Understanding Venture Capital: Key Concepts and Regulations
Venture capital is a form of financing provided to startup companies with high growth potential. It involves high risk and requires a long-term horizon, often coming in various forms like equity, conditional loans, and participation in management. The process includes stages such as seed capital, expansion capital, and last-stage capital. The SEBI regulations outline criteria for venture capital funds, ensuring they invest in venture capital undertakings as per specified guidelines.
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Mona Gupta asst. professor Commerce Department Durga college
Venture capital means risk capital. The risk visualized may be very high, may be so high as to result in total lose or very less so as to result in high gains.
Venture capital is finance that investors provide to startup companies and small businesses that are believed to have long term growth potential. Venture capital generally comes from well-of investors, investment banks and any other financial institutions. However, it does not always take just a monetary form, it can be provided in the form of technical or managerial expertise.
High risk. Long time horizon. Lack of liquidity. Finance new and rapidly growing companies. Finance to smaller and less mature companies. Provided at earlier stage. Participation in management.
Equity Conditional loans Income note Quasi-equity Participating debentures Initial public offer Acquisition by another company Promoter s buy back
Subscription agreement Shareholder s or investor s right agreement Term sheet Management rights letter
Seed capital. Startup capital. Early stage capital. Expansion capital. Last stage capital.
As per SEBI (venture capital funds) regulations, 1996 venture capital fund means a fund established in the form of a trust or company including a body corporate and registered under these regulations which Has a dedicated pool of capital Raised in a manner specified in the regulations, and Invests in venture capital undertaking in accordance with the regulations.
Avishkaar India micro Venture Capital fund Adharshila Venture Capital fund Aditya Birla Private Equity Trust. Aditya Birla Real Estate Fund. Axis venture capital trust Avigo India private equity trust Eureka Venture Fund Gujarat VCF- 1995
