Venture capital and angel financing

1. PRESTIGE INSTITUTE OF MANAGEMENT &
RESEARCH
Topic
“Venture capital & Angel Financing”
Submitted to:-
Prof. SAKET RATHI
Submitted by:-
AYUSH YADAV
AVESH RAYEEN
CHANCHAL JAIN
PRASHANT MAHASHWARI

2. What is Venture Capital ???
Money provided by investors to start-up firms and
small businesses with perceived long-term growth
potential.
Venture capital may be define as a form of “Equity
Financing”, which is specially design for the funding
high risk and high rewards projects.
The objectives of venture capital is to help profession
and small and medium entrepreneurs to launched
enterprises with a specify promise.

3. Features of Venture Capital
High Risk- The success rate in developed economics
like USA is around 60% where as in a developing
countries like INDIA is 20-30%.
Finance High Tech Projects.
It is for the longer period- The benefit or profit from
the venture capital investment will start accruing only
after an average period 4 to 5 years.
It is an active form of investment with a higher degree
of involvement in the management of the venture.
It is a long-term investment and the returns are in the
form of the capital gain.

4. Advantage of Venture Capital
Venture capital has made significant contribution to
technological innovations and promotion of
entrepreneurship.
1. Economic Oriented-
Helps in the industrialization of a country.
Helps in the technological development of a country.
Generate employment.
Helps in developing entrepreneur skill.

5. Advantage of Venture Capital
2. Investor Oriented-
They are invited to invest only after the company start
earning profit so the risk is less and the healthy growth
of capital market is entrusted.
Profit to venture capital company’s/venture capital
funds.
3. Entrepreneur Oriented-
Helps small and medium first generation entrepreneur
to translate there idea into reality.
Promotes entrepreneurship in the country.

6. Disadvantages of Venture Capital
Lengthy and complex process (needs detailed business
plan, financial projections and etc.)
In the deal negotiation stage, you will have to pay for
legal and accounting fees
Investors become part owners of your business -
founder loss of autonomy or control

7. Stages of Venture Capital
Seed Money Stage- Low level
financing for proving a new idea.
Start up - New firms needing funds
for expenses related with marketing
and product development.
Second Round- Operation capital for
early stage, company’s which are
selling product but not returning a
profit.
First Round- Manufacturing and early
sells fund.
Third Round- Funds financing for
firm that’s breaking even and is
contemplating and expansion project.
Fourth Round- Money provided for
firms that are likely to go pubic soon.

8. How does Venture Capital works??
 Venture capital firms typically source the majority of
their funding from large investment institutions.
 Investment institutions expect very high ROI
 VC’s invest in companies with high potential where
they are able to exit through either an IPO or a
merger/acquisition.
 Their primary ROI comes from capital gains although
they also receive some return through dividend.

9. Functions of Venture Capital
The venture capital fill the gap of owner fund’s in
relation to the quantum of equity required to support
the successful launching of new business.
The venture capitalist assist the entrepreneurs in
locating, interviewing and employing corporate
achievers to professionalise the firm.
Venture capital provides finance as well as skills to new
venture of existing based on high technology
innovation.

10. Angels Financing
Angel financing means an “Angel Investor” who
provide financial backing for small start up or
entrepreneur, an angle investor are usually found
among an entrepreneur family and friends.
The capital they provide can be one time injection of
money or ongoing support to carry the company
through difficult time.

11. Who are Angels ??
Angels are investors who:
Expect a financial return.
Believe in giving back to their communities.
Invest locally and regionally.
Participate in the investment process.
Show interest in personal relationships with
companies and employees.
Guidance to entrepreneurs.

12. Financial Attributes of Angels
Provide early-stage investment.
Invest smaller amounts per-investment.
Partially fill funding gap left by venture capital. (VCs)
Invest individual wealth.
Can tolerate loss of entire investment.

13. Q & A

14. Thank You