Types of Venture Capitalists

Generally, there are three types of organized or institutional venture capital funds i. Venture capital funds set up by angel investors, that is, high network individual investors ii. Venture capital subsidiaries of corporations - these are established by major corporations; commercial bank holding companies and other financial institutions iii. Private capital firms/funds-The primary institutional source of venture capital is a venture capital firm venture capitalists take high risks by investing in an early stage company with little or no history and they expect a higher return for their high-risk equity investments in the venture.

Private Agencies

Venture capital funds set up in the private sector include 1. Credit Capital Venture Fund (CCVF) 2. 20th Century Venture Capital Fund 3. India Investment Fund 4. Indus Venture Capital Fund (IVCF) (5) SBI Capital Venture Capital Fund (1) Credit Capital Venture Fund (CCVF) - The Credit Capital Venture Fund (India) was established in 1986. It has a capital base of 10.8 crores. The principal shareholders are Credit Capital Finance Corporation, Bank of India, Asian Development Bank, Common Wealth Development Corporation. It finances ventures promising high returns with maximum assistance limited to Rs. 50 lakhs. It also provides value added services in an advisory role and actively participates in marketing, recruitment and management affairs. -Thus it helps the entrepreneurs to realise maximum returns. It has recently launched 10 state funds of Rs. 10 crore each. It is now known as Lazard Credit Capital Fund (India) Ltd. (LCCVF). (2) 20th Century Venture Capital Fund - It was promoted by 20th Century Finance Ltd. and has a resource base of Rs. 20 crores. The fund aims at reviving the sick industries and help first generation entrepreneurs. (3) India Investment Fund - It is Indias first private venture capital fund mainly subscribed by Non-Resident Indians (NRIs). The Fund is an offshore company owned predominantly by NRI investors incorporated in early 1987. The fund provides equity or equity linked finance to new projects or often young as well as established Indian companies which can demonstrate a potential for sustained growth.

The maximum assistance made available to one venture is limited to Rs. One crore. The principal investment objectives of the fund is long term capital appreciation. Merchant Banking Division of Grindlays Bank has been retained as the advisers for the Fund which evaluates and recommends specific investment proposals. The fund follows hands off approach in making the investment. (4) Indus Venture Capital Fund (lVCF) This fund was promoted by Shri T. Thomas, the former Director of Unilever. The Indus Venture Management Ltd. (IVML) has been entrusted with the management of (IVCF). IVCF has a capital resource of Rs. 21 crores contributed by IVML, the IDB!, IFCI, Deutsche Bank, International Finance Corporation (Washington) and a few other national/international organisations. (5) SBI Capital Venture Capital Fund. This fund has been set up by the SBI Capital Markets Ltd. to finance ventures through its bought out deals. The objective behind the fund is to promote new capital issues by purchasing them when capital market is sluggish and disposing them off at times when market picks-up. The fund has a capital base of Rs. 10 crore.

Early Beginnings
Venture Capital Funds Set Up during 1987-1994
VC Fund Set Up By Year Size (Million)

1 2 3 4 5 6 7 8

Venture Capital Fund Scheme India Investment Fund

IDBI Grindlays 3i Invest. Services Ltd. TDICI Canbank Financial Services Ltd. Credit Capital Venture Fund (I) Ltd. Grindlays 3i Invest. Services Ltd. TDICI APIDC Venture Capital Ltd.

1987 1987

Rs. 543.6 US$ 7.5

Venture Capital Unit Scheme I Canbank Venture Capital Fund All Industry Fund

1989 1989 1990

Rs. 300 Rs. 156 Rs. 120.6

Second India Investment Fund

1990

US$ 13.5

Venture Capital Unit Scheme II APIDC Venture capital Fund 1990

1990 1990

Rs. 1000 Rs. 135

9 10

Gujarat Venture Capital Fund 20th Century Fund

11 12 13 14 15

Indus Venture Capital Fund I

IL&FS Venture Fund Venture Capital Unit Scheme III IFB Venture Capital

Information Technology Fund

Gujarat Venture Finance Ltd. 20th Century Venture Capital Corp. Ltd. Indus Venture Management Ltd. IL&FS Venture Corporation Ltd RC&TF Corporation IFB Venture Finance Ltd. Credit Capital Venture Fund (I) Ltd.

1990 1991

Rs. 240 Rs. 287

1991

Rs. 210

1991 1991 1992

Rs. 500 Rs. 300 Rs 100

1993

Rs 100

History of 20th Century Finance Corporation Ltd.

1979 - The Comp. was incorporated on 31st August, as a private limited Comp. at Mumbai & converted into a public Limited Comp. on 19th December, 1981. The Comp. carries on leasing of all types of industrial & office plant, equipment, machinery, vehicles, buildings & real estate required for manufacturing, processing, transportation & trading business & other commercial & services business. The Comp. was promoted by D. Ahuja, V.S. Srinivasan, R. Parthasarathy & S.S. Kulkarni. 1990 - A joint venture Comp. with equity participation from Kinetic Group of Pune under the name '20th Century Kinetic Finance Ltd.' had been incorporated mainly for financing of two wheelers. - Another venture capital Comp. under the name '20th Century Venture Capital Corporation Ltd.' was incorporated. The Company proposed to have equity participation from Asian Development Bank, ICICI & Bank of Baroda. Another Joint Venture with Batlivala and Karani under the name `Finesse Capital Services Pvt. Ltd.' had also commenced operations during the year.