Subject – Financial Markets And Institutions

Submitted To – Prof. Harjit Singh

Submitted By – Yash Vardhan and Govind Rai

Angel Financing

Venture Capital

Private Equity

PublicStock Markets

Self Finance / Bootstrapping

Debt / Bank Finance

Equity FinancingEquity FinancingNon-Equity FinancingNon-Equity Financing

Introduction

1012/7/2010 Venture Capital

TOPICTOPIC

What Is Venture Capital

Venture Capital is a financial capital provided to early satge, high potential, growth startup companies. The venture capital earns money by owing equity in the companies it invests in.

The concept of VC was formally introduced in India in 1987 by IDBI.

The government levied a 5 per cent cess on all know-how import payments to create the venture fund.

ICICI started VC activity in the same year

Later on ICICI floated a separate VC company - TDICI

Development of VC in INDIA

13

Top Active VC Firms In IndiaTop Active VC Firms In India

1. Helion Venture Partners Investing in technology-powered and consumer service businesses, Helion Ventures Partners is a $605 Mn Indian-focused, an early to mid-stage venture fund participating in future rounds of financing in syndication with other venture partners.

● Investment Structure: Invests between $2 Mn to $10 Mn in each company with less than $10 Mn in revenues.

● Startups Funded: Yepme, MakemyTrip, NetAmbit, Komli, TAXI For Sure, PubMatic.

Accel Partners Accel Partners

● Investment Structure: Invests between $0.5 Mn and $50 Mn in its portfolio companies.

● Startups Funded: Flipkart, BabyOye, Freshdesk, Book My Show, Zansaar, Probe, Myntra, CommonFloor.

Sequoia Capital India Sequoia Capital India

● Industries: Consumer, Energy, Financial, Healthcare, Outsourcing, Technology.

● Startups Funded: JustDial, Knowlarity, Practo, iYogi, bankbazaar.com

Canaan Partners Canaan Partners

● IndustriesIndustries: Technology- Advertising & Marketing, Big Data/Cloud, Consumer, Enterprise/SaaS, FinTech, Hardware, Healthcare – Biopharma, digital Health & MedTech.

● Startups FundedStartups Funded: Naaptol, Bharat Matrimony, iYogi, Happiest minds, mCARBON, CarTrade, Surewaves.

India has a new one-man venture capital fund

With eight investments in the past year in Indian and international companies, Tata has clearly hit the ground running. And except for three, all his investments are in internet-based ventures.

Here is a list of Tata’s personal investments, starting from the latest.

Stages of Financing

Seed Money

To prove a concept

(15-25L)

Extreme risk

Start Up

Provided to companies

(25-60L)

Very high risk

First Round

Manufacturing funds

(1-3cr)

High risk

Second Round

Working capital & expenses

(2-5cr)

Sufficiently high

Third Round

For newel profitable company

(2-10cr)

Medium

Forth Round

Bridge Financing for going public process

(100cr)

Low

Acquisition or buyout financing (10-100cr)

23l

Advantages Of Venture CapitalAdvantages Of Venture Capital

ECONOMYECONOMY ENTREPRENEURENTREPRENEUR

INVESTORINVESTOR

Economy Oriented Economy Oriented -

Helps in industrialization of the country

Helps in the technological development of the country.

Generates employment

Helps in developing entrepreneurial skills

Investor oriented-Investor oriented-

Benefit to the investor is that they are invited to invest only after company starts earning profit, so the risk is less and healthy growth of capital market is entrusted.

Profit to venture capital companies.

Helps them to employ their idle funds into productive avenues.

Entrepreneur oriented-Entrepreneur oriented-

Finance - The venture capitalist injects long-term equity finance, which provides a solid capital base for future growth.

Business Partner - The venture capitalist is a business partner, sharing the risks and rewards.

Alliances - The venture capitalist also has a network of contacts in many areas that can add value to the company.

Why it is hard to find a VC !!!

2812/7/2010

Venture Capital

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

Provide financial assistance to people coming out of universities, technical institutes, etc

Future Prospects of VC in INDIA

2912/7/2010

Venture Capital

Initial public offer(IPOs) Trade sale Promoter buy

backAcquisition by

another company

Exit Route30l