Venture Capital - Meaning and Features

VENTURE CAPITAL:

1 Meaning

2 Features

3 Venture Capital in India

Venture Capital

Venture Capital finance is a new type of financial intermediary which has emerged in India during 1980s. It is a long-term financial assistance provided to projects, which are established to introduce new products, inve ntions, idea and  technology. Venture capital  finance  is more suitable  to  risky  oriented business  which  consists of huge investment and provides  results after 5 to 7 year. 

1Meaning

demonstrated their business potential but do not yet have access to the public securities market or to credit oriented institutional funding sources. Venture Capital also provides management in leveraged buy out financing.

1995 finance bill define Venture Capital as long- term equity investment in novel technology based projects with display potential for significant growth and financial return.

2 Features

Venture Capital consists of the following important features:

(1) Venture Capital consists of high risk and high return based financing.

(2) Venture Capital financing is equity and quasi equity financing instruments.

(3) Venture Capital provides moderate interest bearing instruments.

(4) Venture Capital reduces the financial burden of the business concern at the initial stage.

(5) Venture Capital is suitable for risky oriented and high technology based industry.

3 Venture Capital in India

 ICICI Venture Capital is the first Venture Capital Financing in India. It was started in 1988 by the joint venture of ICICI and UTI.

 The UTI launched Venture Capital Unit Scheme (VECAUS-I) to raise finance in 1990. Technology Development and Information Company (TDICI) is another major Venture Capital financing institution in India.

 Risk Capital and Technology Finance Corporation Ltd. (RCIFC)

 ANZ Grind lays Bank has set up India‘s first private sector Venture Capital fund.

 SBI and Canara Bank are also involved in Venture Capital Finance. They provide either equity capital or conditionals loans.