Venture capital- meaning, stages ad process

venture capital, process of venture capital, stages of venture capital, stages and process of venture capital, early stage finance, later stage financing,

1. Venture Capital Stages and Process By: Aditi Naik Salgaonkar 090-2017 Financial Services

2. Meaning of Venture Capital

3. Stages of Venture Capital Financing At early stage VC evaluates: Technology Potential market Capabilities of the promoter to implement project At later stages VC closely examines: New markets Track records of business Track record of entrepreneur

4. A. Early Stage finance 1. Seed Capital: VC provide seed capital for translating idea into business preposition Investor will investigate through market research, conduct technical and economic feasibility. 2. Start up capital: Organisation is being set up The idea or product gets its form Entrepreneur should provide clear business plan and market analysis

5. 3. Second round finance: Refers to the stage where the product is launched in the market Main goals - capture market share from competitors - minimize losses to reach break even

6. B. Later stages of finance 1. Developmental Capital: Funds are required for – Purchase of new equipment Expansion of marketing and distributing facilities Launching of new products to new regions etc. 2. Expansion Finance: Funds are required for – New or larger factories and warehouses Production capacities New products and new markets Purchasing existing business

7. 3. Buyouts: Management buyout (MBO): VCIs provide funds to enable the current management of a company to acquire majority of the shares from the existing shareholders and take control of the company The buyers have more knowledge about the company and its true potential compared to seller Management buy-in (MBI): Funds are provided to enable an outside group of managers to buy an existing company Involves 3 parties: Mgt team, target co. and VCI. Less popular since it is difficult for new management to assess the actual potential of the target company.

8. 4. Replacement capital: Funds provided to purchase existing shares in a company from other shareholders 5. Turnaround Finance: When established enterprise becomes sick, it needs finance as well as management assistance for major restructuring to revitalize growth of profits

9. Process of venture financing 6. Exit plan