PROJECT REPORT

ON

WORKING CAPITAL MANAGEMENT

Rayat Institute & Management

PTU Jalandhar

In the fulfillment for the degree of Master of Business Administration

Session 2015-17

SUBMITTED To:- SUBMITTED BY:-

Mrs. Manpreet Saini Vinod Kumar
M.B.A-4th Sem.
Roll No-1513567
 ACKNOWLEDGEMENT

Words have never expressed human sentiments. This is only an

attempt to express my deep gratitude which comes from my heart.
It is a great pleasure for me to express my deep feeling of gratitude to
my respected guide Mrs. Manpreet Saini for her invaluable guidance &
supervision in completion of this project work.
I am grateful to my parents for their lovable support. Last but not least
I am thankful to my friends other faculty Members for their direct &
indirect help for completion of this work
 DECLARATION

I, the undersigned hereby declared that the project entitled,

"Venture Capital & Financing written and submitted by me under the
guidance of Mrs. Manpreet Saini for my original work. The empirical
findings in this report are based on the data collected by myself. I have
not copied from my report submitted to this University or any other
University in the past.

Name: Kingpreet Singh

 CERTIFICATE OF ORIGINALITY

This is to certified that Mr. Kingpreet Singh of BBA Rayat Institute of

Management has undertaken the project entitled Venture capital &
financing" under my guidance and supervision. In my opinion, this study
embodies the results of his work and recommends that the same may be
forward for evaluation.
 TABLE OF CONTENTS

CHAPTE
TOPIC PAGES NO.
R NO.

Acknowledgement 2
Declaration 3
Certificate 4
1. Introduction 6-18
2. Venture Capital Schemes in India 19-29
3. Venture capital investment process 30-35
4. Diffrence between venture capital and 36- 50

other funds ( private equity )

5. Research Methodology 51-54
6. Conclusion 55-56
7. Recommendation 57 58
8. Bibliography 59 60
Introductio
n
CHAPTER-1
VENTURE CAPITAL

Introduction

Venture capital is a growing business of recent origin in the area of industrial financing
in India. The various financial institutions set-up in India to promote industries have
done commendable work. However, these institutions do not come upto the benefit of
risky ventures when they are undertaken by new or relatively unknown entrepreneurs.
They contend to give debt finance, mostly in the form of term loan to the promoters and
their functioning has been more akin to that of commercial banks. The financial
institutions have devised schemes such as seed capital scheme, Risk capital Fund etc.,
to help new entrepreneurs. However, to evaluate the projects and extend financial
assistance they follow the criteria such as safety, security, liquidity and profitability and
not potentially. The capital market with its conventional financial instruments/ schemes
does not come much to the benefit or risky venture. New institutions such as mutual
funds, leasing and hire purchase Companys have been established as another leasing
and hire purchase Companys have been established as another source of finance to
industries. These institutions also do not mitigate the problems of new entrepreneurs
who undertake risky and innovative ventures.

India is poised for technological revolution with the emergence of new breed of
entrepreneurs with required professional temperament and technical know how. To
make the innovative technology of the entrepreneurs a successful business venture,
support in all respects and more particularly in the form of financial assistance is all the
more essential. This has necessitated the setting up of venture capital financing
Division/ companies during the latter part of eighties.
Concept of venture capital
The term Venture Capital is understood in many ways. In a narrow sense, if refers to,
investment in new and tried enterprises that are lacking a stable record of growth. In a
broader sense, venture capital refers to the commitment of capital as shareholding, for
the formulation and setting up of small firms specializing in new ideas or new
technologies. It is not merely an injection of funds into a new firm, it is a simultaneous
input of skill needed to set up the firm, design its marketing strategy and organize and
manage it.
It is an association with successive stages of firms development with distinctive types of
financing appropriate to each stage of development .

Meaning of Venture Capital

Venture capital is long-term risk capital to finance high technology projects which
involve risk but at the same time has strong potential for growth. Venture capitalist pool
their resources including managerial abilities to assist new entrepreneur in the early
years of the project. Once the project reaches the stage of profitability, they sell their
equity holdings at high premium.

Definition of the Venture Capital Compan

A venture capital company is defined as a financing institutions which joints an
entrepreneur as a co-promoter in a project and shares the risks and rewards of the
enterprise.

Venture capitalists generally:

Finance new and rapidly growing companies;

Purchase equity securities;

Assist in the development of new products or services;

Add value to the company through active participation;

 Take higher risks with the expectation of higher rewards;

Have a long-term orientation

Features of Ventures Capital

Some of the features of venture capital financing are as under:

Venture capital is usually in the form of equity participation. It may also take the
form of convertible debt or long-term loan.

Investment is made only in high risk but high growth potential projects. Venture
capital is available only for commercialization of new ideas or new technologies
and not for enterprises, which are engaged in trading, booking, financial services,
agency, liaison work or research and development.

Venture capital is joins the entrepreneur as a co-promoter in projects and share

the risk and rewards of the enterprise. There is continuous involvement in
business after making an investment by the investor.

Once the venture has reached the full potential the venture capitalist disinvests
his holding either to the promoters or in the market. The basic objective of
investment is not profit but capital appreciation at the time of disinvestments.

Venture capital is not just injection of the money but also an input needed to set-
up the firm, design its marketing strategy and organize the manage it. Investment
is usually made in small and medium scale enterprises.

Types of Venture Capital

The definitions of the types of venture capital are divided into "Early-Stage",
"Expansion", and "Acquisition/Buyout" financing.
Early-Stage Financing
"Seed financing" is a relatively small amount of capital provided to an inventor or
entrepreneur to prove a concept and to qualify for "start-up" capital. This may involve
product or service development, market research, building a management team and
developing a business plan.

"Start-up Financing" is provided to companies completing product or service

development and initial marketing. These companies are generally in business for less
than 1 year, and have not yet sold their product or service commercially. Usually such
firms have market studies, assembled key management, developed a credible business
plan and are ready to do business.

"First Stage Financing" is provided to companies that have expended their initial
capital and require funds to initiate full-scale manufacturing or servicing.

Expansion Financing
"Second-Stage Financing" is working capital for the initial expansion of a company
that is providing services, or is producing and shipping product, and has growing
accounts receivable and inventories. At this juncture, the company may not be showing
a profit.

"Third-Stage Financing" or "Mezzanine Financing" is provided for major expansion

of a company whose sales volume is increasing and that is breaking even or profitable.
These funds are used for further expansion of additional services (some of which can
be real estate oriented), marketing, working capital or additional product development.

"Bridge Financing" has multiple definitions:

It refers to shorter term, interest only financing

It also helps IPO driven companies to obtain short-term financing that will be
repaid when the IPO occurs
 To an assisted living, skilled nursing or acute care company, where real estate is
an important component of the balance sheet, it can mean financing for
properties that are in development and and require some degree of stabilized
occupancy before permanent, long-term financing can be obtained

It is also used when a restructuring is undertaken if there are early investors who
want to reduce or liquidate their positions, or when management has changed
the stockholdings of the former management and are buying out former positions
to relieve a potential oversupply of stock when becoming public

Acquisition / Buyout Financing

"Acquisition Financing" provides funds to finance an acquisition of all, or a portion of,
another company.

"Management/Leveraged Buyout Financing" enables an operating management

group to acquire a product line or business (which may be at any stage of development)
from either a private or public company. The acquisition may be for the purchase of
select assets or stock.

Stages in the Venture Capital Investment Process

Deal Origination in which potential investments come to the attention of venture
capitalists.

Screening is a step in which the venture capitalist reaches an initial decision to

investigate further the investment (or not). The initial screen is a cursory glance at the
business plan to determine whether or not the proposal fits within the investor's areas of
expertise. If warranted, the investor reads the plan more thoroughly as part of the
generic screen to assess potential of the product or idea to obtain first impressions of
management.

Evaluation, during which the venture capitalist conducts, detailed analysis of the
venture. Criteria that venture capitalist apply are:
 assessment of concept;

assessment of the principals; and

assessment of returns.

Due Dilligence, if warranted, is the second phase of the evaluation step. This step may
include formal market suite studies, reference checks, consultation with third parties.
The investor outlines basic contract terms and discusses pricing.

Negotiation is a step in which the investor and the principals iron out the framework for
a deal. The deal closes once the parameters are acceptable to both parties.

Post-investment activity relates to how the venture capitalist monitors the firm and
takes part in major decisions. This phase largely involves monitoring, control, and
intervention only as

Criteria for investment in Venture capital Undertaking

The general suitability of investment opportunities based on the following criteria:

Strong Management Team. An outstanding team of senior managers, with

demonstrated track records in relevant areas of expertise, has been assembled.

Differentiated Product or Services. The company offers proprietary or significantly

differentiated products or services, the benefits of which create long-term
competitive advantage.

Large Market Opportunity. A large identifiable market exists for the company's
products or services.

Barriers to Entry. Ideally, the target market is characterized by defensible barriers

to entry.
 Visibility of Exit Mechanism. An initial public offering within a 12- to 24-month
timeframe is feasible, and an exit through a strategic sale is a viable alternative.

Size of Investment. The potential size of an investment by Gaebler Ventures is

between $200,000 and $1 million (varying based on the company's stage of
development and subsequent need for capital).

Location. Our preference is to invest in companies in the Chicago area or based

elsewhere in Illinois.

To assess the investment criteria of most institutional investors in small companies, it is

important to understand the measure of success these funds are held to by their own
investors.
REGULATORY FRAMEWORK FOR VENTURE CAPITAL IN INDIA.

In his budget speech for 1988-89, the finance minister declared that a scheme will be
formulated under which Ventures Capital Companies / Funds will be enabled to invest in
new companies and be eligible for the concessional treatment of capital gains available
to non-corporate entities. Such companies will have to comply with the following
guidelines.

The minimum size of a venture capital company would be Rs.10 crore. If it desires to
raise fund from the public the promoters share shall be less than 10 per cent.
Venture capital assistance should go mainly to enterprises where the risk element is
comparatively high due to the technology involved being relatively new, untried or very
closely held, and/or the entrepreneur being relatively new and not affluent though
otherwise qualified and the size being modest. The assistances should be mainly for
equity support though loan support to supplement this may also be given.

Thus, venture capital assistance will be given to those entrepreneurs which satisfy the
following parameters:
Total investment not to exceed Rs.10 crores.

Relatively new, professionally or technically qualified with inadequate resources or

banking to finance the project.
A venture capital is required to invest at least 75 per cent of its funds in venture capital
activity. A venture capital is firm can raise funds through pubic issues and/or private
placement to finance VCF/VCCs. Foreign equity upto 25 per cent multilateral /
international financial organizations, development finance institutes, reputed mutual
funds, etc., would be permitted provide these are management neutral and are for
medium to long-term investments.
A venture capital fund will be managed by professional such as bankers, managers and
administration and persons with adequate experience of industry, finance, accounts etc.
Venture Capital in India

Venture capital funds (VCFs) are part of the primary market. There are 35 venture
capital funds registered with SEBI apart from one foreign venture capital firm registered
with SEBI. Data available for 14 firms indicate that total funds available with them at the
end of 1996 was Rs.1402 crores, which Rs.672.85 crores had been invested in 622
projects in 1996. Ventura capital which was originally restricted to risk capital has
become now private equity.

Venture capital represents funds invested in new enterprises which are risky but
promise high returns. VCFs finance equity of units which propose to use new
technology and are promoted by technical and professional entrepreneurs. They also
provide technical, financial and managerial services and help the company to set up a
track record.

Once the company meets the listing requirements of OTCEI or stock exchange, VCF
can disinvest its shares.
Venture capital as a source of the launch capital either of the American type or the
slightly variant (in scope) British type is, by and large, conspicuous by its absence in
India. There are, of course, some institutional venture capital funds/ schemes in
operation in India. For instance, Industrial Finance Corporation of India set up the Risk
Capital Foundation in 1975 with a view to providing special assistance to new
entrepreneurs, particularly technologists and professionals for promoting medium-sized
industrial projects. Further, with a view to assisting entrepreneurs who have skills but
lack finance to bring in the requisite promoters contribution, Industrial Development
Bank of India (IDBI) introduced two seed capital schemes, viz.,

State financial corporations special share capital schemes under which SFCs extend
special share capital assistance to projects in the small-scale sector from their special
class of share capital contributed jointly by the concerned state Government and IDBI
and
IDBIs own scheme for such assistance (operated mainly through State Industrial
Development Corporation / State Financial corporation)_ in respect of medium-sized
projects costing upto Rs.2 crores. In 1985 the IDBI introduced venture capital fund
scheme to assist industrys efforts for technological advancements. Most of the ventures
assisted by the Bank have been sponsored by professionally qualified entrepreneurs
and the process/technology involved a wide range of new and indigenously developed
ones.
In 1986, Industrial Credit and Investment Corporation of India (ICICI) also launched a
venture capital scheme to encourage new techno crafts in the private sector in new
fields of high technology with inherent risk. Under this scheme ICICI assists projects,
with initial investment not exceeding Rs.2 crores, in the form of equity or conditional
loan with flexible charges and repayment period or conventional loan. Two new fund
were launched recently.

The first one called India fund floated by the International Division of Merrill Lynch with
subscription by non-resident Indians living mainly in the UK and Western Europe is
managed by the UTI.

The second one is the venture capital fund with an initial capital of Rs.10 crores
established in December 1986 by IDBI to provide equity capital for pilot plants
attempting commercial applications of indigenous technology and to adapt previously
imported technology to wider domestic application.

To undertake the task on a continuous and systematic basis, the Industrial Credit and
Investment Corporation set up with the UTI The Technology Development and
Information Company of India Ltd. (TDICI) in 1989. TDICT has started providing
venture capital, R & D funds and technical and managerial services including
Technology and Information. The ICICI also established in 1988 with UTI venture
capital fund with Rs.20 crores, subscribed equally by ICICI and UTI. The fund is being
used for providing assistance mainly in the form of equity, conditional loans and
convertible debenture, to set up technological ventures which have potential for fast
growth.
In January, 1990 ICICI and UTI have jointly launched their second venture fund for
Rs.100 crores. It is interesting to note that the commonwealth Development Corporation
of the U.K. will also be participating in this fund. Among commercial banks, State Bank
of India, Canara Bank and Grind lays Bank have shown interest in this area. SBIs
merchant banking subsidiary, SBI capital markets invests in the equity shares of new
and unknown companies. Canara Bank has also set up a venture capital fund through
its subsidiary, viz., (as bank financial Services) Grind lays Bank launched India
investment fund to provide venture capital assistance to high risk projects.

In July, 1990 The Gujarat Industrial Corporation Ltd., launched a venture capital finance
scheme through a newly registered subsidiary with the help of the Capital Trust Fund
worth Rs.24 crores to cater to projects which will enhance the growth of the national
economy. The new subsidiary Gujarat Venture Finance Ltd. would financially
support the entrepreneur having both indigenous and imported technologies not tried
before in the country. This organization would finance venture capital entirely through
equity participation.

In private sector a few venture capital funds have been established. One such fund is
Indus Venture Capital Fund (IVCF). This venture capital has been set up with a capital
of Rs. 21 crore contributed by several Indian and international institutions. The fund
provides both equity capital as well as managerial support to entrepreneurs.

The other private venture capital firms set up in India are Credit Capital Venture Fund,
Twentieth Century Finance Company and Infrastructure Leasing and Financial Services
Ltd.
FUTURE OF VENTURE CAPITAL IN INDIA
Rapidly changing economic environment accelerated by the high technology explosion,
emerging needs of new generation of entrepreneurs in the process and inadequacy of
the existing venture capital funds/schemes are indicative of the tremendous scope for
venture capital in India and pointers to the need for the creation of a sound and broad-
based venture capital movement India.

There are many entrepreneurs in India with a good project idea but no previous
entrepreneurial track record to leverage their firms, handle customers and bankers.
Venture capital can open a new window for such entrepreneurs and help them to launch
their projects successfully.
VENTURE CAPITAL
SCHEMES IN INDIA
CHAPTER 2
 ALL VENTURES CAPITAL OPTIONS IN BRIEF

I. VENTURES CAPITAL SCHEMES BY NATIONAL LEVEL VENTURES

CAPITAL ORGANISATION

2.1 STATE BANK OF INDIA VENTURE CAPITAL ASSISTANCE (NEW)

State Bank of India was constituted on 1 July 1955. More than a quarter of the
resources of the Indian banking system thus passed under the direct control of the
State. Later, the State Bank of India (Subsidiary Banks) Act was passed in 1959,
enabling the State Bank of India to take over eight former State-associated banks as its
subsidiaries (later named Associates).

The Bank is actively involved since 1973 in non-profit activity called Community
Services Banking. All the branches and administrative offices throughout the country
sponsor and participate in large number of welfare activities and social causes.
Business is more than banking because we touch the lives of people anywhere in many
ways.

National Bank For Agriculture And Rural Development (NABARD)

NABARD is established as a development Bank, in terms of the Preamble of the Act,

"for providing and regulating Credit and other facilities for the promotion and
development of agriculture, small scale industries, cottage and village industries,
handicrafts and other rural crafts and other allied economic activities in rural areas with
a view to promoting integrated rural development and securing prosperity of rural areas
and for matters connected therewith or incidental thereto."
NABARD:

(i) Serves as an apex financing agency for the institutions providing investment and
production credit for promoting the various developmental activities in rural areas;

(ii) takes measures towards institution building for improving absorptive capacity of the
credit delivery system, including monitoring, formulation of rehabilitation schemes,
restructuring of credit institutions, training of personnel, etc. ;

(iii) co-ordinates the rural financing activities of all institutions engaged in developmental
work at the field level and maintains liaison with Government of India, State
Governments, Reserve Bank of India (RBI) and other national level institutions
concerned with policy formulation; and

(iv) undertakes monitoring and evaluation of projects refinanced by it

IDBI Venture Capital Fund

The initial impetus was given by IDBI's Technology Division when venture capital fund
was set up in 1986 for encouraging commercial application of indigenously developed
technology and adopting imported technology for wider domestic application.

The salient features of the scheme are :

1. Financial assistance under the scheme is available to projects whose requirements
range between Rs.5 lakhs and 2.5 crores. The promoters stake should be at least 10%
for the venture below Rs. 50 lakhs and 15% for those above Rs. 50 lakhs.

2. Assistance was extended in the form of unsecured loan involving minimum legal
formalities. Interest at a confessional rate of 9% is charged during technology
development and trial production and 17$ once the product is introduced in the market.
3. The fund extend financial assistance to venture such as chemicals. computer
software, electronics. bio-technology, non-conventional energy/food processing, medical
equipment etc.

4. The project does not succeed ,IDBI,, can insist on transfer of technology to some
other promoter designated by it on mutually agreed terms and conditions. It has
assisted 70 projects with a net sanction of Rs.46.80 crores upto March,1993.

CANBANK VENTURE CAPITAL FUND LIMITED VENTURE CAPITAL

ASSISTANCE

Area Of focus: High growth small and medium enterprises

Passive or active role as investor: Active Role
Preferred stages of investment: Other early stage and later stage financial
Choice for financing: Preferably through equity
Industry preference: Manufacturing sector- industries with good growth potential
Regional preference: Southern and western region
Target return and period: 30%, 5-7 years
Monitoring: Hands on role with Board seat

HSBC PRIVATE EQUITY MANAGEMENT MAURITIUS LIMITED-

VENTURE CAPITAL ASSISTANCE
Investment Philosophy
HPEMM`s strategy is to invest in well-managed companies, which are placed to grow
rapidly and to take advantage of the favorable economic conditions existing within the
region. Priorities companies for investment include manufacturing companies,
preferably with significant export sales or collaborations with international partners, and
asset backed service companies. HPEMM will participate only in situations where there
is a clearly defined realization strategy. HPEMM operates on a medium to long-term
investment policy and expects to hold its investments for two to seven years. HPEMM
prefer to invest in establish, profitable companies, which require additional capital of
US$ 3 million to expand existing operations. HPESS gernelly takes minority equity
positions in the companies in which it invests but, is prepared to take majority stake
particularly is situations involving restructuring or acquisitions. HPESS also consider
investment arising from capital restructuring and management buy-outs-buy ins.
UTI venture capital
UVF not only provides capital but also strives to create value for its portfolio companies
by providing them its and industry knowledge, access to local talent and its business
networking Indian and oversees market.

UTI venture funds management company private LTD.(UVF) is the venture capital and
private equity arm of unit trust of India(UTI) group. Presently, UVF manages India
technology venture unit scheme (ITVUS),a SEBI register venture fund. ITVUS is a
technology focused venture fund focusing on sector such as software products and
services, IT enabled services, semi conductor, communication, networking as well as
pharmaceuticals and biotechnology Uti India largest mutual fund institution having a
successful track record of 39 years and managing invest able funds to the tune of
around RS 40000 crores(approx $8.8billion USD)spread across domestic and of sure
India dedicated funds. Its serves 10million retail investor and domestic and oversees
institutional investor UVF has advantage leveraging on its parents significant ownership
positon in most Indian corporate including technology companies, its capital market
presence and sister concern such as the UTI bank, a leading private sector bank in
India and the UTI securities, a leading capital market intermediary.
2.2 VENTURE CAPITAL SCHEME BY STATE LEVEL VENTURE CAPITAL
ORGANISATION

Uttar Pradesh Financial Corporation (UPFC)

Uttar Pradesh Financial Corporation (UPFC) was established in 1954 under the State
Financial Corporation Act, 1951 with its Head Office at Kanpur. The UPFC took a
humble step for the industrial development of the State of Uttar Pradesh by providing
term loan assistance to small and medium scale units. Several units nurtured by UPFC
have now become large enterprises

Andhra Pradesh Industrial Development Corporations Venture Capital Ltd.

(APIDC-VCL).
The APIDL-VCL was launched in June 1990 with a fund of Rs.13.5 crores of which
Rs.4.5 crore was contributed by the World Bank, Rs.3 crores by IDBI and Rs.1.5 crore
was committed by Andhra Bank. APIDC-VCL has a few proposal for venture capital
financing in the sphere of biotechnology and computer software applications. Assistance
toe ach venture is in the range of Rs/25 lakhs to Rs.1 crores and does not exceed 49
percent of the total equity of a project. Assistance is normally in the form of equity but
depending on the circumstances loans may also be provided

GUJRAT VENTURE FINANCE LIMITED(GVFL)

The Gujarat Industrial Investment Corporation promoted Gujarat Venture Finance Ltd.,
the first stage level venture finance company to begin venture finance activities since
1990. It provides financial support to the ventures whose requirements range between
25 lakhs and 2 crores. GUFL provides finance through equity participation and quasi
equity instruments. The firm engaged in bio-technology, surgical instruments
conservation of energy and good processing industries are covered by GUFL. Total
corporation of Rs.24 crores of the fund was co-financed by GIIC, IDBI, state level fianc
corporation, some private corporate and the World Bank.
Delhi Financial Corporation(DFC)

The Delhi Financial Corporation has been rendering yeoman service to small scale
entrepreneurs in Delhi and Chandigarh. It has made finance available to existing and
prospective entrepreneurs at very reasonable terms.

The corporation has devised suitable schemes for catering the needs of different
categories of entrepreneurs.

VENTURE CAPITAL SCHEME BY PRIVATE VENTURE CAPITAL

ORGANISATION

Indus Venture Capital Fund

Indus venture capital fund is one of the noteworthy private sector venture companies. It
has been promoted with a starting corpus of Rs.21 crores contributed by several Indian
and international institutions and companies. Indus venture Management Limited has
been entrusted to manage the fund of Indus venture capital fund. It provides equity and
management support to the firms. Financial assistance is given to those firms who
confine their commercial operations in areas of health care products, electronics and
computer technology. Investment strategy of the equity funds is not to invest more that
10% of its corpus in one project and equity stake in a company may be upto 50%. The
basic objective is to earn capital gains through equity liquidation after certain reasonable
time span.

The leading leasing company, 20th Century Finance Corporation has launched venture
capital fund worth Rs.20 crores to cater to the needs of small businessman.
Credit Capital Venture Fund Limited

The first private sector venture capital fund called, Credit Capital Venture Fund (CVF)
was set up by Credit Capital Corporation Limited (CVF) in April 1989 with an authorized
capital of Rs.10 lakhs. Rs.6.5 crore was subscribed by International financial agencies.
The CVF went to public in January 1990 to raise Rs.3.5 crore. It provides entrepreneurs
who have ideas and ability, but no finance, with equity capital for new green fields
projects., It main thrust area would be export oriented industries and technology
oriented projects, the presents portfolio of the fund consists of investment in six units
worth Rs.25 lakhs. CVF launched a new venture fund of Rs.10 crore called The
Information Technology Fund to provide direct equity support to projects in the
technology information field .
Present Position
The were 20 venture capital companies in India both in private and public sector in
1994. These companies assisted 350 projects to the tune of Rs.250 crore upto 1993-94
the form of assistance in these projects are follows :

Equity 62%
Convertible debentures 14%
Debt. 24%
Out of the 350 projects assisted 62% belongs to new entrepreneurs.

At the end of 1996, according to the Venture Capital Association of India, 14 of its
members had set up 17 funds. They had access to Rs. 1402 crore. A major part of the
deployment has been in equities- around 61 per cent of the total investment of Rs. 673
crore. Another 21 per cent was deployed in convertible instruments at 6 per cent in debt.
The fast growing software sector has not found favour with venture capital companies.
Industrial products and machinery accounted for 29 per cent of the total venture capital
investment followed by 13 per cent of the total in consumer related industries, 8 per cent
in food processing and only 7 per cent in software and service sector.
Suggestions for the growth of venture capital Funds
Venture capital industry is at the take off stage in India. It can play a catalytic role in the
development of entrepreneurship skill that remains unexploited among the young and
energetic technocrats and other professionally qualified talents. It can help promote new
technology and hi-tech industries, which involve high risk but promises attractive rate of
return. In order to ensure success of venture capital in India, the following suggestions
are offered:

(i) Exemption/Concession for Capital Gains:

Capital gains law represents a hurdle to the success of venture capital financing. The
earnings of the funds depend primarily on the appreciation in stock values. Further, the
capital gains may arise only after 3 to 4 years, of investment and that the projects, being
in new risky areas, may not even succeed. Capital gains by corporate bodies in India
are taxed at a much investment risk and long gestation period this is a deterrent to the
development of VCFs.

The benefit of the capital gains, under section 48 of the Act is not significant. Hence, it
would be advisable that all long term capital gains earned by VCCs should be exempted
from tax or subject to concessional flat rate. Further, capital gains reinvested in new
venture should also be exempted from tax. Section 52(E) of the Act should be amended
to give effect to this.

(ii) Development of Stock Markets:

Guidelines issued by finance ministry provides for the sale of investment by way of
public issue at the price to be decided on the basis of book value and earning capacity.
However, this method may not give the best available prices to venture fund as it will not
be able to consider future growth potential of the invested company.
One of the major factors which contributed to the success of venture funds in the West
is development of secondary and tertiary stock markets. These markets do not have
listing requirements and are spread over all important cities and towns in the country.
These stock markets provide excellent disinvestments mechanism for venture funds. In
India, however, stock market is not developed beyond a few important cities.

Success of venture capital fund depends very much upon profitable disinvestments of
the capital contributed by it. In US and UK secondary and tertiary markets helped in
accomplishing the above. However, in India, promotion of such maker is not feasible in
the prevailing circumstances as such laissez faire policy may attack persons with
ulterior motives in the business to the determent of general public. However, stock
market operation may be started at man by more big cities where, say, the number of
stock exchanges can be increased to 50. Further, permission to transact in unlisted
securities with suitable regulation will ensure firsthand contact between venture fund
and investors.
(iii) Fiscal Incentives:
Fiscal incentives may be given in the form of lowering the rate of income tax. It can be
accomplished by :
(i) Application of provisions applicable to non-corporate entities for taxing long term
capital gains.
(ii) An allowance to funds similar to section 80-CC of Income Tax Act, say 20 percent of
the investment in new venture which can be allowed as deduction from the income.
(iv) Private Sector Participation
In US and UK where the economy is dominated by private sector, development of
venture fund market was possible due to very significant role played by private sector
which is often willing to put money in high risk business provided higher returns are
expected. The guidelines by finance ministry provide that non- institutional promoters
share in the capital of venture fund cannot exceed 20 percent of total capital; further
they cannot be the single largest equity holders. The private sector, because of this
provision, may not like to promote venture fund business.
Promotion of venture funds by private sector, in addition to public financial institution
and banks, is recommended as:

Private sector is in advantageous position as compared to financial institutions and

banks to provide managerial support to new ventures as leading industrial house have a
pool of experienced professional managers in all fields of management viz. marketing,
production and finance.
The leading business houses will be able to raise funds from the investing public with
relative ease.

(vi) Limited Partnership

The Practice of the limited partnership as in vogue in UK should be permitted in order to

promote integration of object between the managers and contributors for the success of
venture capital projects.

(vii) Public Issue through OTCEI

The suggestion of Malagam Committee regarding making the public issue through
OTCEI should be implemented in case of certain specified industries.
The initiative on the part of the Government in the direction would see rapid growth of a
new breed of venture capital assisted entrepreneurs.
 VENTURE
CAPITAL
INVESTMENT
PROCESS

CHAPTER-3
 VENTURE CAPITAL INVESTMENT PROCESS

Venture capital investment process is different from normal project financing. In

order to understand the investment process a review of the available literature on
venture capital finance is carried out. Tyebjee and Bruno in 1984 gave model of
venture capital investment activity with some variations is commonly used
presently. As per this model this activity is a five step process as follows:

1. Deal Organization

2. Screening

3. Evaluation or due Diligence

4. Deal Structuring

5. Post Investment Activity and Exit

 Investors

Screening

VC MGT Fund
Selection

Investment
process

Structuring
Prospective
Investee

Monitoring

Exit

Venture Capital Investment Process

 Deal Origination:

In generating a deal flow, the VC investor creates a pipeline of deals or investment

opportunities that he would consider for investing in. deal may originate in various
ways. Referral system, active search system, and intermediaries. Referral system is
an important source of deals. Deals may be referred to VCFs by their parent
organizations, trade partners, industry associations, friends etc. Another deal flow
is active search through networks, trade fairs, conferences, seminars, foreign visits
etc. intermediaries is used by venture capitalists in developed countries like USA,
is certain intermediaries who match VCFs and the potential entrepreneurs.

Screening:

VCFs, before going for an in-depth analysis, carry out initial screening of all
projects on the basic of some broad criteria. For example, the screening process
may limit projects to areas in which the venture capitalist is familiar in terms of
technology, or product, or market scope. The size of investment, geographical
location and stage of financing could also be used as the broad screening criteria.

Due Diligence:

Due diligence is the industry jargon for all the activities that are associated with
evaluating an investment proposal. The Venture capitalists evaluate the quality of
entrepreneur before appraising the characteristics of the product, market or
technology. Most venture capitalists ask for a business plan to make an assessment
of the possible risk and return on the venture. Business plan contains detailed
information about the proposed venture. The evaluation of ventures by VCFs in
Indian includes; Preliminary evaluation: the applicant required to provide a brief
profile of the proposed venture to establish prima facie eligibility.

Detailed evaluation: once the preliminary evaluation is over, the proposal is

evaluated in greater detail. VCFs in India expect the entrepreneur to have: -
integrity, long-term vision, urge to grow, managerial skills, commercial orientation.

VCFs in India also make the risk analysis of the proposed projects which includes:
product risk, market risk, technological risk and entrepreneurial risk. The final
decision is taken in terms of the expected risk-return trade-off as shown in figure.

Deal Structuring:

In this process, the venture capitalist and the venture company negotiate the terms
of the deals, that are the amount form and price of the investment. This process is
termed as deal structuring. The agreement also include the venture capitalists right
to control the venture company and to change its management if needed, buyback
arrangement specify the entrepreneurs equity share and the objectives share and the
objectives to be achieved.

Post Investment Activities:

Once the deal has been structured and agreement finalized, the venture capitalist
generally assumes the role of a partner and collaborator. He also gets involved in
shaping of the direction of the venture. The degree of the venture capitalists
involvement depends on his policy. It may not, however be desirable for a venture
capitalist to get involved in the day-to-day operation of the venture. If a financial
or managerial crisis occurs, the venture capitalist may intervene, and even install a
new management team.
 Exit:

Venture capitalists generally want to cash-out their gains in five to ten years after
the initial investment. They play a positive role in directing the company towards
particular exit routes. A venture may exist in one of the following ways:

There are four ways for a venture capitalist to exit its investment:

Initial Public Offer (IPO)

Acquisition by another company

Re-purchase of venture capitalists share by the investee company

Purchase of venture capitalists share by a third party

DIFFERENCE BETWEEN
VENTURE CAPITAL
AND OTHER FUNDS
(PRIVATE EQUITY)
 Chapter-4

Venture Capital Vs Development Funds

Venture capital differs from development funds as latter means putting up of

industries without much consideration of use of new technology or new
entrepreneurial venture but having a focus on underdeveloped areas

(locations). In majority cases it is in the form of loan capital and proportion of

equity is very thin. Development finance is security oriented and liquidity prone.
The criteria for investment are proven track record of company and its promoters,
and sufficient cash generation to provide for returns (principal and interest). The
development bank safeguards its interest through collateral.

They have no say in working of the enterprise except safeguarding their interest by
having a nominee director. They do not play any active role in the enterprise except
ensuring flow of information and proper management information system, regular
board meetings, adherence to statutory requirements for effective management
information system, regular board meetings, adherence to statutory requirements
for effective management control where as Venture capitalist remain interested if
the overall management of the project account of high risk involved I the project
till its completion, entering into production and making available proper exit route
for liquidation of the investment. As against this fixed payments in the form of
installment of principal and interest are to be made to development.
 Venture Capital Vs Seed Capital & Risk Capital

It is difficult to make a distinction between venture capital, seed capital, and risk
capital as the latter two form part of broader meaning of Venture capital.
Difference between them arises on account of application of funds and terms and
conditions applicable. The seed capital and risk funds in India are being provided
basically to arrange promoters contribution to the project. The objective is to
provide finance and encourage professionals to become promoters of industrial
projects. The seed capital is provided to conventional projects on the consideration
of low risk and security and use conventional techniques for appraisal. Seed capital
is normally in the form low interest deferred loan as against equity investment by
Venture capital. Unlike Venture capital, Seed capital providers neither provide any
value addition nor participate in the management of the project. Unlike Venture
capital Seed capital provider is satisfied with low-normal returns and lacks any
flexibility in its approach.

Risk capital is also provided to established companies for adapting for new
technologies. Herein the approach is not business oriented but developmental. As a
result on one hand the success rate of units assisted by seed capital/risk.

Finance has been lower than those provided with venture capital. On the other
hand the return to the seed/risk capital financier had been very low as compared to
venture capitalist.
 Seed Capital Scheme Venture Capital Scheme

Basic Income or aid Commercial viability

Beneficiaries Very small entrepreneurs Medium and large

entrepreneurs are also covered

Size of assistance Rs. 15 lac(Max) Up to 40 percent of promoters

equity

Appraisal process Normal Skilled and Specialized

Estimates returns 20 percent 30 percent plus

Flexibility Nil Highly flexible

Value addition Nil Multiple ways

Exit option Sell back to promoters Several, including public offer

Funding sources Owner funds Outside contribution allowed

Syndication Not done Possible

Tax concession Nil Exempted

Success rate Not good Very satisfactory

 Difference between Seed Capital Scheme and Venture Capital Scheme

Venture Capital Vs Bought Out Deals

The important difference between the venture capital and bought out deals is that
bought outs are not based upon high risk- high reward principal. Further unlike
venture capital they do not provide equity finance at different stages of the
enterprise. However both have a common expectation of capital gains yet their
objectives and intents are totally different.

VENTURE CAPITAL & ALTERNATIVEFINANCING COMPARISON

Venture capital & alternative financing comparison

If we are struggling to find success in our quest for venture capital, maybe we are
looking in the wrong place. Venture capital is not for everybody. For starters,
venture capitalists tend to be very picky about where they invest. They are looking
for something to dump a lot of money into 9usually no less than $1 million) that
will pour even more money right back at them in a short amount of time (typically
3-7 years). We may be planning for a steady growth rate as opposed to the
booming, overnight success that venture capitalists tend to gravitate toward. We
may not be able to turn around as large of a profit as they are looking for in quick
enough time.

Simply put, venture capital is not the right fit for our business and there are plenty
of other options available when it comes to finding capital.

Substitute in Early stage

o Angels

Most venture capital funds will not consider investing in anything under $1 million
to $2 million. Angels, however, are wealthy individuals who will provide capital
for a startup business. These investors have usually earned their money as
entrepreneurs and business managers and can serve as a prime resource for advice
on top of capital. On the other hand, due to typically limited resources, angels
usually have a shorter investment horizon than venture capitalists and tend to have
less tolerance for losses.

o Private Placement

An investment bank or agent may be able to raise equity for our company by
placing our unregistered securities with accredited investors. However, you should
be aware that the fees and expenses associated with this practice are generally
higher than those that come with venture and angel investors. We will likely
receive little or no business counsel from private investors who also tend to have
little tolerance for losses and under-performance.

o Initial Public Offering

If we are somehow able to gain access to public equity markets than an initial
public offering (IPO) can be an effective way to raise capital. Keep in mind that,
while the public markets high valuations, abundant capital and liquidity
characteristics make it attractive, the transaction costs are high and there are
ongoing legal expenses associated with public disclosure requirements.

Later Stage Financing

o Bootstrap Financing

This method is intended to develop a foundation for your business from scratch.
Financial management is essential to make this work. With bootstrap financing
youre building a business from nothing, which means there is little to no margin
for error in the finance department. Keep a rigid account of all transactions and
dont stray from your budget.

A few different methods of bootstrapping include:

Factoring, this generates cash flow through the sale of your accounts receivable to
a factor at discounted price fors cash.
Trade Credit is an option if you are able to find a vendor or supplier that will
allow you to order goods on net 30, 60 or 90 day terms. If you can sell the goods
before the bill comes due then you have generated cash flow without spending any
money. Customers can pay you up front our services.

Leasing, your equipment instead of purchasing it outright.

o Fund from Operations

Look for ways to tweak your business in order to reduce the cash flowing out and
increase the cash flowing in. Funding found in business operations come free of
finance charges, can reduce future financing charges and can increase the value of
your business. Month-by-month operating and cash projections will show how well
we have planned, how you can optimize the elements of your business that
generate cash and allow you to plan for new investments and contingencies.

o Licensing

Sell licenses to technology that is non-essential to our company or grant limited

licensing to essential technology that can be shared. Throughout licensing we can
generate revenue from up-front fees, access fees, royalties or milestone payments.

o Vendor Financing

Similar to the trade credit related to bootstrap financing, vendors can play a big
role in financing your new business. Establish vendor relationships through our
trade association and strike deals to offer their product and pay for it at a date in
the near future. Selling the product in time is up to us. In hopes of keeping you as a
customer, vendors may also be willing to work out an arrangement if we need to
finance equipment or supplies. Just make sure to look for stability when you
research a vendors credentials and reputation before you sign any kind of
agreement. And keep in mind that many major suppliers (GE Small Business
Solutions, IBM Global Financing) own financial companies that can help you.

o Self Funding

Search between the couch cushions and in old jacket pockets for whatever extra
money you might have lying around and invest it into your business. Obviously
loose change will not be enough for extra business funding, but take a look at your
savings, investment portfolio, retirement funds and employee buyout options from
your previous employer. You wont have to deal with any creditors or interest and
the return on your investment could be much higher.

However, make sure that you consider the risks involved with using your own
resources. How competitive is the market that you are about to enter into? How
long will it take to pay you back? Will you be able to pay yourself back? Can you
afford to lose everything that you are investing if your business were to fail? Its
important that your projected returns are more than enough to cover the risk that
you will be taking.

o SBIR and STTR Programs

Coordinated by the SBA, SBIR (Small Business Innovation Research) and STTR
(Small business Technology Transfer) programs offer competitive federal funding
awards to stimulate technological innovation and provide opportunities for small
businesses. You can learn more about these programs at SBIRworld.com.

o State Funding
If youre not having any luck finding funding from the federal government take a
look at what your state has to offer. There is a list of links to state development
agencies that offer an array of grants and financial assistance for small
businessessonsAbout.com..

o Community Banks

These smaller banks may have fewer products than their financial institution
counterparts but they offer a great opportunity to build banking relationships and
are generally more flexible with payment plans and interest rates.

o Microloans

These types of loans can range from hundreds of dollars to low six-figure
amounts. Although some lenders regard microloans to be a waste of time
because the amount is so low, these can be a real boon for a startup business
or one that just needs to add some extra cash flow.

o Finance Debt

It may be more expensive in the long run than purchasing, but financing your
equipment, facilities and receivables can free up cash in the short term or reduce
the amount of money that you need to raise.

Friends

Ask your friends if they have any extra money that they would like to invest.
Assure them that you will pay them back with interest or offer those stock options
or a share of the profits in return.
 o Family

Maybe you have a rich uncle or a wealthy cousin that would be willing to lend you
some money get your business running or send it to the next level. Again, make it
worth their while by offering interest, stocks or a share of the profits.

o Form a Strategic Alliance

Aligning your business with a corporation can produce funding from upfront or
access fees to your service, milestone payments and royalties. In addition,
corporate partners may be able to provide research funding, loans and equity
investments.
 o Sell Some Assets

Find an interested party to buy some of your assets (computers, equipment, real
estate, etc) and then lease them back to you. This provides an instant source of
cash and you will still be able to use whatever assets you need.

o Business Lines of Credit

If your business has positive cash flow and has proven that it will cover its debts
then you may be eligible for a business line of credit. This type of financing is a
common service offered by most business banks and serves as business capital, up
to an agreed upon amount, that you can access at any time.

o Personal Credit Cards

Using personal credit cards to finance a business can be risky but, if you take the
right approach, they can also give your business a lift. You should only consider
using this type of financing for acquiring assets and working capital. Never
consider this to be a long-term option. Once your company breaks even or moves
into the black, ditch the credit cards and move toward traditional bank financing or
lease agreements.

o Business Credit Cards

Business credit cards carry similar risks as personal credit cards but tend to be a
safer alternative. While the activity on this card goes toward your credit report, a
business credit card can help you to build business credit, keep your business
expenses separate from your personal expenses and can make tax season easier to
manage.
 PLAYERS IN VENTURE CAPITAL INDUSTRY

Idea Established the Expansion Troubleshooting

company

Business Break Investing In IPO Turnaround

concept Even-point technology

Small Venture Medium

Angle venture funds
Fund Corporate investors

Big Venture Funds + Financial Funds

Players in Venture Capital Industry

There are following group of players:

Angels and angel clubs

Venture capital funds

o Small

o Medium

o Large
 Corporate Venture funds

Financial service venture groups

Angels and angel clubs

Angels are wealthy individuals who invest directly into companies. They can form
angel clubs to coordinate and bundle their activities. Beside the money, angels
often provide their personal knowledge, experience and contacts to support their
investees. With average deals sizes from USD100, 000 to USD 500,000 they
finance companies in their early stages. Examples for angel clubs are Media Club,
Dinner Club, and Angels forum

Small and Upstart Capital Funds

These are smaller Venture Capital Companies that mostly provide seed and startup
capital. The so called Boutique firms are often specialized in certain industries or
market segments. Their capitalization is about USD 20 to USD 50 million (is this
deals size or total money under management or money under management per
fund?). As for small and medium Venture capital funds strong competition will
clear the market place. There will be mergers and acquisitions leading to a
concentration of capital. Funds specialized in different business areas will form
strategic partnerships. Only the more successful funds will be able to attract new
money. Examples are:

o Artemis Comaford

o Abbell Venture Fund

o Acacia Venture Partners
Medium Venture Funds

The medium venture funds finance all stages after seed and operate in all business
segments. They provide money for deals up to USD 250 million. Single funds have
up to USD 5 billion under management. An example is Accel Partners

Large Venture Funds

As the medium funds, large funds operate in all business sectors and provide all
types of capital for companies after seed stage. They often operate internationally
and finance deals up to USD 500 million the large funds will try to improve their
position by mergers and acquisitions with other funds to improve size, reputation
and their financial muscle. In addition they will to diversify. Possible areas to enter
are other financial services by means of M&As with financial services corporations
and the consulting business. For the latter one the funds have a rich resource of
expertise and contacts in house. In a declining market for their core activity and
with lots of tumbling companies out there is no reason why Venture Capital funds
should offer advice and consulting only to their investees.

Examples are:

o AIG American International Group

o Cap Vest man

o 3i
 Corporate Venture Funds

These Venture Capital funds are set up and owned by technology companies.
Their aim is to widen the parent companys technology base in an win-win-
situation for both, the investor and the investee. In general, corporate funds invest
in growing or maturing companies, often when the investee wishes to make
additional investments in technology or product development. The average deals
size is between USD 2 million and USD 5 million. The large funds will try to
improve their position by mergers and acquisitions with other funds to improve
size, reputation and their financial muscle. In addition they will to diversify.
Possible areas to enter are other financial services by means of M&As with
financial services corporations and the consulting business. For the latter one the
funds have a rich resource of expertise and contents in house. In a declining
market for their core activity and with lots of tumbling companies out there is no
reason why Venture Capital funds should offer advice and consulting only to their
investees. Examples are:

o Oracle

o Adobe

o Dell

o Kyocera

Financial Funds:

A solution for financial funds could be a shift to a higher securisation of Venture

Capital activities. That means that the parent companies shift the risk to their
customers by creating new products such as stakes in a Venture Capital fund.
However, the success of such products will depend on the overall climate and
expectations in the economy. As long as the sown turn continues without any sign
of recovery customers might prefer less risky alternatives.
Research Methodology

CHAPTER: - 5
Research Methodology

An effort will be made to study the role of venture capital institutions in India by
collectively and individually. This study revolves around the various ventures capital
institutions in India. These are

Industrial Finance Corporation of India (IFCIIndustrial development bank of India (IDBI)

Industrial Credit and Investment Corporation of India (ICICI)

Infrastructure development Finance Company Ltd (IDFC)

Small industries development bank of India (SIDBI)

State Financial Corporation (SIDCs)

4.1 OBJECTIVES

To get an insight about the concept of ventures capital financing

To study the procedures of ventures capital financing in India

To study the method of valuation of ventures capital

To study the operational an financing performance of ventures capital finacing
organization.

To study the risk associated with investing in ventures capital industry and various
protections given by the industry.
4.2 Need and Significance

The emergence of ventures capital in India financial system is of recent origin and
ventures capital financing has started recently in India. The ventures capital firm by
financing he risky proposals, can play a crucial and innovative role in the development
of small scale enterprise in particular and economic development in general. Venture
capital financing as a source of finance in India is still in the primary stage. There is a
need for creating a conductive environment for growth of ventures capital firms for
which concerted effort from various agencies and government and the government are
required.

The ventures capital should be viewed a an instrument for financing a wide range of
project, which essentially have a high risk return profile. In order to develop the ventures
capital industry as a catalyst agency for development of technology, nurturing new
enterprise and stimulating industrial activities, a lot more is still required so it is a need
for creation of an awareness about the venture capital industry.

4.3 Limitations Of Study

The scope of study is limited due to lack of time.

The research is to be conducted at micro level

The study will be limited unto the availability of the data The researcher

Does not have any excess to the internal working of the ventures capital

Companies.

RESEARCH DESIGN

Descriptive research desing

DATA COLLECTION

Data collection form following secondary sources.

Books

Internet

Newspaper and magazines

Journals

Analysis and Statistical tools

For the purpose of analysis various financial tools like financial ratios, comparatives
statements, cash flow statement etc will be used
Conclusion

CHAPTER 6

Conclusion
Venture Capital funds go through due diligence to finalize the deal. This includes
evaluation of the management team, strategy, execution and commercialization plans.
This is supplemented by legal and accounting due diligence, typically carried out by an
external agency. In India the entire process takes about 6 months. Entrepreneur is
advised to keep that in mind before looking to raise funds. The actual cash inflow might
get delayed because of regulatory issues.

All businesses are not evaluated equally. Ventures houses today are looking at
what enhances the value of a company with different 'value drivers' affecting various
industry segments. For example, when evaluating a technology company, investor may
care about a unique technology or process with great potential. They won't necessarily
worry whether the company lacks audited financial statement or an organization
structure. In a non-technology area, however there must be more than a new ideas;
'value drivers might include..
RECOMMENDATION

CHAPTER 7
 RECOMMENDATION
The emergence of venture capital in Indian financial system is of recent origin and
venture capital financing has started recently in India. The venture capital firms by
financing the risk proposals can play a crucial and innovative role in the development of
small scale enterprise in particular and economic development in general. Century
capital financing as a source of finance in India is still in the primary stages. Indian
ventures capital firms are financing small and medium size venture capital undertaking;
s the investment of a venture capital firm in a single undertaking was restricted to 5% of
the total corpus of the fund. The budget 1997-1998 however has increased this limit to
20% of the total corpus. So, the venture capital firm may finance to relatively big
undertaking also.
The rules and regulations applicable to the venture capital firms come in way of
providing healthy environment for the growth of the venture capital industry. There is a
need for creating a conductive environment for the growth of venture capital firms for
which concerted effort from various agencies and the government are required. These
agencies may be development financial institution other financial institution private
sector unit etc.
The venture capital should be viewed as an instrument for financing a wide range of
projects, which essentially have risk high return profile. In order to develop the ventures
capital industry as a catalyst agency for development of technology, nurturing new
enterprises and stimulating industrial activities, a lot mo9re is still required. Some of the
steps which may be undertake are:
1. Preferential tax treatments of venture capital firms.
2. Providing exit ways to venture capital firms. The underdeveloped capital market in
India is the biggest hurdle in growth of the venture capital firms. The advent of the
OTCEI was considered a good step towards this objectives but it has failed to bring the
desired impact.
3.Providing long terms finance to venture capital fund y providing incentives to the
investors of the venture capital firms.
4. Extending the area of operation of venture capital firms to services sector also.
BIBLIOGRAPHY
CHAPTER-8
 BIBLIOGRAPHY
WEBSITE:-

www.google.com
www.venturecapital.com
www.wikipedia.com

BOOKS REFFERED:-

Financial Management-by I M PANDEY

Financial Management-by PRASANA CHANDRA

Financial Management by Shashi K.Gupta