STUDY OF VENTURE

CAPITAL IN INDIA
SUBMITTED BY
DHRUTI BHATIA
ROLL NO : 2018MMS062

UNDER THE GUIDANCE OF

PROF. MAKARAND POLE
OBJECTIVES OF THE STUDY
• UNDERSTAND THE CONCEPT OF VENTURE CAPITAL
• STUDY VENTURE CAPITAL INDUSTRY IN INDIA
• STUDY VENTURE CAPITAL INDUSTRY IN GLOBAL SCENARIO
• STUDY THE EVALUATION & NEED OF VENTURE CAPITAL
INDUSTRY IN INDIA
• UNDERSTAND THE LEGAL FRAMEWORK FORMULATED BY SEBI TO
ENCOURAGE VENTURE CAPITAL ACTIVITY IN INDIAN ECONOMY
• FIND OUT OPPORTUNITIES THAT ENCOURAGE & THREATS THOSE
HINDER VENTURE CAPITAL INDUSTRY IN INDIA
INTRODUCTION TO THE TOPIC
FEATURES OF VENTURE CAPITAL

• HIGH RISK

• EQUITY PARTICIPATION & CAPITAL GAINS

• PARTICIPATION IN MANAGEMENT

• LENGTH OF INVESTMENT

• ILLIQUID INVESTMENT

• HIGH-TECH
STAGES OF VENTURE CAPITAL
Financing Stage Period (funds Risk perception Activity to be financed
locked in years)
Early stage finance 7-10 Extreme For supporting a concept or idea or
R & D for product development
Start up 5-9 Very high Initializing operations or
developing prototypes
First stage 3-7 High Start commercial production and
marketing
Second stage 3-5 Sufficiently high Expand market & growing working
capital need
Later stage finance 1-3 Medium Market expansion, acquisition &
product development for profit
making company
Buy out-in 1-3 Medium Acquisition financing
Turnaround 1-3 Medium to high Turning around a sick company
Mezzanine 1-3 Low Facilitating public issue
VENTURE CAPITAL INVESTMENT PROCESS
METHODS OF VENTURE FINANCING

•EQUITY AND QUASI EQUITY

•CONDITIONAL LOAN

•INCOME NOTES

•CONVERTIBLE DEBENTURES

•CUMULATIVE CONVERTIBLE PREFERENCE SHARE

VENTURE CAPITAL IN INDIA
REGULATORY IN VENTURE CAPITAL
CHALLENGES IN VENTURE CAPITAL
• REQUIREMENT OF AN EXPERIENCED MANAGEMENT TEAM.
• REQUIREMENT OF AN ABOVE AVERAGE RATE OF RETURN ON INVESTMENT.
• LONGER PAYBACK PERIOD.
• UNCERTAINTY REGARDING THE SUCCESS OF THE PRODUCT IN THE MARKET
• THE CATEGORY OF POTENTIAL CUSTOMERS AND HENCE THE PACKAGING
AND PRICING DETAILS OF THE PRODUCT.
• THE SIZE OF THE MARKET.
• MAJOR COMPETITORS AND THEIR MARKET SHARE.
• SKILLS AND TRAINING REQUIRED AND THE COST OF TRAINING.
OPPORTUNITIES AND THREATS IN VENTURE
CAPITAL

• INITIATIVES TAKEN BY THE GOVERNMENT IN FORMULATING POLICIES

TO ENCOURAGE INVESTORS AND ENTREPRENEURS
• VENTURE CAPITAL MARKET IN INDIA GETTING OVERHEATED
• UNPRODUCTIVE WORKFORCE
• EXIT ROUTE BARRIERS
• TAXES ON EMERGING SECTOR
RECOMMENDATIONS & CONCLUSION

• TAX PASSES THROUGH FOR VENTURE CAPITAL FUNDS:

• MOBILIZATION OF GLOBAL AND DOMESTIC RESOURCES
• FLEXIBILITY IN INVESTMENT AND EXIT
• RELAXATION IN TAKEOVER CODE
• RBI PRICING NORMS
• VENTURE CAPITALISTS IN INDIAN HAVE NOTICE OF NEWER
AVENUES AND REGIONS TO EXPAND. VCS HAVE MOVED BEYOND
IT SERVICE BUT ARE CAUTIOUS IN EXPLORING THE RIGHT
BUSINESS MODEL, FOR FINDING OPPORTUNITIES THAT
GENERATE BETTER RETURNS FOR THEIR INVESTORS.
• IN SPITE OF FEW NON ATTRACTING FACTORS, INDIAN
OPPORTUNITIES ARE NO DOUBT PROMISING WHICH IS EVIDENT
BY THE LARGE NUMBER OF NEW ENTRANTS IN PAST YEARS AS
WELL IN COMING DAYS. NONETHELESS THE MARKET IS
CHALLENGING FOR SUCCESSFUL INVESTMENT.
THANK YOU!