Venture capital is a form of startup funding provided to emerging business on the basis of growth prospective of firm in near future. It involves high risk as the funding is provided to startups which may rise or fall in near future and the probability of getting failed in surviving in the market competitive scenario is higher as compared to rising into a profitable business. Venture capitalist provides funding on the basis of several factors which indicates a strong ability of firm being successful in business in coming years. These factors could be an innovative idea, a properly build framework of future business, positive market survey, well - defined business plan etc. Venture capital is in the form of equity financing where, the investor buys stake or share in the ownership of the company which enables it to share the risk and reward of the business. Some of the examples of successful start-ups which were highly valued by VCs are :- Uber, Flipkart, Xiaomi, Airbnb The process goes like- 1.Idea generation stage where the basic idea of business is analyzed in term of its potential 2. Business proposal- this provides a detailed analysis on various factors like market, competitors, plans, financial analysis, set plan, strategies formed etc 3. Meeting- Meeting is held between the owner and venture capitalist after the business proposal is found strong to discuss on future working 4. Agreement- agreement is made regarding the amount of fund to be provided with set terms and condition of holding an equity stake in company 5. Funding- Finally the investment is made by venture capitalists to these start-ups which serves as a form of financing for the business. Thank You For Watching Subscribe to DevTech Finance on Youtube to find related videos.

1. Venture Capital

2. INTRODUCTION
• Venture Capital is a form of financing provided to startups or small
businesses at their initial stages by affluent investors (angel
investors), financial entities and investment banks
• This investment by venture capitalist is provided on the basis of
firm’s future prospects, growth potential, innovative ideas and a
well defined framework of business planning & execution

3. FEATURES
• This financing provided by venture capitalists involves high level of risk as the
firms are startups and new in market so the related competition is high to
breakthrough and build a position
• As it involves high risk the expectation of return on financing is also high
• Venture capital is in the form of equity financing where, the investor buys stake
or share in the ownership of the company which enables it to share the risk and
reward of the business

4. FEATURES
• The venture capitalist provides support by guiding and participating actively
in the decision making for business and hopes for the success of firm to reap
out the benefit of a risky-investing
• Involves long-term horizon as the time involved is uncertain which the start-
up may take to build up a profitable business
• Rate of failures and loss of venture capital is quite high still the expected
profit after success of firm makes it lucrative option of investing
• Some of the examples of successful start-ups which were highly valued by
VCs are :- Uber, Flipkart, Xiaomi, Airbnb

5. PROCESS
• Idea Generation (growth potential, innovation)
• Business Plan (business proposal with detailed projections on future plans, financial
framework, competitors analysis, market survey, opportunities & related strategy)
• Preliminary Meeting (meeting to discuss various aspects after going through the set
plans of business proposal and to decide whether to provide financing or not)
• Term sheets Agreement (agreement to move forward with the related term & conditions
of financing)
• Funding (final stage to provide fund)

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