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Entrepreneurship Unit 4, Financing a new venture
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Venture capital and new venture financing, It is one of the widely used sources of medium term finance. It is also called risky capital, , The business doesn’t stand the obligation to repay the money., The capitalist who invests in venture capital is not similar to bankers and equity shareholders. , A venture capitalist acts as a partner, manager and advisor to the enterprise.
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Features of venture capital, The main features of venture capital can be summarized as follows: , High Degrees of Risk , Lack of Liquidity, Equity participation, Innovative Projects, Participation in management
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Advantages of venture Capital, They bring wealth and expertise, Better than angel investors, Does not stand the Obligation to repay money, Valuable info, resources and technical assistance
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Disadvantages of Venture Capital, Control of founder is lost , Lengthy and complex process, Uncertain form of financing (restrictions), Benefit from such finance can be realised in long run only.
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Private Equity, Firms that invest in equity of private company not listed company with the aim to exit at higher valuation in future., , Example of famous private equity in india, Motilal oswal private equity , Everstone capital , IDFC private equity funds
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Private Equity, Few experts in various domain comes together, Fund name , 500cr, Contact pension fund ,lic. 80, 30, , Investing into various business
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Private Equity, An initial public offering (IPO) — shares of the company are offered to the public, typically providing a partial immediate realization to the financial sponsor as well as a public market into which it can later sell additional shares; , • A merger or acquisition — the company is sold for either cash or shares in another company; , • A recapitalization — cash is distributed to the shareholders (in this case the financial sponsor) and its private equity funds either from cash flow generated by the company or through raising debt or other securities to fund the distribution.
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Indian , Company, Up to 10 % of , company’s share, Indian , Company, More than 10 % of , company’s share, Indian , Company, EQUITY, G Sec, Sub – A/c’s
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Types of Foreign Direct investment, Foreign direct investments are commonly categorized as horizontal, vertical, or conglomerate., With a horizontal direct investment, a company establishes the same type of business operation in a foreign country as it operates in its home country. A U.S.-based cell phone provider buying a chain of phone stores in China is an example. , In a vertical investment, a business acquires a complementary business in another country. For example, a U.S. manufacturer might acquire an interest in a foreign company that supplies it with the raw materials it needs., In a conglomerate type of foreign direct investment, a company invests in a foreign business that is unrelated to its core business. Since the investing company has no prior experience in the foreign company's area of expertise, this often takes the form of a joint venture.
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Government agencies assisting in financing the projects, Department Of Science & Technology
