Introduction to venture capital Venture Capital is a form of "risk capital".

In other words, capital that is invested in a project (in this case - a business) where there is a substantial element of risk relating to the future creation of profits and cash flows. Risk capital is invested as shares (equity) rather than as a loan and the investor requires a higher"rate of return" to compensate him for his risk. What is venture capital? Venture capital provides long-term, committed share capital, to help unquoted companies grow and succeed. If an entrepreneur is looking to start-up, expand, buy-into a business, buy-out a business in which he works, turnaround or revitalise a company, venture capital could help do this. Obtaining venture capital is substantially different from raising debt or a loan from a lender. Lenders have a legal right to interest on a loan and repayment of the capital, irrespective of the success or failure of a business . Venture capital is invested in exchange for an equity stake in the business. As a shareholder, the venture capitalist's return is dependent on the growth and profitability of the business. This return is generally earned when the venture capitalist "exits" by selling its shareholding when the business is sold to another owner. What kind of businesses are attractive to venture capitalists? Venture capitalist prefer to invest in "entrepreneurial businesses". This does not necessarily mean small or new businesses. Rather, it is more about the investment's aspirations and potential for growth, rather than by current size. Such businesses are aiming to grow rapidly to a significant size. As a rule of thumb, unless a business can offer the prospect of significant turnover growth within five years, it is unlikely to be of interest to a venture capital firm. Venture capital investors are only interested in companies with high growth prospects, which are managed by experienced and ambitious teams who are capable of turning their business plan into reality.

For how long do venture capitalists invest in a business? Venture capital firms usually look to retain their investment for between three and seven years or more. The term of the investment is often linked to the growth profile of the business. Investments in more mature businesses, where the business performance can be improved quicker and easier, are often sold sooner than investments in early-stage or technology companies where it takes time to develop the business model. Where do venture capital firms obtain their money? Just as management teams compete for finance, so do venture capital firms. They raise their funds from several sources. To obtain their funds, venture capital firms have to demonstrate a good track record and the prospect of producing returns greater than can be achieved through fixed interest or quoted equity investments. Most UK venture capital firms raise their funds for investment from external sources, mainly institutional investors, such as pension funds and insurance companies. Venture capital firms' investment preferences may be affected by the source of their funds. Many funds raised from external sources are structured as Limited Partnerships and usually have a fixed life of 10 years. Within this period the funds invest the money committed to them and by the end of the 10 years they will have had to return the investors' original money, plus any additional returns made. This generally requires the investments to be sold, or to be in the form of quoted shares, before the end of the fund. What is involved in the investment process? The investment process, from reviewing the business plan to actually investing in a proposition, can take a venture capitalist anything from one month to one year but typically it takes between 3 and 6 months. There are always exceptions to the rule and deals can be done in

extremely short time frames. Much depends on the quality of information provided and made available. The key stage of the investment process is the initial evaluation of a business plan. Most approaches to venture capitalists are rejected at this stage. In considering the business plan, the venture capitalist will consider several principal aspects: - Is the product or service commercially viable? - Does the company have potential for sustained growth? - Does management have the ability to exploit this potential and control the company through the growth phases? - Does the possible reward justify the risk? - Does the potential financial return on the investment meet their investment criteria? In structuring its investment, the venture capitalist may use one or more of the following types of share capital: Ordinary shares These are equity shares that are entitled to all income and capital after the rights of all other classes of capital and creditors have been satisfied. Ordinary shares have votes. In a venture capital deal these are the shares typically held by the management and family shareholders rather than the venture capital firm. Preferred ordinary shares These are equity shares with special rights.For example, they may be entitled to a fixed dividend or share of the profits. Preferred ordinary shares have votes. Preference shares These are non-equity shares. They rank ahead of all classes of ordinary shares for both income and capital. Their income rights are defined and they are usually entitled to a fixed dividend (eg. 10% fixed). The shares may be redeemable on fixed dates or they may be irredeemable.

Sometimes they may be redeemable at a fixed premium (eg. at 120% of cost). They may be convertible into a class of ordinary shares. Loan capital Venture capital loans typically are entitled to interest and are usually, though not necessarily repayable. Loans may be secured on the company's assets or may be unsecured. A secured loan will rank ahead of unsecured loans and certain other creditors of the company. A loan may be convertible into equity shares. Alternatively, it may have a warrant attached which gives the loan holder the option to subscribe for new equity shares on terms fixed in the warrant. They typically carry a higher rate of interest than bank term loans and rank behind the bank for payment of interest and repayment of capital. Venture capital investments are often accompanied by additional financing at the point of investment. This is nearly always the case where the business in which the investment is being made is relatively mature or well-established. In this case, it is appropriate for a business to have a financing structure that includes both equity and debt. (Below given pts I dnt thnk shud be added or we can take dis as one pt ie. Other forms of finance, bt u decide) Other forms of finance provided in addition to venture capitalist equity include: - Clearing banks - principally provide overdrafts and short to mediumterm loans at fixed or, more usually, variable rates of interest. - Merchant banks - organise the provision of medium to longer-term loans, usually for larger amounts than clearing banks. Later they can play an important role in the process of "going public" by advising on the terms and price of public issues and by arranging underwriting when necessary.

- Finance houses - provide various forms of installment credit, ranging from hire purchase to leasing, often asset based and usually for a fixed term and at fixed interest rates. Factoring companies - provide finance by buying trade debts at a discount, either on a recourse basis (you retain the credit risk on the debts) or on a non-recourse basis (the factoring company takes over the credit risk). Government and European Commission sources - provide financial aid to UK companies, ranging from project grants (related to jobs created and safeguarded) to enterprise loans in selective areas. Mezzanine firms - provide loan finance that is halfway between equity and secured debt. These facilities require either a second charge on the company's assets or are unsecured. Because the risk is consequently higher than senior debt, the interest charged by the mezzanine debt provider will be higher than that from the principal lenders and sometimes a modest equity "up-side" will be required through options or warrants. It is generally most appropriate for larger transactions. Venture capital financing process There are five common stages of venture capital financing 1. The Seed stage 2. The Start-up stage 3. The Second stage 4. The Third stage 5. The Bridge/Pre-public stage The number and type of stages may be extended by the VC firm if it deems necessary; this is common. This may happen if the venture does not perform as expected due to bad management or market conditions

The following schematics shown here are called the process data models. All activities that find place in the venture capital financing process are displayed at the left side of the model. Each box stands for a stage of the process and each stage has a number of activities. At the right side, there are concepts. Concepts are visible products/data gathered at each activity. This diagram is according to the modeling technique founded by Professor Sjaak Brinkkemper of the University of Utrecht in the Netherlands. The Seed Stage

The Seed Stage This is where the seed funding takes place. It is considered as the setup stage where a person or a venture approaches an angel investor or an investor in a VC firm for funding for their idea/product. During this stage, the person or venture has to convince the investor why the idea/product is worthwhile. The investor will investigate into the technical and the economical feasibility (Feasibility Study) of the idea. In some cases, there is some sort of prototype of the idea/product that is not fully developed or tested. If the idea is not feasible at this stage, and the investor does not see any potential in the idea/product, the investor will not consider financing the idea. However if the idea/product is not directly feasible, but part of the

idea is worth for more investigation, the investor may invest some time and money in it for further investigation. Example A Dutch venture named High 5 Business Solution V.O.F. wants to develop a portal which allows companies to order lunch. To open this portal, the venture needs some financial resources, they also need marketeers and market researchers to investigate whether there is a market for their idea. To attract these financial and non-financial resources, the executives of the venture decide to approach ABN AMRO Bank to see if the bank is interested in their idea. After a few meetings, the executives are successful in convincing the bank to take a look in the feasibility of the idea. ABN AMRO decides to put a few experts for investigation. After two weeks time, the bank decides to invest. They come to an agreement of invest a small amount of money into the venture. The bank also decides to provide a small team of marketeers and market researchers and a supervisor. This is done to help the venture with the realization of their idea and to monitor the activities in the venture. Risk At this stage, the risk of losing the investment is tremendously high, because there are so many uncertain factors. Research by J.C. Ruhnka and J.E. Young shows that the risk of losing the investment for the VC firm is around 66.2% and the causation of major risk by stage of development is 72%. The Harvard report by William R. Kerr, Josh Lerner, and Antoinette Schoar, however, shows evidence that angelfunded startup companies are less likely to fail than companies that rely on other forms of initial financing.

The Start-up Stage

The Start-up Stage If the idea/product/process is qualified for further investigation and/or investment, the process will go to the second stage; this is also called the start-up stage. At this point many exciting things happen. A business plan is presented by the attendant of the venture to the VC firm. A management team is being formed to run the venture. If the company has a board of directors, a person from the VC firms will take seats at the board of directors. While the organisation is being set up, the idea/product gets its form. The prototype is being developed and fully tested. In some cases, clients are being attracted for initial sales. The management-team establishes a feasible production line to produce the product. The VC firm monitors the feasibility of the product and the capability of the management-team from the board of directors. To prove that the assumptions of the investors are correct about the investment, the VC firm wants to see result of market research to see whether the market size is big enough, if there are enough consumers to buy their product. They also want to create a realistic forecast of the investment needed to push the venture into the next stage. If at this stage, the VC firm is not satisfied about the progress or result from market research, the VC firm may stop their funding and the venture will have to search for another investor(s). When the cause relies on handling

of the management in charge, they will recommend replacing (parts of) the management team. Example Now the venture has attracted an investor, the venture need to satisfy the investor for further investment. To do that, the venture needs to provide the investor a clear business plan how to realise their idea and how the venture is planning to earn back the investment that is put into the venture, of course with a lucrative return. Together with the market researchers, provided by the investor, the venture has to determine how big the market is in their region. They have to find out who are the potential clients and if the market is big enough to realise the idea. From market research, the venture comes to know that there are enough potential clients for their portal site. But there are no providers of lunches yet. To convince these providers, the venture decided to do interviews with providers and try to convince them to join. With this knowledge, the venture can finish their business plan and determine a pretty good forecast of the revenue, the cost of developing and maintaining the site and the profit the venture will earn in the following five years. After reading the business plan and consulting the person who monitors the venture activities, the investor decides that the idea is worth for further development. Risk At this stage, the risk of losing the investment is shrinking, because the uncertainty is becoming clearer. The risk of losing the investment for the VC firm is dropped to 53.0%, but the causation of major risk by stage of development becomes higher, which is 75.8%. This can be explained by the fact because the prototype was not fully developed and tested at the seed stage. And the VC firm has underestimated the risk involved. Or it could be that the product and the purpose of the product have been changed during the development.

The Second Stage

The Second Stage At this stage, we presume that the idea has been transformed into a product and is being produced and sold. This is the first encounter with the rest of the market, the competitors. The venture is trying to squeeze between the rest and it tries to get some market share from the competitors. This is one of the main goals at this stage. Another important point is the cost. The venture is trying to minimize their losses in order to reach the break-even. The management team has to handle very decisively. The VC firm monitors the management capability of the team. This consists of how the management team manages the development process of the product and how they react to competition.

If at this stage the management team is proven their capability of standing hold against the competition, the VC firm will probably give a go for the next stage. However, if the management team lacks in managing the company or does not succeed in competing with the competitors, the VC firm may suggest for restructuring of the management team and extend the stage by redoing the stage again. In case the venture is doing tremendously bad whether it is caused by the management team or from competition, the venture will cut the funding. Example The portal site needs to be developed. (If possible, the development should be taken place in house. If not, the venture needs to find a reliable designer to develop the site.) Developing the site in house is not possible; the venture does not have this knowledge in house. The venture decides to consult this with the investor. After a few meetings, the investor decides to provide the venture a small team of webdesigners. The investor also has given the venture a deadline when the portal should be operational. The deadline is in three months. In the meantime, the venture needs to produce a client portfolio, who will provide their menu at the launch of the portal site. The venture also needs to come to an agreement on how these providers are being promoted at the portal site and against what price. After three months, the investor requests the status of development. Unfortunately for the venture, the development did not go as planned. The venture did not make the deadline. According to the one who is monitoring the activities, this is caused by the lack of decisiveness by the venture and the lack of skills of the designers. The investor decides to cut back their financial investment after a long meeting. The venture is given another three months to come up with an operational portal site. Three designers are being replaced by a new designer and a consultant is attracted to support the executives decisions. If the venture does not make this deadline in time, they have to find another investor.

Luckily for the venture, with the come of the new designer and the consultant, the venture succeeds in making the deadline. They even have two weeks left before the second deadline ends. Risk At this stage, the risk of losing the investment still drops, because the venture is capable to estimate the risk. The risk of losing the investment for the VC firm drops from 53.0% to 33.7%, and the causation of major risk by stage of development also drops at this stage, from 75.8% to 53.0%. This can be explained by the fact that there is not much developing going on at this stage. The venture is concentrated in promoting and selling the product. That is why the risk decreases.[3] The Third Stage

The Third Stage This stage is seen as the expansion/maturity phase of the previous stage. The venture tries to expand the market share they gained in the previous stage. This can be done by selling more amount of the product and having a good marketing campaign. Also, the venture will have to see whether it is possible to cut down their production cost or restructure the internal process. This can become more visible by doing a SWOT analysis. It is used to figure out the strength, weakness, opportunity and the threat the venture is facing and how to deal with it.

Except that the venture is expanding, the venture also starts to investigate follow-up products and services. In some cases, the venture also investigates how to expand the life-cycle of the existing product/service. At this stage the VC firm monitors the objectives already mentioned in the second stage and also the new objective mentioned at this stage. The VC firm will evaluate if the management team has made the expected reduction cost. They also want to know how the venture competes against the competitors. The new developed follow-up product will be evaluated to see if there is any potential. Example Finally the portal site is operational. The portal is getting more orders from the working class every day. To keep this going, the venture needs to promote their portal site. The venture decides to advertise by distributing flyers at each office in their region to attract new clients. In the meanwhile, a small team is being assembled for sales, which will be responsible for getting new lunchrooms/bakeries, any eating-places in other cities/region to join the portal site. This way the venture also works on expanding their market. Because of the delay at the previous stage, the venture did not fulfil the expected target. From a new forecast, requested by the investor, the venture expects to fulfil the target in the next quarter or the next half year. This is caused by external issues the venture does not have control of it. The venture has already suggested to stabilise the existing market the venture already owns and to decrease the promotion by 20% of what the venture is spending at the moment. This is approved by the investor. Risk At this stage, the risk of losing the investment for the VC firm drops with 13.6% to 20.1%, and the causation of major risk by stage of development drops almost by half from 53.0% to 37.0%. However at this stage it happens often that new follow-up products are being developed. The risk of losing the investment is still decreasing. This may

because the venture rely its income on the existing product. That is why the percentage continuous drop. The Bridge/Pre-public Stage

The Bridge/Pre-public Stage In general this stage is the last stage of the venture capital financing process. The main goal of this stage is to achieve an exit vehicle for the investors and for the venture to go public. At this stage the venture achieves a certain amount of the market share. This gives the venture some opportunities; for example: Hostile take over Merger with other companies Keeping away new competitors from approaching the market Eliminate competitors Internally, the venture has to reposition the product and see where the product is positioned and if it is possible to attract new Market segmentation. This is also the phase to introduce the follow-up product/services to attract new clients and markets.

As we already mentioned, this is the final stage of the process. But most of the time, there will be an additional continuation stage involved between the third stage and the Bridge/pre-public stage. However there are limited circumstances known where investors made a very successful initial market impact might be able to move from the third stage directly

to the exit stage. Most of the time the venture fails to achieves some of the important benchmarks the VC firms aimed. Example Now the site is running smoothly, the venture is thinking about taking over the competitors website happen.nl. The site is promoting restaurants and is also doing business in online ordering food. This proposal is being protested by the investor, because it may cost a lot of the ventures capital. The investor suggests a merge instead. To settle down their differences, the venture requested an external party to investigate into the case. The result of the investigation was a takeover. After reading the investigation, the investor agrees to it and happen.nl is being taken over by the venture. With the take-over of a competitor, the venture has expanded its services. Seeing the ventures result, the investor comes to the conclusion that the venture still have not reach the target that was expected, but seeing how the business is progressing, the investor decides to extend its investment for another year. Risk At this final stage, the risk of losing the investment still exists. However, compared with the numbers mentioned at the seed-stage it is far lower. The risk of losing the investment the final stage is a little higher at 20.9%. This is caused by the number of times the VC firms may want to expand the financing cycle, not to mention that the VC firm is faced with the dilemma of whether to continuously invest or not. The causation of major risk by this stage of development is 33%. This is caused by the follow-up product that is introduced.

Examples of vc firms in india 1. Nexus Venture partners Who we are We are India's leading Venture Capital fund. We invest in early and early growth stage companies across sectors in India and US. We are a team of successful entrepreneurs with extensive investing and operating experience, who love to get our hands dirty. We understand the unique challenges faced by entrepreneurs and know that it takes teamwork and exceptional execution capability for a company to succeed. Our partner companies have access to the entire Nexus team in India and Silicon Valley for help in recruiting talent, forging new alliances, opening doors to new customers, shaping strategy and connecting with best-of-breed executives, advisors, co-investors and board members. We have been voted:

India's Top Venture Fund by Red Herring India's Best Venture Capital firm by Venture Intelligence APEX When we invest We typically invest early in the life of the company and in most cases, we are the first institutional round of capital. Our investment size ranges up to $10 million in early / early-growth stage companies. We have a seed program to support high potential entrepreneurs with breakthrough ideas with investment of up to $500,000. We also like to participate in follow-on investments at later stages for companies that successfully execute their business plans. We prefer to take a board

seat in the companies we invest in and are active in supporting the entrepreneur wherever assistance is required. However, we do not seek to control or manage the company we invest in. How we work We typically limit our investments to 6-8 new investments a year. We are available as a team to our partner companies. While the amount of involvement in a company depends on the stage of the company and the need of the entrepreneur, we typically get involved in recruiting talent, market intelligence, business development, strategy and future financings. What we like to invest in

Passionate and driven entrepreneurs Capital efficient business models Innovative product, process or business model addressing a significant customer pain point Large existing or potential market opportunity in India or globally Differentiated product or service that can create a competitive advantage Companies that can be standalone independent businesses, not features for another business Where we invest We have offices in India and Silicon Valley. We invest in companies in India that address Indian or global markets, or based out of US with technologies relevant for India and emerging markets

2. SIDBI VENTURE CAPITAL LTD. Mission "To catalyse entrepreneurship by providing capital and other strategic inputs for building businesses around growth opportunities and maximize returns on investment " SIDBI Venture Capital Limited (SVCL) is a wholly owned subsidiary of SIDBI, incorporated in July 1999. Current funds managed by SVCL are: National Venture Fund for Software and Information Technology (NFSIT)

The National Venture Fund for Software and Information Technology Industry (NFSIT) has been set up by Small Industries Development Bank of India (SIDBI) in association with Ministry of Information Technology (MIT), Govt. of India during 19992000. It is a close ended 10 year fund with a corpus of Rs. 1 billion. SIDBI, Ministry of Information Technology (MIT), Govt. Of India and IDBI are the initial contributors to the fund.

SME Growth Fund (SGF) The fund is presently in the divestment stage.

The SME Growth Fund (SGF) has been set up by Small Industries Development Bank of India (SIDBI) in association with other leading commercial banks such as Punjab National Bank, State Bank of India, Bank of Baroda, Bank of India, Central Bank of India, Union Bank of India, Oriental Bank of Commerce and Corporation Bank. It is a close ended 8 year fund dedicated to SME sector with a corpus of Rs. 5 billion. The Fund commenced its operations in 2004-2005. SME Growth Fund focuses at wide range of growth sectors, such as life sciences, retailing, light engineering, food processing, information technology, infrastructure related services, healthcare, logistics and distribution, etc. The main objective of the fund is to invest in companies at early stage as well as in second round financing for those with a track record of proven technology or business model and opportunities for growth and earnings. The fund would endeavour to develop international networking and enable assisted units to attract co-investment from international venture capitalists in subsequent rounds of financing.

3. DFHL VENTURE CAPITAL FUND

DHFL venture capital fund was launched by Dewan Housing Finance Ltd. The DHFL fund for venture capital has marked the entry of Dewan Housing Finance Ltd. into real estate fund in India. A venture capital fund implies a fund that invests in real estate in order to make profit for all its unit holders. The DHFL capital venture fund has been approved by the SEBI. The DHFL Venture Capital Fund plans to raise around ` 250 crore from its investors. It also has a ` 100 crore green shoe option. The venture capital fund of DHFL is a close-ended fund for a period of 7 years and has the option to extend the maturity date by an additional 2 years. The DHFL Venture Capital Fund has been investing in a balanced manner in both, residential and commercial properties. Instead of focusing on real estate, the DHFL Capital Venture Fund has been focusing on developing entire properties because they give more returns. In order to increase its value, the DHFL fund for venture capital has been focusing more on secondary locations. The returns expected by the Dewan Housing Finance Ltd. from the capital venture fund of DHFL has been between 20-25%. The fund have been open to institutes and investors who are typically high-net-worth individuals. The minimum that an institute can invest is ` 10 crore and for the high-net-worth investors, the minimum investment needs to be worth ` 2 crore. For the arrangement of institutional clients, ICICI Securities have been hired where the DHFL Venture Capital Fund has started to invest from the beginning of 2006. The fund has given a great fillip to the real estate sector in India because more fund has since become available for the development of the real estate. DHFL Venture Capital Fund has

helped the real estate sector to grow by a considerable margin. 4. Canbank Venture Capital Fund Ltd is sponsored by Canara Bank. It came into existence in the year of 1989 and is currently managing four funds. The firm is committed to offer highly promising portfolio of investments in several sectors. The capital of the firm is formed by Public Sector Banks, International Development Financial Institutions and Public Sector Financial Institutions. Canbank Venture Capital Fund Ltd has the record to invest in 78 companies of various sectors in last 17 years. The firm is backed well by a qualified team to manage, invest and create value in the invested companies. The Board of Directors of Canbank Venture consists of the senior management members of Canara Bank. The prominent members of the board are - M. Bhaskara Rao, D.L. Rawal, P.V.Maiya and N. Ramani. The four funds currently being managed by Canbank Venture are Bharath Nirman Fund - Fund IV, Canbank Venture Capital Fund I, Canbank Venture Capital Fund II and Canbank Venture Capital Fund III. (Source: Canbank Venture official website) Canbank Venture Capital Fund-I was set up in the year of 1989. The fund covered a number of sectors and invested in 40 different projects. Canbank Venture Capital Fund-II was set up in the year of 1998. This fund invested in 8 companies and displays a well-diversified portfolio. Canbank Venture Capital Fund III was set up in the year of 2001. This fund has the record to invest in 23 companies across different sectors till date. This fund was designed to give preference to small-scale units making a special focus on the IT sector.

Canbank Venture Capital Fund Ltd has a number of portfolios of investments in the various sectors of business. Some of the major companies in which Canbank Venture Capital Fund Ltd. invests are as follows:

Omnitech Info Solutions Limited RT Outsourcing Services Limited KLT Automotive & Tubular Products Ltd Polygel Technologies (I) Pvt Ltd Avasarala Technologies Ltd Merchem Ltd Telesis Global Solutions Ltd Prathista Industries Limited The various investment criteria set by Canbank Venture Capital Fund Ltd are: activity, technology and business, management team, sector, nature and size of assistance, size of assistance and role of the firm in the venture.
http://www.scribd.com/doc/9130227/A-Report-on-Venture-Capital-Industry-in-India (THIS is a link to a complete project on venture capital..have alook in it n c if u think some topics can b added)

you are an entrepreneur and you are facing your first meeting with a venture capitalist you might feel at a slight disadvantage. After all, he has probably met thousands of entrepreneurs and done hundreds of these meetings. I thought it would be helpful to provide the Six Minute Strategist's Guide to 36 Questions to Ask a Venture Capitalist - to redress the balance a little shall we say! To help with the thought process I have divided the questions into six sections. This may also help to structure the discussion. These are: A. Fund Profile. It is important to understand the fit of the fund to your business and whether the strategy espoused by the VC firm at the time the fund was raised is consistent with the aims and objectives of your company. B. Investment Style. Each firm has their own approach (well OK many are very similar) but it is important to understand how they work and how they are going to work with you. This also affects the chances that they will want to make an investment in your company. C. Deal Flow. Is the deal you are trying to put together compatible with the sort of deals the VC wants to do? Understanding this and their return criteria is important D. Process. If you start working with a VC firm, you are setting out on a long term relationship and it is important to get off on the right foot. There is a lot of detail to be covered in the investment process and they will explain it to you. Raise the subject and get them to explain it to you. E. Structure. The devil as ever is in the detail. The financial and legal structure of the deal will be complex and usually designed to minimise the VCs risk. Forewarned is Forearmed! F. Value Added. Don't just look to a VC for their money. In most cases they will want a seat on your board, if not two. What you want from this is relevant experience and the ability to contribute to the business beyond their financial investment. Don't be shy. If you have a great business they will want to invest in it and you are entitled to know what else they are bringing to the table. This list of questions is not meant to be exhaustive but to give you some pre-loaded bullets in your gun to shoot at them. Fund Profile 1. How many investments have you made in your current fund? 2. Which pension funds and other investors have invested in your funds? 3. What (relevant) sector experience do your General Partners have? 4. What is the value of your total funds under management? 5. How many investments have you made todate? 6. Do you have any geographic limitations on your investments? Investment Style 7. How do you differentiate between the opportunities that you see? 8. What sort of deals do you look at? 9. How many deals do you look at in a year?

10. How many deals do you do in a year? 11. Do you make minority investments? 12. How hands on are you with your investments? Deal Flow 13. What is the average size of each investment? 14. What is your min/max equity cheque? 15. How much do you expect to keep for follow on investments? 16. How much leverage do you bring into your deals? 17. Where do you find your deals? 18. Do you work on cash multiples or IRRs? Process 19. Who would I work with in your firm - what is their relevant experience? 20. Do you have any current investments which may conflict with my business? 21. What are the key attributes you look at when evaluating a deal? 22. What is your deal process? 23. Can we speak to some of the CEOs of your existing investee companies? 24. What financial information do you expect us to provide? 25. How do you value my company? Structure 26. Who makes the decisions about investments? 27. Explain the key tenets of the shareholder agreement? 28. Do you insist on a board seat? 29. Will you want to appoint a non exec chairman? 30. Explain your return expectations? 31. How do you structure your investments? Value Added 32. Do you bring any added value to the table? What? 33. Can you find additional deals to help my business grow?

34. Which sectors do you focus on? 35. Is this/my deal important to you? Why? 36. How do you work with us post investment? I hope this helps you to think about the nature of the relationship between yourself as an investee company and your Venture Capital investor.

CONCLUSION
Before you approach a VC for funding, examine your goals. How much capital do you need? Do you want passive or active investors? Are you looking to ramp up your marketing efforts? Grow your management team? Does your Board of Directors need more seasoned expertise? Answering these questions for yourself will help you decide whom to approach for investment capital, whether that be a VC, angel investor, strategic investor, or other. If you choose the VC path, make your best effort to get an entre into your target VCs through a trusted referral. And always do your homework, both on the VCs youre targeting and on your own business needs. Do the math, come to the table prepared, and keep your presentation brief and to the point. Know your ultimate business objectives, and be honest about those goals with your prospective investors.

News Articles-only a few best ones to b selected

NEWS

Venture capitalists bet on start-ups like Freecharge.in, Knowlarity, etc as retail sector booms
January 27, 2012 | Paramita Chatterjee , ET Bureau

NEW DELHI: Eager venture capitalists are pouring money into very young start-ups with innovative ideas to support the ongoing boom in India's retail sector. They are stepping up investments in companies that are building new technologies and business models, betting that they will play a prominent role as India's retail sector grows in size and sophistication. "Highly specialised and niche business models designed for the Indian market... NEWS

Venture Capitalists are back with a bang

April 26, 2002 | Malini Bhupta , TNN

Puneet Bhatia is a busy man. He's always on the phone or in meetings with potential business partners. His only point of contact is his cellphone ? since he's still in the process of setting up a new office. Bhatia's your archetypal VC-on-the-fly, alternating between negotiating potential deals and checking out a new home for his firm ? NewBridge Capital ? in India. For all those who've only been tracking VCs exiting India, NewBridge Capital, the bulge-bracket private... NEWS

After Facebook, Silicon Valley warily eyes Square

June 1, 2012 | Reuters

SAN FRANCISCO: As Silicon Valley scrambles to assess the impact of the Facebook IPO mess, all eyes are on Square. The much-heralded, next-generation payments company had been aiming to raise its next round of venture capital funds at a valuation of as much as $4 billion - up from $1 billion just a year ago. That is the sort of acceleration in valuation that happened with Facebook prior to its public market debut. But with Facebook worth $26 billion less than it was just... NEWS

Power of Ideas 2012: Unmetric provides corporates with social tools to understand competitors'...
May 31, 2012 | Peerzada Abrar , ET Bureau

Access to money in the right amounts and at the right times is crucial for a start-up venture. A series starts today on some exciting ventures. The start-up provides tools which help restaurants & spas use social tools to understand their competitors' social media strategy. With more and more Indians logging onto social media, posting updates on Facebook and airing views on Twitter , three IIT graduates in...

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Venture capitalists driving Net engine

March 9, 2006 | TNN

What's the common thread that runs through naukri.com, cleartrip.com, Mauj Telecom, Travelguru and Yatra Online? On the face of it, consumer and the Internet. But dig a little deeper and one can see that these are also Indian firms that have attracted investments from big venture capitalists (VCs) in the last few months. And the VCs who have invested in these companies include big names like Kleiner Perkins, Ram Shriram of Sherpalo, WestBridge Capital and Sequoia. Does this imply that... NEWS

Venture capitalists line up for online biz

April 11, 2007

MUMBAI: Indian start-ups that use the Internet and mobile phones to sell their products and services are attracting large funds from venture capitalists, raising the spectre of a bubble similar to the one that destroyed the budding Internet commerce industry at the turn of the millennium. In 2006, venture capitalists (VCs) struck 30 deals worth a total of $200 million; money they believe would multiply as Internet and mobile phones proliferate in the world's second fastest growing... NEWS

'In India there is scope to become venture capitalists'

July 11, 2009 | PTI

WARANGAL: With the fast growth of economy, particularly in India, there is an ample scope to become venture capitalists thus becoming job creators instead of job seekers, Director of Indian Institute of Space Science and Technology-Thiruvanthapuram, Padmashri Dr B N Suresh said on Saturday. While addressing the Seventh academic convocation of National Institute of Technology (NIT)- Warangal, Dr Suresh said that technology change is presently exponential and there is a need... NEWS

Budget 2012: Venture Capitalists fear setback, to meet officials shortly

March 27, 2012 | Reena Zachariah , ET Bureau

MUMBAI: The India Venture Capital Association , the industry body for private equity firms and venture capital companies, is planning to meet finance ministry officials shortly to discuss the impact some of the Budget proposals would have on their investments. "Often PE firms scale up their portfolio companies through inorganic growth (acquisitions). Share premium paid in such acquisitions becomes taxable, thereby impacting the PE operations," said... NEWS

Venture capitalists investment jumps five times to $777 mn

December 3, 2007 | PTI

NEW DELHI: Investments made by venture capitalists in the country have increased nearly five times to 777 million dollars in the first three quarters of 2007 compared to the year-ago period, with IT sector accounting for half of the deals, says a new report. According to the 'Quarterly India Venture Capital Report', venture capitalists invested more than 777 million dollars in 57 deals for entrepreneurial companies in the first nine... NEWS

Hybrid between a McKinsey and a Venture Capitalist: Sameer Wadhawan

May 29, 2012 | Saumya Bhattacharya , ET Bureau

?In the second of our weekly series, we take a look at Coca-Cola India's talent acquisition and nurturing strategy. Sameer Wadhawan , VP, HR and services, Coca-Cola India and Southwest Asia, takes us through the process. The Talent Underpinnings We like to call ourselves a hybrid between a McKinsey and a venture capitalist . Fundamentally, our role is to make our bottlers successful. That's where the consulting part comes in. One of... NEWS

Facebook fallout: Silicon Valley won't snub Morgan Stanley

May 25, 2012 | Reuters

SAN FRANCISCO/NEW YORK: Silicon Valley isn't quite ready to dump Morgan Stanley over the Facebook IPO fiasco. It could be said that playing a role in botching the world's biggest tech initial public offering would be enough to kick its lead banker out of the club, or at least to the curb, but a tarnished image hasn't necessarily dented Morgan Stanley's position as a go-to underwriter for Silicon Valley, according to... NEWS

Silicon Valley takes Facebook IPO performance in stride

May 22, 2012 | Reuters

SAN FRANCISCO: Facebook's lackluster initial public offering performance is a black eye for many on Wall Street and could have ramifications for similar upcoming deals such as an offering by Twitter , but venture capitalists in Silicon Valley are keen to shrug off Facebook's stumble - at least for now. Any social networking companies planning IPOs might now be thinking twice, although the biggest companies currently aiming to... NEWS

Facebook IPO wealth might make many employees quit, let a hundred start-ups bloom
May 19, 2012 | Rituparna Chatterjee , ET Bureau

SAN FRANCISCO: As the first day of trading in one of the biggest initial public offerings (IPOs) wound down on Friday, the frenzy around Facebook Inc is expected to have a ripple effect on start-up activity in Silicon Valley. Also read - Facebook IPO: Full coverage "I believe that Facebook employees, emboldened by their company's success, will venture out themselves to do extraordinary things," Timothy Draper, one of... NEWS

Orangescape gets $1 million funding from Indian Angel Network

May 9, 2012 | PTI

New Delhi: IT firm Orangescape today said it has secured $1 million funding from Indian Angel Network, which will be used to expand operations in the US and Europe. "This is a bridge round of funding. We'll use this amount to expand services to mature economies like the US, UK and Western Europe and help raise next round of funding from top-tier venture capitalists," OrangeScape CEO Suresh Sambandam said. The company...

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Venture capitalists invest $13 bn in emerging firms in 2008

February 22, 2009 | PTI

NEW DELHI: Venture capitalists invested over $ 13 billion in companies in emerging countries, including India and China, in 2008, much higher than their previous bets, even as global economic situation continued to deteriorate at a faster pace. Venture capitalists (VCs)continued to seek out investment opportunities outside the US in 2008, as they put more than 13.4 billion dollar to work in 1,416 deals for emerging countries including India, China and Israel last...

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Pinterest, Square, Airtime: Tech startups that could become the next hit
May 7, 2012 | New York Times

When Facebook bought Instagram for $1 billion last month, it raised a lot of eyebrows - and questions about which buzzed-about young startups might be on track for similar success. There is certainly no shortage of companies to choose from. The startup scene is on fire, flooded with apps and services that are attracting users and backing from venture capitalists. But it can be hard to work out which companies are just at the height of their hype cycle, and...

Success of Venture capital in India

(This is a press release latest-we can explain takin real words frm CEOS durin presentations)
Venture capital proving a success in India says Experts Venture investing is relatively new to India unlike equity or debt said Mr. Sandeep Singhal, co-founder of Nexus Venture Partners. Mr. Sandeep Murthy Partner, Sherpalo Advisers said that there are tremendous opportunities existing in India and we feel Venture capital has enormous scope in India for helping countrys 450 million entrepreneurs dreaming to set up their own successful ventures while addressing the Young Entrepreneurs Society (YES) formed under the aegis of All India Association of Industries (AIAI). Both the speaker had comfortable jobs and were doing well in the United States but in view of the growth story of India decided to support the Indian entrepreneurs and started the Venture capital funds to support the eager entrepreneurs who are yearning to become their own master in diverse fields of industry and services. Mr. Singhal, further said that our criteria is to look at the entrepreneurs his vision his capacity to implement project to fund them however inspite of various regulations and irritants coming in the way of development in India, we admire that they make their way. Mr. Murthy said Venture capitalist, are also called angel investors. India is a fertile ground for venture capital as growth in India is led by a large number of entrepreneurs either in manufacturing or any type of services which contributes as much as 60% to Indias GDP. Mr. Murthy further added that despite venture capitalism being one of the costliest sources of financing there is no dearth of entrepreneurs opting for it. The advantage of this form of financing is that decision is made quickly on extending seed capital and it is purely base on the gut feeling of venture capitalist. They all help entrepreneurs in getting skilful people, technology and marketing strategy besides funding .

Mr. Vijay Kalantri, President., All India Association of Industries (AIAI) said that entrepreneurs need finance and I appreciate the risk and assessment taken by the venture capitalist to help Indian technocrats and entrepreneurs to fulfill their ambition. Mr. Kalantri said that India will have 60% of its population in the age group of 25-40 by 2012 and there is tremendous opportunities for entrepreneurs and venture capital to grow together and make India to achieve 12% growth, which is the move towards becoming world economy power. Mr. Amit Sarda, President of Young Entrepreneurs Society (YES) welcomed the guest and proposed the vote of thanks. For favour of publication Young Entrepreneurs Society The Business/City Reporter January 22, 2011 Rupa Naik Executive Director

(I hv deleted making the invt-Due deligence pt.) (Since we r makng ppt, it doesnt matter if VC financng stages is in detail, we can make it shrt while preparing for presentatons, even if u feel dat I shud make it shrt tell me by sms) (Articles we can select later on, dey r nt 2 be added in ppt.) (R u going 2 add that topic of long list of questns in ppt?) (Add success of VC in India in our ppt.) (I hv added short conclusion)