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This book studies diverse categories of venture capital (VC) firms in India based on their ownership type (domestic vs foreign), stage of investment (early vs growth stage) and VC investment team composition (entrepreneurial experience vs investing experience). For each category of VC firms, the nuances in their investment, portfolio involvement and exit strategies are separately analysed. Employing the framework of information asymmetry, the book studies how different categories of VC firms rely on distinct mechanisms such as deal syndication and domain specialization to address the ensuing adverse selection and agency risks. It also delves into the macro context by assessing whether the emergence of VC in India has been driven by 'pull' or 'push' factors. This is accomplished by analysing in depth the supply and demand of VC funds. Finally, it critically reviews the existing policies of entrepreneurial finance and arrives at recommendations for future directions of the same.
Venture capital may play an important role in supporting entrepreneurial development and small business growth. But institutional arrangements and instruments must be carefully chosen, taking into account the lessons from countries where venture capital has been a reality now for a few years. The Bank's role should be largely to disseminate these lessons.
Venture Capital Financing in India provides a balanced, two-part presentation of the practice of venture capital financing in India in the light of global experience. The first part provides detailed coverage of the practices and procedures adopted by the venture capital industry in India as well as its operational performance. Among the aspects discussed are negotiation and deal-structuring techniques, regulatory and legal framework, methods of investment monitoring, portfolio evaluation, exit strategies, and opportunities for overseas investors. The second part provides profiles of all venture capital companies operating in India. Author J. C. Verma includes information on all contributors to the funds, their investment practices, the ventures financed by them and the stages of their development, and the requirements specified by them for entrepreneurs to avail of finance. Venture Capital Financing in India provides readers the information they seek whether interested in venture capital, entrepreneurship, investment management, merchant banking, financial management, or international finance with regard to rate of return and the competition.
ABOUT THE BOOK Venture capital funding is an increasingly important area for entrepreneurial ventures in both industrialized and developing countries. Venture capital has become especially important in India in developing information technology (IT) sector. Venture capital is a form of equity financing in which the investor actively participates in the venture being financed. Although the concept as such is very old, a formal market for venture capital in the US started only after World War II. A venture capital firm manages funds provided by investors and directs them to the most promising ventures, mainly in the form of equity. This volume, which includes 13 case studies, provides an exhaustive account of the theory and practice of venture capital firms. The reader will gain insight into the operation of venture capital funding in India. The book examines in detail the contracts between venture capital firms and entrepreneurs to determine what provisions are included in these contracts that help in decision-making such as appraisal, screening, self-selection, monitoring, incentivizing and divestment. Experiences of other countries in managing venture capital operations are also explained in the book.
This paper presents new empirical evidence on the certification role of venture capital firms in India, an economy characterized by a high degree of information asymmetry. We first present a detailed description of venture capital activity in India between 2000 and 2012. We then analyze the post-issue operating performance of firms that underwent initial public offering (IPO) firms. Results indicate that Indian IPO firms underperform relative to industry medians in the first three years after going public. Finally, we compare operating performance between venture capital (VC) backed IPO firms and non-VC backed IPO firms. Results indicate that VC backed IPO firms are associated with higher growth rates in sales and capital expenditures and a better performance in operating cash flows but are less profitable than non-VC backed IPO firms.
There Is No Comprehensive Work Available On The Subject Of Venture Capitalism And This Book Attempts To Fill The Gap. It Will Be Of Interest To Students And Professionals In The Banking And Financial Sectors.
This book explores how the venture capital sector supports growth and development of SMEs. The text draws from major international empirical studies in Indian and Islamic industries to analyse techniques used by venture capitalists to value, structure and monitor investments. This book is essential for students, policy makers and practitioners.