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Entrepreneurialism is about recognizing, seizing, and exploiting opportunities. Managerialism is related to administrative procedures and organizational structures. Paternalism is about the protection and guardianship of the family business, and it carries both positive and negative connotations.
Indians facts
Started in 1890 to promote import substitution & attain economic freedom , Swasdeshi Movement License Raj to avoid exposure Cpncept of promotors still ava. Because
Promotors control in term of share Lack of strong institutional base
In the next five years, 30 percent of family-owned firms will experience a change in leadership due to retirement or semi-retirement 25 percent of senior generation family business shareholders have not completed any estate planning other than writing a will, 80 percent want the business to stay in the family, and 20 percent are not confident of the next generations commitment to the business
From the University of North Carolina Family Business Forum. http://www.unca.edu/fbf/statistics.html Accessed June 2006
Reduced cost of controls for theft, etc. because family workers trust each other and are less likely to steal from themselves. Communicate more effectively through efficient informal communication and decision-making channels
Challenges for Family Business A famous saying about family owned business in Mexico is Father, founder of the company, son rich, and grandson poor (Padre noble, hijo rico, nieto pobre). The founder works and builds a business, the son takes it over and is poorly prepared to manage and make it grow but enjoys the wealth, and the grandson inherits a dead business and empty bank account. The issue is sustainability of transgenerational wealth. Emotions. Family problems like Divorce, separations, health or financial problems will affect the business Informality. Absence of clear policies and business norms for family members Tunnel vision. Lack of outside opinions and diversity on how to operate the business. Compensation problems for family members. Dividends, salaries, benefits and compensation for non-participating family members are not clearly defined and justified.
Role confusion. Lack of talent. Hiring family members, not qualified or lack the skills and abilities for the organization.
Inability to fire them when it is clear they are not working out.
Succession Planning. Do not have a plan for handing the power to the next generation, leading to great political conflicts and divisions. Paternalistic. Control is centralized and influenced by tradition instead of good management practices. Predisposed to being more risk averse.
Overly Conservative. Older family members try to preserve the status quo and resist change. Especially resistance to ideas and change proposed by the younger generation. Communication problems. Provoked by role confusion, emotions (envy, fear, anger) Growth. Problems due to lack of capital and new investment or resistance to re-investment in the business. Lack of written strategy. No documented plan or long term planning.
Challenges/Disadvantages to the Family Business Differing family member goals and expectations Jealousy and interference from some annoyed family members Predisposed to being more risk averse. Attempt to avoid bringing in outsiders as resources because they believe that it threatens the security of the family.
Who's in charge
Should the owner run the business? Family power struggles and rivalries
India's top business families that had been there, done thatand then lost the plot or missed a trick.
Right from the Mafatlals to the Kilachands to the Walchand Hirachand Group in the West, the Shrirams in the North, the Bangurs in the East and the BPL group in the South, India's corporate landscape is littered with family businesses whose best days may be behind them. Some were broken by the violent trade unionism and gang wars of Mumbai in the '80s and others by family splits and competition from global enterprises. Some made merry in the Licence Permit Raj and then found the going tough when India opened up its economy to foreign competition;
Resolving Challenges
Families must become more business-like Objectivity and transparency in all dealings Clear succession plans Training and development Written policies and procedures Family therapy or conflict resolution process May also involve non-family members
Stage I
Pre-Business
Child becomes aware of facets of firm and/or industry. Orientation of child by family member is informal.
Stage II
Child works as part-time employee. Work becomes more difficult. Includes education and work for other firms.
Introductory Functional
Entry of Successor
Stage III
Functional
Potential successor begins work as full-time employee. Includes all . nonmanagerial positions.
Stage IV
Advanced Functional
Potential successor assumes managerial position. Includes all management positions prior to . becoming president.
Transfer of Leadership
Stage V
Early Succession
Successor assumes presidency. Includes period in which the successor becomes head of company.
Stage VI
Mature Succession
Successor becomes head of company.
Professional Management
Family culture is built around an informal entrepreneurial style of management. Decision making process is centralized Over dependence on the owner-founder and other family members Family and non-family members used to this style will resist change
Professional Management Business growth requires a larger, deeper pool of qualified management talent than any one family can realistically produce.
Supervising relatives
The desire to complement family members skills Lack of management talent in the family
Elements of professionalism
Unselfish concern for the welfare of others Accountability, responsibility & reliability Excellance
Knowledgeable, skillful Competency to handle situation Decision making skills Communication competency
Respect to orhers
Degree of openmindness
Lack
New Practices ( quality certification, participative management, change in working styles) Impartial HRM
Adopt
Lack
No , even in selection
Financial benefit
Organisation
own
autocratic
Owner Feelings and Thinking Feels he is paying high salary. Expects maximum time and effort with quick results Expect professional to come in and make immediate, even dramatic improvements in the business
Professional Management skills and training Recognized past performance and rewarded Feels that it is unrealistic to expect any real changes immediately and should take one to two years to make significant changes
Owner
Professional should be spending a great deal of time everyday, including weekends Professional should not only work on broad areas but also perform detail work.
Professional
Works under the assumption that he can get on top of the business by putting in a full regular day. Professional doesnt think detail work is wise use of time. He prefers broad-range thinking and has others to do the detail work for him.
Owner
Owner is economical with expenses. Motto is stay out of debt Owner feels that every expenditure should pay off immediately
Professional
Professional feels one must invest in development and not expect immediate return.
Ewing Kauffman was the entrepreneur, who started with few resources, grew his firm into a multibilliondollar company over four decades, and did so in an ethical and compassionate manner. He experienced first hand the rewards of education and entrepreneurship for himself, his family, his work associates, and his community. People in the company were called associates, not employees- offered a profit sharing plan Mr. K, philosophies rewarding those who produce & allowing decision making through out the ORGconcepts what is now called intrapreneurship in a company
Fresh Ideas Innovative thinking gaze Learning and Dynamic Positive Change Entrepreneurship is the way out
16 Top 25: Circa 1939 Rank Group Assets 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 TATA 62.42 Top 25: Circa 1969 Group Assets TATA 505.36 Top 25: Circa 2009 Group Assets MUKESH 37,510.80 2,00,469.13 TATA AMBANI 1,44,183.63 BK.-K.M. BIRLA 19,497.94 TATA 19,345.59 ADAG 1,41,304.36 AMBANI 9,664.12 BIRLA ADITYA 78,943.79 R.P. GOENKA OM PRAKASH 9,593.78 37,545.16 RUIA JINDAL O.P. JINDAL
5,456.10
MARTIN BURN 18.02 BIRD 12.40 ANDREW YULE 12.38 INCHCAPE E.D. SASSOON ACC BEGG ORIENTAL TEL. & ELEC. DALMIA JARDINE WALLACE BROS BIRLA WADIA DUNCAN FINLAY 10.70 9.56 8.68 5.75 5.60 5.51 5.33 5.33 4.85 4.70 4.54 3.84
BIRLA 456.40 MARTIN BURN 153.06 BANGUR 104.31 THAPAR SURAJMULL NAGARMULL MAFATLAL ACC WALCHAND 98.80 95.61 92.70 89.80 81.11
ESSAR
36,837.49
M.A. 4,782.10 CHIDAMBARAM 4,434.09 L.M. THAPAR M.L. MITTAL RAI LALBHAI DHOOT GUPTA BAJAJ B.M. KHAITAN
4,425.35 4,210.87 4,112.44 3,737.87 3,705.27 3,415.87
SHRIRAM 74.13 BIRD HEILGERS 68.62 J.K. SINGHANIA 66.84 GOENKA SAHU JAIN MACNEILL & BARRY SARABHAI 65.34 58.75 57.28 56.72
3,351.62 ADANI
To sustain valuation levels in the long run will not be possible with only organic growth but companies should look outwards for other attractive opportunities or in other words through acquisitions and strategic transformations. When Reliance Industries was split between the two brothers, the investors were skeptical of the valuations but market capitalization of RIL (Mukesh Ambani) and Anil Dhirubhai Ambani Group (Anil Ambani) have proved them wrong. In emerging markets many companies are increasingly involved in both domestic and cross-border acquisitions but the major concern for family businesses being dilution of control restricts many such businesses from being aggressive on the M & A front.
Inorganic Growth Mittal Steel acquired Arcelor in 2006. Prior to that end 2005, Mittal family owned 88% of Mittal Steel. After acquiring Arcelor the familys shareholding reduced to 44%. The first gain was Mittal-Arcelor became the worlds leading steel company, larger than its next 3 closest rivals put together. Secondly, the family stake valued at Euro 14 billion (end of 2005) is Euro 33 billion (end of 2006) a 61% increase. Dilution of control with respect to equity issuance must be evaluated in the context of overall growth potential of a company and enhanced valuation of family stake.
Organic Growth Mr. Gyan had started his small business with a cycle shop. The core business was hinged on giving the cycle on rent on hourly basis. He had three sons naming Vinay, Ajay, and Sanjay. Subsequently Vinay joined his fathers business. However, he realized that doing this was not sufficient. He started expanding by entering into the new segment of autorickshaw dealership. So, the business shifted their core to giving auto-rickshaws on rents on day-to-day basis and to earn commission on auto fares and rent on an hourly basis. They stopped their cycle business. To help Vinay, Sanjay the 2nd brother joint the business.
The sustainability of all these family firms hinge on the power and influence politics
1. Rajan and Anil Nanda (Escorts Heart Institute) are still fighting legal battles after elder brother Rajan decided to sell majority stake in EHI to Fortis Healthcare (2005). Anil had moved to court to stall the deal. 2. Narinder Jeet Kanwar, younger brother of Onkar Singh Kanwar (Apollo Tyres) has approached company law board saying his elder brother has fraudulently acquired control of the company (November 2007). 3. BPL group chairman, T.P.G. Nambiar has alleged that his son-in-law Rajeev Chandrasekhar was illegally trying to take control of BPL Communications in 2004. Therefater they have reached an out-ofcourt settlement. 4. This year (2007) there was some difference in opinion between Sonu Mirchandani and Gulu Mirchandani regarding the control of their company Gurviso.
Innovations
The family business survived on the right team, consolidation and diversification strategies, people power and adaptability of the management
Women Entrepreneur
She captured the markets around the world and now she wants to conquer space
Work on formulations that astronauts could carry with them to protect their skin from the ravages of space travel and slow down the ageing process. Sent National Aeronautics and Space Administration (NASA) free samples of her moisturizers, hoping that they will be used on space expeditions One of the largest manufacturers of herbal products in the world. Formulates and markets over 400 products for various beauty and health needs and has a strong presence across the globe, from the USA to Asia.
In 2002, the Shahnaz Husain Group was worth $100 million. Employed about 4200 people in 650 salons spread across 104 countries. Good growth rate in the 25 years that it has been in business. Average growth rate in the initial years (late 1970s to the early 1980s) was 15-20%. In the 1990s the average growth rate was 19.4%. Diversified into Ayurvedic centers for Panchkarma, Dhara and Kerala massage. Set up two Shahnaz Husain Ayurvedic Health Resorts, one near Delhi and another in collaboration with the Hyakumata group of Japan in the US island of Saipan. "The Arch of Europe Gold Star for Quality", "One of the Leading Women Entrepreneurs of the World", "The 2000 Millennium Medal of Honor , "Rajiv Gandhi Sadbhavana Award", etc.
Lessons on Entrepreneurship
Dedication and relentless hard work have paid off "It is important to have a dream and to believe in the magic of your dreams A true entrepreneur is a person who has independence of spirit. "One should be innovative, dynamic and willing to try every avenue towards success"...
Dr. Kiran Mazumdar-Shaw, Chairman & Managing Director of Biocon Ltd., Became Indias richest woman in 2004, was educated at the Bishop Cotton Girls School and Mount Carmel College in Bangalore. Founded Biocon India with a capital of Rs.10,000 in her garage in 1978 Her application for loans were turned down by banks then on three counts
biotechnology was then a new word, the company lacked assets, women entrepreneurs were still a rarity.
Ekta Kapoor, creative head of Balaji Telefilms Synonymous with the rage of soap operas in Indian TV, after her most famous venture Kyunki Saas Bhi Kabhi Bahu Thi which was aired in 2000 on Star plus. Ekta dominates Indian Television. At the 6th Indian Telly Awards 2006,she bagged the Hall Of Fame award for her contributions.
Neelam Dhawan, Managing Director, Microsoft India, Graduate from St. Stephens College in 1980,and also passed out from Delhis Faculty Of Management studies in 1982. She was keen on joining FMCG majors like Hindustan Lever and Asian Paints, both companies rejected Dhawan, as they didnot wish to appoint women for marketing and sales.
Naina Lal Kidwai, was the first Indian woman to graduate from Harvard Business School. Fortune magazine listed Kidwai among the worlds top 50 Corporate Women from 2000 to 2003. She is the first woman to head the operations of a foreign bank in India. ( HSBC)
Indu Jain, used to be the Chairman of the Times Group The most powerful and largest Media house India has known. Indu Jain is known by many different identities such as that of spiritualist, humanist, entrepreneur,an educationalist but most prominently she played the role of the Chairman of Times Group.
WOMEN ENTREPRENEURS
A woman or a group of women who initiate,organize and run a business. Women who innovate or adopt a business activity
Women Entrepreneurship
An enterprise owned and controlled by a women having a minimum financial interest of 51% of capital and giving at least 51% of the employment generated by the enterprise to women. An act of business ownership and business creation that empowers women economically increases their economic strength as well as position in society. Economically independent. Strong desire to do something positive Contributes to the position values of family and social life.
Mahila Grih Udyog 7 ladies started in 1959: Lizzat Pappad Lakme Simon Tata Shipping coorporation Mrs. Sumati Morarji Exports Ms. Nina Mehrotra Herbal Heritage Ms. Shahnaz Hussain Balaji films Ekta Kapoor
equally contributing
Grassroots Entrepreneur
Driven by the need to augment the familys finances to secure children;s future e.g tailors, flower sellers, STD booth owner Turnover aspiration of 5 lakh
Upper Crust
Drawn from top most social class Well educated Travel agencies, traders in pharaceuticals, Turnover over 5 crore
11. Ranjana Kumar ,Chairman, NABARD 12. Ravina Raj Kohli, Media personality and ex-President, STAR News 13. Renuka Ramnath, CEO, ICICI Ventures 14. Ritu Kumar ,Fashion Designer 15. Ritu Nanda, CEO, Escolife 16. Shahnaz Hussain, CEO, Shahnaz Herbals 17. Sharan Apparao, Proprietor, Apparao Galleries 18. Simone Tata, Chairman, Trent Ltd 19. Sulajja Firodia Motwani, Joint MD, Kinetic Engineering 20. Tarjani Vakil, former Chairman and Managing Director, EXIM Bank 21. Zia Mody, Senior Partner, AZB & Partners
Shortage of raw-materials: High prices of raw materials, on one hand and getting raw materials at minimum discount rates are the other.
Cut-throat Competition: Lot of the women entrepreneurs have imperfect organizational set up to drive in a lot of money for canvassing and advertisements. Face severe competition from organized industries. Face a stiff competition with the men entrepreneurs who easily involve in the promotion and development area and carry out easy marketing of their products with both the organized sector and their male counterparts.
Lack of education and prevalent levels of illiteracy amongst women: In India, around (40%) of women are still illiterate. Illiteracy is the root cause of socioeconomic barriers or hurdles. Due to lack of Knowledge of latest technological change, know-how and education creates problems before women to set up competitive enterprises.
Family Conflicts: Conflict of performing of home role as they are not available to spend enough time with their families. Incapability to attend to domestic work, time for education of children, personal hobbies, and entertainment adds to their conflicts.
Marketing Problems: Dominated by males and even women with adequate experience fail to make a dent. Have to be at the mercy of middlemen who pocket the hunk of profit. Women entrepreneurs also find it difficult to capture the market and make their products popular.
Lack of self-confidence & optimistic attitude among women: Lack of selfconfidence, determination, physically powerful outlook, hopefulness etc. Always panic from committing mistakes Limited initiative of taking risk and bearing uncertainty in them.
Status
No. of Women Entrepreneurs 2930 3180 1618 1394 842 2135 1538 1026 4185
Percentage
Tamil Nadu Uttar pradesh Punjab Maharastra Madhya pradesh Kerala Gujrat Karnatka Other states & UTS
LOAN/ SCHEMES BY SEVERAL COMMERCIAL BANKS FOR THE DEVELOPMENT OF WOMEN ENTREPRENEURSHIP
Name of Bank Vijaya bank State bank of India Bank of India Canara Bank Union Bank of India UCO Bank Central Bank of India Oriental Bank of commerce ICICI Bank
Name of Loan/ Scheme V Mangla Stree Shakti Package Priyadarshini Can Mahila Viklang Mahila Vikas Yojana Nari Shakti Cent Kalyani Orient Mahila Vikas Yojana Womens Account
Yojna Schemes and Programme Nehru Rojgar Yojna Jacamar Rojgar Yojna TRYSEM DWACRA Technological Training and Awards Stree Shakti Package by SBI Entrepreneurship Development Institute of India Trade Related Entrepreneurship Assistance and Development (TREAD) National Institute of Small Business Extension Training (NSIBET) Women's University of Mumbai
Percentage
16 23 25 36 45 43 40 35 35
Venture an undertaking involving uncertainty especially a risky or dangerous one a business enterprise or speculation in which something is risked in the hope of profit
Venture Capital
A type of private equity capital typically provided by professional, outside investors to new, growth businesses. As cash in exchange for shares in the invested company, High risk, but offer the potential for above-average returns. Long term equity finance with return in the form of capital gain
Private equity, made for the launch, early development or expansion of a business. Provides equity capital to enterprises not quoted at the stock market. The money can be used to develop new products and technologies, to expand working capital, to make acquisitions, or to improve a companies gearing-up.
Origin
1946 General Georges Doriot Father of the modern Venture Capital Industry Founded the American Research and Development Corporation whose biggest success was Digital Equipment Corporation at Massachusetts For 11 yrs, financed 35 companies & gained 35 times of his investment 1977 Arthur Rock & Co. provided venture capital to Apple Computer Indian Scenario Started in 1988 with four institutions , ICICI ( Mumbai), Gujrat Industrial Development Corporation ( Ahmedabad) , Andhra Pradesh Industrial Development ( Hyderabad) & Canara Bank ( Bangalore) Fund from 12 ( 1990)-45 ( 2000)
As Mentor
Providing strategic, operational & financial advice Contacts networking in field like
Recruiting key personnel Providing contacts in International market
KEY ELEMENTS OF VENTURE CAPITAL Investments in unquoted companies Is equity capital by nature Is medium to long-terms targeted at companies with growth potential
Characteristics
Long time horizon Lack of liquidity High risk Equity participation Participation in management
HOW VC OPERATE Venture capital companies obtain their funds from investors. these are institutional investors, the parent companies of the venture capital companies, private individuals and other parties. Provide their investees management skills, contacts and market access. Representation in the board, Act as management consultants and as financial advisors in certain projects. Get their returns mainly when they sell out their stakes in the investee companies. often this is done in the course of an IPO (initial public offering).
Borrowers: New entrepreneurs who cannot get such an amount from the general investors. Type of project: High risk, high rewards and long term projects. Managenment: Jointly by the entrepreneurs and venture capitalists, take active part in the management and decisionmaking.
New venture: New technology to produce new products, in expectations of high gains
Mode of investment: Basically an equity financing method, the investment in relatively new companies when it is too early to go to the capital market to raise funds. Objective:
is to make a capital gain in equity investment at the time of exit long-term capital that is injected to enable the business to grow at a rapid pace, mostly from the start-up stage.
Conditional Loan:
Repayable in the form of a royalty after the venture is able to generate sales No interest is paid on such loans. In India, VCFs charge royalty ranging between 2 to 15 percent; Actual rate depends on other factors of the venture such as gestation period, cost-flow patterns, riskiness and other factors of the enterprise.
Income Note :
Hybrid security which combines the features of both conventional loan and conditional loan. The entrepreneur has to pay both interest and royalty on sales, but at substantially low rates.
Exit Route
IPO Trade Sale-sell his stake to strategic buyer having a similar/complementry or plan to enter Promoter Buyback- at predetermined price
Advantages
Injects long term equity finance which provides a solid capital base for future growth. Venture capitalist is a business partner, sharing both the risks and rewards. Venture capitalists are rewarded by business success and the capital gain. The venture capitalist is able to provide practical advice and assistance to the company based on past experience with other companies which were in similar situations.
The venture capitalist also has a network of contacts in many areas that can add value to the company. The venture capitalist may be capable of providing additional rounds of funding should it be required to finance growth. Venture capitalists are experienced in the process of preparing a company for an initial public offering (IPO).
Disadvantages
Long & complex process Require to draw a detailed business plan & need professional help Pay legal & accounting fees whether successful in securing Lossening of management control
MARKET SEGMENTS Seed capital Start-up capital Expansion capital ( 1ST & 2ND Phase) Mezzanine financing ( 3RD Phase) Bridge financing capital ( 4th phase) Rescue capital
Seed capital and start-up capital are provided to finance the early growth phases of a company.
Seed capital is used to determine weather an idea is worth further consideration and to transform the idea into a working business concept. Self finance, friends & family
Founder(s) only No product No customers Primary risk: R&D
Start-up capital finances the foundation of the company and about the first year of its operation. typical activities financed by start-up capital are trial product development and testing and test marketing. Firms have assembled a management team, & beginning to generate revenues
No revenues Limited customer interest Primary risk: market
accept
Two sources
Business angels-Is an affluent individual who provides capital for a business start-up, usually in exchange for ownership equity. They typically invest their own funds, unlike venture capitalists, who manage the pooled money of others in a professionally-managed fund Venture Capitalist firms-
Expansion capital ( 1ST & 2ND Phase) supports companies in the growth phase which have already brought their products to market.
Production & marketing Working capital funds- for early stage companies that are selling product, but not yet turning a profit Primary risk:execution
Bridge financing capital ( 4th phase) -finance the expenses in the period before the IPO
Start Up
5-9
Very High
First Stage
3-7
High
Financial Stage
Risk Perception
Activity to be financed Expand market and growing working capital need Market expansion, acquisition & product development for profit making company Facilitating public issue
Second Stage
Sufficiently high
Third Stage
1-3
Medium
Fourth Stage
1-3
Low
VC investment process
Deal origination Screening Due diligence (Evaluation) Deal structuring
Exit plan
Deal origination:
VC investor creates a pipeline of deals or investment opportunities that he would consider for investing in. Deal may originate in various ways. referral system, active search system, and intermediaries. Referral system
by their parent organisaions, trade partners, industry associations, friends etc.
Intermediaries
Used by venture capitalists in developed countries like USA Intermediaries who match VCFs and the potential entrepreneurs.
Screening Before going for an in-depth analysis, carry out initial screening of all projects on the basis of some broad criteria. limit projects to areas in which the venture capitalist is familiar in terms of technology, or product, or market scope. The size of investment Geographical location and Stage of financing
Due Diligence Evaluating an investment proposal. Evaluate the quality of entrepreneur before appraising the characteristics of the product, market or technology. Ask for a business plan to make an assessment of the possible risk and return on the venture. Evaluation: VCFs in India expect the entrepreneur to have:Integrity, long-term vision, urge to grow, managerial skills, commercial orientation. Risk analysis of the proposed projects which includes: Product risk, Market risk, Technological risk and Entrepreneurial risk. Final decision is taken in terms of the expected risk-return trade-off
Deal Structuring: Negotiate the terms of the deals, that is, the amount, form and price of the investment. Include the venture capitalist's right to control the venture company and to change its management if needed Buyback arrangements, acquisition, making initial public offerings (IPOs), etc.
Post Investment Activities: Once the deal has been structured and agreement finalised, the venture capitalist generally assumes the role of a partner and collaborator. Gets involved in shaping of the direction of the venture. If a financial or managerial crisis occurs, the venture capitalist may intervene, and even install a new management team.
Exit Venture may exit in one of the following ways: 1. Initial Public Offerings (IPOs) 2. Acquisition by another company 3. Purchase of the venture capitalist's shares by the promoter, or 4. Purchase of the venture capitalist's share by an outsider.
Venture capital funds Small Medium Large Corporate venture funds Financial service venture groups
POWER OF SUPPLIERS
COMPETITIVE RIVALRY
POWER OF BUYERS
THREAT OF SUBSTITUES
Power of Supplier
Power of suppliers of money is not overly high because of the high liquidity of todays financial markets. Very important for the venture capital companies to demonstrate a good track record of high returns to attract funds.
Power of Buyers
Venture capital funds select them carefully and according to their own preferences to limit potential losses.
Threat of Substitute
Hardly any real substitutes for the venture capital industrys product, consisting of equity combined with management help, contacts, and guidance.
All in all we see the competition in todays venture capital industry as moderate. This is mainly due to the growing industry. It could rapidly change as the industry matures and the growth slows down.
The concept of venture capital was formally introduced in India in 1987 by IDBI. ICICI started VC activity in the same year Later on ICICI floated a separate VC company TDICI (Technology Development & Information Company Of India Ltd. )
2) Those promoted by State Government controlled development finance institutions. For example: - Punjab Infotech Venture Fund - Gujarat Venture Finance Ltd (GVFL) - Kerala Venture Capital Fund Pvt Ltd. 3) Those promoted by public banks. For example: - Canbank Venture Capital Fund - SBI Capital Market Ltd
4)Those promoted by private sector companies. For example: - Infrastructure Leasing & Financial Services Limited
(IL&FS) Trust Company Ltd
- Infinity Venture India Fund 5)Those established as an overseas venture capital fund. For example: - Walden International Investment Group - HSBC Private Equity management Mauritius Ltd
Rules by SEBI:
VCF are regulated by the SEBI (Venture Capital Fund) Regulations, 1996. The following are the various provisions:
A venture capital fund may be set up by a company or a trust, after a certificate of registration is granted by SEBI on an application made to it. On receipt of the certificate of registration, it shall be binding on the venture capital fund to abide by the provisions of the SEBI Act, 1992. A VCF may raise money from any investor, Indian, Nonresident Indian or foreign, provided the money accepted from any investor is not less than Rs 5 lakhs. The VCF shall not issue any document or advertisement inviting offers from the public for subscription of its units
SEBI regulations permit investment by venture capital funds in equity or equity related instruments of unlisted companies and also in financially weak and sick industries whose shares are listed or unlisted At least 80% of the funds should be invested in venture capital companies and no other limits are prescribed. A VCF is not permitted to invest in the equity shares of any company or institutions providing financial services. The securities or units issued by a venture capital fund shall not be listed on any recognized stock exchange till the expiry of 4 years from the date of issuance .
BANGALORE
450
14000
400
387
12000
299
350
300
10000
280
250
8000
7500 6390
200
6000
146
170
150
4000
100
2000
50
0
2006 2007
Value of deals
Sehat First is a joint venture between d.o.t.z Technologies and Acumen Fund
Aimed at delivering affordable, quality basic health care & pharmaceutical services through self-sustainable franchised health centers. Key Focus Areas To expand the health care service delivery network To create entrepreneurial & employment opportunities Unique Selling Points Basic health care services Pharmacy service Tele-consultancy services (through e-Sehat application) General merchandise store (including health & hygiene products) Quality service at affordable price