse and buy.‘ The company has
expanded into product sales nearly three months ago and now claims to be the largest e-
tailer of lifestyle products.

Fashionandyou.com: Fashionandyou.com, a private shopping site for luxury brands and

designer apparel & accessories (owned by Awari Technologies Pvt Ltd), has raised $41
million (Rs 200 crore) in a second round of funding, led by Norwest Venture Partners and
Intel Capital. Sequoia Capital India and Nokia Growth also participated in the
fundraising. The company is co-founded by former Yahoo! India sales director Pearl
Uppal and Harish Bahl, founder and chairman of Smile Group.

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One of the largest investments in the Indian e-tailing space, the deal came less than a year
after the luxury e-commerce portal raised a first round of institutional capital from
Sequoia. The total amount of private capital, raised by the company, stands at $50
million. Fashionandyou.com partners with high fashion and luxury brands across fashion
apparel, designer wear, accessories, footwear, watches, jewellery, fragrances and home
décor segments, among others, and holds private sales events for renowned Indian and
global brands where prices are slashed up to 80 per cent.
Naaptol: Naaptol Online Shopping Pvt Ltd, owner of the shopping site Naaptol.com,
raised $26 million from New Enterprise Associates (NEA). Earlier investors Canaan
Partners and Silicon Valley Bank also participated in the round that ended in August
2020. The deal was NEA‘s first direct investment in an Indian e-commerce start-up.

The funds will be used to fuel Naaptol‘s massive hiring plans and also to scale up the
company‘s Internet business, supply chain and inventory. Naaptol currently works with
50 vendors and has three lakh products listed on its e-commerce sites. It has launched a
private sales site called Naaptol Club and forayed into television space with an
investment of Rs 60 crore. The company continues to experiment with more online
models and may launch new properties going forth.

TV18 Home Shopping: TV18 Home Shopping Network Ltd, a teleshopping channel in
India from the Network18 Group, raised $26. million (Rs 100 crore) from its existing
investors SAIF Partners, Network18 and GS Shopping. The funds are being used for
investments in logistics, warehousing and technology. The company, which runs a
dedicated teleshopping channel called HomeShop18, is expecting to hit Rs 1,000 crore in
total sales value.

In 2010, Capital 18 Fund, a private investment vehicle from the Network18 Group,
acquired 75 per cent stake in the company for $21 million which made it a 75:25 joint
venture with SAIF Partners and valued the firm at $28 million. In 2009, HomeShop18
roped in GS Home Shopping Inc. as a strategic investor, which, along with Network18
Media & Investments Ltd, infused $23.5 million into the company.

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 CHAPTER - VII
RESEARCH FINDINGS &
SUGGESTIONS

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 FINDINGS
 The VCF and FVCI in 2021 has proved to be good for real estate sector. However,
the other sectors also showed good investments but trailing to real estate, services
sector show good mark then telecommunications and then industrial products
sector. Also, Media and IT sector also witnessed a good investment, later with
pharmaceuticals and biotechnology sectors.

 Venture capital investments saw an upswing in activity in 2020 with e-commerce

taking off in a big way. Most venture capital firms had multiple exposures to this
space – either through fashion, baby products, or generic e-tailers. The year also
saw emergence of nearly half a dozen seed-stage funds looking to raise $20
million-$25 million to plug the gap between Krishu funding and series A round.

 Of the top five deals in the venture space, four happened in the e-commerce space
as these companies started investing in marketing and supply chain logistics.
Mobile value-added services and technology companies also continued to attract
venture funds. Venture capital has been a remarkable catalyst of entrepreneurial
activity, after the Second World War, in many developed countries. It has led to
significant growth in industry and innovation.

 The prospects for the Indian VC industry are no less humongous. It is up to the
industry to reflect on its current predicament and evolve a strategy to seize the
opportunity. With due emphasis being given to the industry, there is lot of scope
for development. Trying to put the domestic market on par with that in the U.S.
may not be justified. Capital markets in India are still growing to maturity through
transparency, liquidity and accountability of promoters.

 With this maturity, the venture capital market would also attain its maturity. Until
such time, it is not fair or easy to compare markets in India to those in the U.S.
Despite the slump in the new economy sectors and the collapse of the dotcoms,
venture capital companies are still buoyant about the Indian technology sector and
a large sum of money is waiting to be invested.

 According to VCs, the Indian market is one of the preferred markets in this part of
the world right now. Things are poised for change over the next 3-6 months since
the valuation gap between entrepreneur expectations and VC pricing has fallen

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 when compared to last year. As far as the areas of investment and deal sizes are
concerned, most VCs feel that the market will favour large sized deals and
probably even management buyouts. Growth or mezzanine stage capital will
continue to occupy centre stage according to most VCs.

 As for startup funding--the views are mixed. Some VCs believe that startup stage
funding is likely to surface again though a larger share of the capital will possibly
be invested in listed companies, others will continue to remain bearish on startups
since scaling up startups is a tough business. Thus venture funds have been an
engine for economic growth for over a decade in countries like USA, Israel,
Taiwan. The situation is now ripe to be replicated in India.

 To foster innovation, new ventures have to work in a competitive & supportive

environment which also needs financial backing from venture capitalists (VCs)
and Krishu investors who will provide the venture not just with funds, but also
with strategic management support.

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 SUGGESTIONS

From the experience of Venture Capital activities in the developed countries and detailed
case study of venture capital in India we can derive that the following measures needs to
be provided to boost Venture Capital industry in India.

1. Social Awareness:
Lack of social awareness of the existence of venture capital industry has been
observed. Hardly few know about the principal objectives and functions of the existing
venture capital funds in the country and thus banking of the media is required to bridge
the gulf between the society and the existing venture capital funds.

2. Deregulated Economic Environment:

A less regulated and controlled business and economic environment where an
attractive customer opportunity exists or could be created for high-tech and quality
products.

2. Fiscal Incentives:
Though Venture Capital funds like Mutual funds are exempted from paying tax on
dividend income and long-term capital gains, from equity investment, unlike Mutual
funds there are pre-conditions attached to the tax shelter. So it is imperative that the
Government streamlines its guidelines on tax exemption for Venture Capital Funds.

3. Entrepreneurship And Innovation:

A broad-based (and less family based) entrepreneurial traditions and societal and
governmental encouragement for innovation creativity and enterprise.

4. Marketing Thrust:
A vigorous marketing thrust, promotional efforts and development strategy employing
new concepts such as venture fairs, venture clubs venture networks, business
incubators etc., for the growth of venture capital.

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5. A Statutory Co-ordination Body:
A harmonious co-ordination needs to be maintained among the technology institutes,
professional institutes and universities who are the producers of future venture capital
managers. The coordinating organ so formed is expected to ventilate an outline of the
latest requirements of the venture capital funds management. Central Government
should come forward to promote the referred coordination organ in the form of a
statutory body. The coordination organ would not only maintain link with the
domestic professional institutions, technology institutes and universities but also with
the global venture capital funds in order to exchange the novel ideas that can help in
standardizing Indian practice on venture capital funds.

6. Technological Competitiveness:
Encouragement and funding of R&D by private and public sector companies and the
government for ensuring technological competitiveness.

8. Training and Development of Venture Capital Managers:

For the success of venture capital fund, be it privately owned or public sector
financial institutions, strategies need to be found to promote entrepreneurship. For
this, venture capital funds need professionals with initiative, drive and vision to
identify such entrepreneurs who have sound & ideas and innovative vision.
Unfortunately, such professionals are not easily available particularly in developing
countries like India. Therefore management schools need to develop social training
programs to train venture capital mangers in which risk taking and entrepreneurial
attitude needs to be incubated.

9. Broad Knowledge Base:

A more general, business and entrepreneurship oriented education system where
scientist and engineers have knowledge of accounting, finance and economics and
accountants understand engineering or the physical sciences.

10. Exit Routes:

For venture capital funds, exits are crucial; going public is one way for the investors
to be paid back. Current rules of companies going public in India insist on sustained
track record of profits.

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 CHAPTER -VIII
SUGGESTIONS &
RECOMMENDATIONS

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 SUGGESTIONS & RECOMMENDATIONS

1. The Indian Venture Capital (VC) industry is just about a decade old industry as
compared to that in Europe and US. In this short span it has nurtured close to 1000
ventures, mostly in SME segment and has supported budding technocrat
/professionals all through. The VC industry, through its investments in high
growth companies as well as companies adopting newer technologies backed by
first generation entrepreneurs, has made a substantial contribution to economy. In
India, however, the potential of venture capital investments is yet to be fully
realized.

2. The Indian venture capital industry is dominated by public sector financial

institutions. A few private sector venture capital firms have been set up recently.
VCFs in India are not pure venture capitalists. They pursue both commercial as
well as developmental objectives. Venture finance is made available to high-tech
as well as non-tech businesses. About two-thirds of the venture capital is invested
in non-tech businesses.
3. A large number of high-tech ventures financed by VCFs are in thrust areas of
national priority such as energy conservation, quality upgradation, advanced
materials, bio-technology, reduced material consumption, environment protection,
improved international competitiveness, development of indigenous technology
etc. Yet another feature of venture financing in India is that it is not readily
available for development of prototypes or setting up of pilot plants at the
laboratory stage.
4. Venture capital can play a more innovative and developmental role in a
developing country like India. It could help the rehabilitation of sick units through
people with ideas and turnaround management skills. A large number of small
enterprises in India become sick even before the commencement of production.

5. Venture capitalists could also assist small ancillary units to upgrade their
technologies so that they could be in line with the developments taking place in
their parent companies.

6. Yet another area where Venture Capital Funds (VCFs) can play a significant role
in developing countries is the service sector, including tourism, publishing, health-
care etc. They could also provide financial assistance to people coming out of the
universities, technical institutes involving high risk.

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BIBLIOGRAPHY

52
 BIBLIOGRAPHY

BOOKS
I.M Panday, Venture Captial The Indian Experience
Facing the Indian Venture Capital Industry, Hashank Rajurkar
Productivity
The Securities and Exchange Board of  SEBI (Venture Capital Funds)
India Regulations, 1996

NVCA and Venture Economics National Venture Capital Yearbook4

NATIONAL AND INTERNATIONAL JOURNALS

1. Dolley, J. ‗Characteristics and Procedure of Common Stock Split-ups,‘

Harward Business Review, 1933, Vol 10, pp 316-326.
2. Myers, J and A. Bakay, ‗Influence of Stock Split-Ups on Market Price,‘
Harward Business Review, Vol 26, 1948, pp 251-265.
3. . Baker, C ‗Effective Stock Splits,‘ Harward Business Review, Vol 34, 1956.
Pp 101-106.

WEBSITES

 www.nasscom.org
 www.indiainfoline.com
 www.icfaipress.org
 www.thehindubusinessline.com
 www.gvfl.com
 www.vcline.com

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