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General
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Venture
capital is a type of private equity capital typically provided by
professional, outside investors to new, growth businesses. Generally
made as cash in exchange for shares in the invested company, venture
capital investments are usually high risk, but offer the potential for
above-average returns.
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The main
features of venture capital are High Degrees of Risk, Equity
Participation, Long Term Investment, Participation in Management,
Achieve Social Objectives, Investment is liquid.
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Generally
there are three types of organised or institutional venture capital
funds: Venture capital funds set up by angel investors; venture capital
subsidaries of corporation; and private venture capital firms/funds.
Venture capital subsidaries are established by major corporations,
commercial bank holding companies and other financial
institutions.
Venture
Capital in India
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Many U.S.
and other foreign investors are evaluating alternatives for investments
into software development, business process outsourcing, drug discovery
and other tech and non-tech companies based in India. In the IT, life
sciences and related sectors, many U.S. and India venture capitalists
still make early stage investments into a U.S. company which has a
subsidiary in India for fulfillment.
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Some
Indian state government funds are actively investing in India. These
include SIDBI Venture Capital Limited, Gujarat Venture Fund Limited,
RVCF, APIDC, Canbank Venture Capital Fund Limited, IFCI Venture Capital
Funds Limited, Rajasthan Asset Management Co. Private Ltd., KITVEN and
Kerala Venture Capital Fund Private Limited. Investments from these
institutions have the advantage of lower ‘cost’ of capital and hence can
be more attractive to entrepreneurs; however, the maximum amount of
capital available is typically $500,000.
Market
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Over 44 US-based VC firms are now
seeking to invest heavily in start-ups and early-stage companies in
India. These firms have raised, or are in the process of raising, an
average of US $100 million each. Indeed, if these 40-plus firms are
successful in raising money, they would garner approximately $4.4
billion to be invested during the next 4 to 5 years.
- The spiraling growth in the economy has led to a similar rise in
the funding provided by venture capitalists. Apart from a few sectors
like non-banking financial services, gold financing and activities not
permitted under the industrial policy of the Government of India,
investors can invest their funds in most other sectors. And if investors
can get used to the heat and dust of India, it continues to be a country
that offers great investment opportunities to foreign investors.
Entrepreneur
who want the information on General, Market, Company Profiles, Projects,
Venture Capital in India, Consultants, Business Plan, Reports
can
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