Professional Documents
Culture Documents
THE NEW
VENTURE
By Team -7
Agenda
An overview
Debt or Equity Financing
Internal or External Funds
Funding from Banks and Financial institutions,
Governmental and Developmental Sources,
Private Placement,
Types of Investors,
Private Offerings,
Bootstrap Financing,
Venture Capital , Nature of Venture Capital, Approaching,
presenting and obtaining the funds,
FDI
Financial
Requirements
Driven by:
Burn rate
Operation needs
Working capital
Asset requirement
And sales
Here comes your footer Page4
Debt Financing
Not only these are the least expensive funds in terms of cost & control,
but they are absolutely essential in attracting outside funding.
The outside providers of capital feel that the entrepreneur may not be
sufficiently committed to the venture, if he/she doesn’t have money
invested.
The invested amount by the entrepreneur may be negligible but
valuable here to outside providers.
It is the money which makes outside investors feel comfortable with here
commitment level.
Commercial Banks
Inventory Loans
Straight Loans
Character Loans
Regulation D contains
1.Broad provisions designed to simplify the private offerings,
2.General definitions of what constitutes a private offering,
3.Specific operating rules –Rule504,Rule505,and Rule506..
The Contract
The Sponsoring company
The Limited Partnership
The Bank has financed over 8 lakhs SSI units in the country. It has
55 specialised SSI branches, 99 branches in industrial estates and
more than 400 branches with SIB divisions.
Definition: To finance your company's startup and growth with the assistance of
or input from others.
Bootstrapping is one of most effective and inexpensive ways to ensure a
business' positive cash flow. Bootstrapping means less money has to be
borrowed and interest costs are reduced.
This becomes important when capital from debt & equity financing is
more expensive.
In addition to the monitory costs, outside capital has other costs as well
like.,
Outside capital usually takes between 3 & 6 months to raise outside
capital.
Outside capital often decreases a firm’s drive for sales & profits.
The availability of capital increases the impulse to spend.
Outside capital can decrease the company’s flexibility.
Outside capital may cause more disruption & problems in the venture
than was present without it.
Is a type of private equity capital typically provided for early-stage, high-
potential, growth companies in the interest of generating a return .
Before World War II, venture capital investments (originally known as "development
capital") were primarily the domain of wealthy individuals and families.
ARDC is credited with the first major venture capital success story when its 1957
investment of $70,000 in Digital Equipment Corporation (DEC) would be valued at over
$355 million after the company's initial public offering in 1968.
The public successes of the venture capital industry in the 1970s and early 1980s.
The growth of the industry was hampered by sharply declining returns and certain
venture firms began posting losses for the first time.
Professor Andrew Metrick refers to first 15 years of the modern venture capital
industry beginning in 1980 as the "pre-boom period" in anticipation of the
boom that would begin in 1995 and last through the bursting of the Internet
Bubble in 2000.
As a percentage of GDP, venture investment was 0.058% percent in 1994,
peaked at 1.087% (nearly 19x the 1994 level) in 2000 and ranged from 0.164%
to 0.182 % in 2003 and 2004.
Starts with the receipt of Business Plan by the venture capitalist. Determines if the deal or
similar deals have been seen previously. Then, determines if the proposal fits his or her
long-term needs in developing a portfolio balance. Investigates the economy of the
industry and evaluates weather he or she has the appropriate knowledge and ability to
invest in that industry. Reviews weather the deal can deliver the ROI required. The
credentials and capability of the mgt team are evaluated to determine if they can carry out
the plan presented.
AGREEMENT ON PRINCIPAL TERMS
The venture capitalist wants a basic understanding of the process before making the major
commitment of the time and effort involved in the formal due diligence process.
It is the longest stage, involving anywhere from one to three months. There is a
detailed review of the company’s history, the business plan, the resumes of the
individuals, their financial history, and target customers. The upside potential
and downside risk are assessed; and there is a thorough evaluation of the
markets, industry, finances, suppliers, customers and mgt.
FINAL APPROVAL
After making initial contact with the right firm, send an executive
summary
Be Concise.
Mass Emails
Hype
Trade shows
FDIs require a business relationship between a parent company and its foreign
subsidiary.
The foreign direct investor may acquire 10% or more of the voting power of an
enterprise in an economy through any of the following methods
Foreign Direct Investment (FDI) equity inflows in the country have increased
from US $ 5.5 billion in 2005-06 to US $ 27.31 billion in the year 2008-09.
despite the economic slowdown, showing a percentage growth of 11% over the
previous financial year.