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VENTURE CAPITAL

By,Jismy JamesMAM sem 5

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INTRODUCTION

CAPITALFund employed in any business activity. Most important factor for production. No economic entity can function without

capital.

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Venture capitalVenture capital is significant innovation of 20th

century. It is generally consider as synonym of risky capital.

Venture capital is a new financial service, the emergence of which wants towards developing strategies to help a new class of new entrepreneurs to translate their business ideas into realities.

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Features of VCNew Venture

Continuous Involvement

Mode of Investment

Objective

Hands-On Approach

High Risk-Return Ventures

Nature of Firm

Liquidity.

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STAGES IN VENTURE CAPITAL

1. Seed Money: Low level financing needed to prove a new idea.

2. Start-up: Early stage firms that need funding for expenses associated with marketing and product development.

3. First-Round: Early sales and manufacturing funds.

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4. Second-Round: Working capital for early stage companies that are selling product, but not yet turning a profit.

5. Third-Round: Also called Mezzanine financing, this is expansion money for a newly profitable company

6. Fourth-Round: Also called bridge financing, it is intended to finance the "going public process”

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Methods of venture capital

Equity

Conventional Loan

Conditional Loan

Income noteOther financing

method

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ADVANTAGES OF VENTURE CAPITAL

Economy oriented

Entrepreneur oriented

Investor Oriented

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Economy Oriented-

Helps in industrialization of the countryHelps in the technological development of the

countryGenerates employmentHelps in developing entrepreneurial skills

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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.

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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.

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

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HAVE A NICE DAY

THANK YOU