Venture capital and its advantages

1. By,
Jismy James
MAM sem 5
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Jismy James

2. INTRODUCTION
CAPITAL
Fund employed in any business activity.
Most important factor for production.
No economic entity can function without capital.
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3. Venture capital
Venture 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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5. Features of VC
New Venture
Continuous Involvement
Mode of Investment
Objective
Hands-On Approach
High Risk-Return Ventures
Nature of Firm
Liquidity.
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6. 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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7. 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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8. Methods of venture capital
Equity
Conventional Loan
Conditional Loan
Income note
Other financing method
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9. ADVANTAGES OF VENTURE CAPITAL
Economy
oriented
Entrepreneur
oriented
Investor Oriented
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10. Economy Oriented-
 Helps in industrialization of the country
 Helps in the technological development of the
country
 Generates employment
 Helps in developing entrepreneurial skills
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11. 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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12. 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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