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Unit 2-Features, Methods and Process of Venture Capital Financing

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Unit 2-Features, Methods and Process of Venture Capital Financing

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प्रथम शंकर
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Unit 2- Features, Methods and

Process of Venture Capital Financing


• Features of VC Financing
• Various sources of Financing- Institutional and
Other Sources
• Funding Process
INTRODUCTION
• Venture Capital is a financing tool for
companies and an investment vehicle for
wealthy individuals and institutional investors.
• Wealthy investors like to invest their capital in
start-ups with a long-term growth perspective.
– This capital is called venture capital and the
investors are called venture capitalists, in other
words, it is a way for companies to receive money
in the short term and for investors to grow wealth
in the long term.
Contd.
• Venture Capitals tend to focus on
– emerging companies and such investments are risky
as they are illiquid, but also have the potential to
provide impressive returns if invested in the right
venture.
• A venture capital firm can finance a company by
– equity participation and capital gains,
– participating in debentures and
– also extending conditional loans to the firms.
Types of Investors
• Angel Investors
• Venture Capitalist
• Private Equity
Watch the video
– https://www.youtube.com/embed/2wyF4EqHfUo
Features of Venture Capital
• High-risk investment: It is highly risky and the chances of failure are
much higher as it provides long-term startup capital to high risk-
high reward ventures.
• High Tech projects: Generally, venture capital investments are
made in high tech projects or areas using new technologies as they
have higher returns.
• Participation in Management: Venture Capitalists act
complementary to the entrepreneurs, for better or worse, in
making decisions for the direction of the company.
• Length of Investment: The investors eventually seek to exit in three
to seven years. The process takes several years for having significant
returns and also need the talent of venture capitalist and
entrepreneurs to reach completion.
• Illiquid Investment: It is an investment that is not subject to
repayment on demand or a repayment schedule.
Let’s read some news
SaaS platform Zvolv raises $1.5 mn, will
use fund to expand business
• The funding round was led by JSW Ventures, a technology-focused venture capital fund.
• India’s burgeoning startup landscape and its rapid strides in digital adoption are considered
key contributors to the growing SaaS adoption in the country
• Zvolv has raised $1.5 million and will use the funds to expand globally and improve its
technology,
• The funding round was led by JSW Ventures, a technology-focused venture capital fund. It
had participation from Riso Capital, a Silicon Valley-based VC fund that invests in India-based
startups.
• More and more enterprises are switching to no-code and low-code development platforms
to dramatically increase application delivery speed. Combined with the increased demand for
custom applications and data-centric solutions, business and IT teams within enterprises are
increasingly turning to Zvolv as per Hardik Gandhi, co-founder and chief executive officer of
the company
• Zvolv is a no-code/low-code platform for automating business processes. Launched in 2018,
the platform is used by large enterprises like the Tata Group, Aditya Birla Group, Accenture,
KPMG, Dominos, Swiggy and Lenskart.
• “Zvolv’s intelligent no-code platform is creating immense value for their customers. In this
increasingly digital environment, we are seeing accelerated demand for platforms like Zvolv
– Sachin Tagra, Partner at JSW Ventures
PE-VC investments surge to record $49
bn in first nine months of CY2021
• Investments worth $20 bn in unicorns account for nearly 41%
of the value pie so far in CY2021, which has seen the addition
of 29 billion-dollar companies
• Private equity and venture capital (PE-VC) firms invested a
record $49 billion across 840 deals in Indian companies during
the first nine months of 2021, 23 per cent higher than the
$39.5 billion invested in the previous calendar year.
• Investments worth $20 billion in unicorns--VC-funded startups
valued at $1 billion or more--account for close to 41 per cent
of the value pie in 2021 so far, which has seen the addition of
29 unicorns, data from Venture Intelligence shows.
Mumbai Last Updated at October 2, 2021 00:29 IST
Conclusion
• As world markets are becoming more and more
competitive, thus, it is necessary to choose the right access
to human capital to guide and monitor along with the
requisite funds necessary for new projects.
• Venture Capitalists in India have ensured newer avenues
and expansion.
• There are large sectors of the economy that are ripe for
venture capital investors like IT, Pharma and other service
industries too.
• Therefore, Venture Capitalists are having positive response
to do business in Indian. As there is a risk factor, one should
do a thorough study before getting into the process.

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