Research Project Report on Growth of Venture Capital Finance in India and Role of Business Confidence Index

A
Research Report
ON
Growth of Venture Capital Finance in India
and Role of Business Confidence Index
In partial fulfillment of the requirements for the degree of
Master of Business Administration
(Kurukshetra University, Kurukshetra; Session 2012-14)
Under Supervision of: Submitted By:
Dr. Shilpa Jain Piyush Gupta
Head of Department Student, MBA IV
MBA, SDIMT Reg. No. 05 MY 1282
S. D. Institute of Management and Technology
Jagadhri, Yamunangar, Haryana 135003

Growth of Venture Capital Finance in India and Role of Business Confidence Index | 2
DECLARATION
I, Piyush Gupta, hereby declare that the work presented herein is genuine
work done originally by me and has not been published or submitted
elsewhere for the requirement of a degree programme. Any literature, data or
works done by others and cited within this dissertation has been given due
acknowledgement.
Piyush Gupta
MBA (2012-14)
Roll No. ______

Table of Contents
ACKNOWLEDGEMENT 5
PREFACE 6
1 INTRODUCTION TO VENTURE CAPITAL FINANCE 7
1.1 VENTURE CAPITAL FINANCING 7
1.2 BENEFITS OF VC OVER OTHER FUNDING METHODS 9
1.3 A BRIEF HISTORY 10
1.4 VENTURE CAPITAL FINANCINGPROCESS 12
1.5 WHAT DO VCS LOOK FOR? 13
2 VENTURE CAPITAL IN INDIA AND BUSINESS CONFIDENCE 14
2.1 INDUSTRYOVERVIEW 14
2.2 STRENGTHS AND CHALLENGES OF INDIA 15
2.3 GROWTHOF VENTURE CAPITAL INDUSTRY 16
2.4 BUSINESS CONFIDENCE INDEX 18
3 INTRODUCTION TO THE STUDY 21
3.1 BACKGROUND OF THESTUDY 21
3.2 NEED FOR THE STUDY 22
3.3 OBJECTIVES OF STUDY 23
3.4 SCOPEOF STUDY 24
4 LITERATURE REVIEW 25
5 RESEARCH METHODOLOGY 29

5.1 DATA COLLECTION 29
5.2 RESEARCH DESIGN 30
5.3 LIMITATIONS OF STUDY 30
6 ANALYSIS AND INTERPRETATION 31
6.1 ANALYSING GROWTH OF VENTURE CAPITAL FINANCE IN INDIA AND FORECASTING
VC INVESTMENTS IN NEAR FUTURE 31
6.2 ANALYSIS OF VENTURE CAPITAL INVESTMENTS IN DIFFERENT SECTORS OF
ECONOMY 35
6.3 CII’S BUSINESS CONFIDENCE INDEX AND VENTURE CAPITAL INVESTMENT
GROWTH 46
7 FINDINGS AND CONCLUSION 49
7.1 FINDINGS 49
7.2 CONCLUSION 51
8 REFERENCES 52
8.1 BIBLIOGRAPHIC REFERENCES 52
8.2 WEB REFERENCES 53
9 SUGGESTED READINGS 54
APPENDIX 55
APPENDIX I - DATA SETS 55
APPENDIX II - GLOSSARYOF TERMS AND ABBREVIATIONS 58

ACKNOWLEDGEMENT
This research project “Growth of Venture Capital Finance in India and
Role of Business Confidence Index” in itself is an acknowledgement to the
inspiration, drive, and technical assistance contributed to it by many
individuals. The project and its report work would have never been
completed without the guidance and assistance that I received from time to
time during the whole research process.
I express my sincere gratitude to my Internal Supervisor Dr. Shilpa Jain
(Head of Department, MBA, SDIMT Jagadhri) for giving me unconditional
support and an opportunity to enhance my skill in the field of my project.
I would like to thank Dr. Shelly Gupta (Director, SDIMT Jagadhri) for her
immense cooperation and provision of every possible required resource
during project work.
Above all, I am grateful to GOD who showed me rays of light to do the
project and I am also thankful to all my family members and friends for their
constant support and inspiration to complete this report.
Piyush Gupta
MBA(2012-2014)
Roll No.

PREFACE
The research project report “Growth of Venture Capital Finance in India
and role of Business Confidence Index” is undertaken as a part of MBA
curriculum at Kurukshetra University. Venture Capital Finance is a mode of
financing a high risk and new business ventures and is no more in the
dormant stage in India.
The academic research study has been undertaken in order to know the
current scenario of venture capital finance in India and to predict it near
future rate of growth. The report also lookouts for market share of different
economic sectors in terms of Venture Capital Investments and analyses
growth of venture capital investment in these sectors.
The research project report further analyse whether values Business
Confidence Index can predict growth rate of Venture Capital Investments.
For this reason Business Confidence Index by Confederation of Indian
Industry (CII) has been used.
The report starts with Introduction to the topic i.e. Venture Capital
Financing. It then throws light of this Industry in India. The report than
provides objectives of this project, reviews of literature done and Research
methodology used. It then provides details of Analysis and Interpretation
followed by findings and conclusion.

1 INTRODUCTION TO VENTURE CAPITAL FINANCE
1.1 Venture Capital Financing
Business requires capital, and getting it at the right time is very important.
There are several alternatives to fund the business. A brief heading to name
a few would be:
• Owner or proprietor’s capital
• Equity partner
• Debt Finance
These can further be branched to many options giving entrepreneur several
options to chooseamong. In this study the focus would be more on financing
by venture capital which comes under equity financing.
Venture capital is a risk financing in the form of equity or quasi-euity. It
gives the business funds based on their potential and their interest as
perceived by the investor. Funds might be required for seed stage funding,
expansion/development funding or for acquisition financing. Venture capital
is established among developed countries and is developing in third world
countries because of its impact on encouraging entrepreneurial activities
within a nation. Venture Capital firms invest funds on any business with a
professional outlook; they focus on their primary segment which varies
among different specializations (e.g. e-commerce, Oil & Gas, Healthcare,
Manufacturing, Health/life sciences, etc.).
'Venture Capital' is an important source of finance for those small and
medium-sized firms which have very few avenues for raising funds.

Although such a business firm may possess a huge potential for earning
large profits in the future and establish itself into a larger enterprise. But the
common investors are generally unwilling to invest their funds in them due
to risk involved in these types of investments. In order to provide financial
support to such entrepreneurial talent and business skills, the concept of
venture capital emerged. In a way, venture capital is a commitment of
capital, or shareholdings, for the formation and setting up of small scale
enterprises at the early stages of their life cycle.1
Venture capitalists comprise of professionals of various fields. They provide
funds (known as Venture Capital Fund) to these firms after carefully
scrutinizing the projects. Their main aim is to earn huge returns on their
investments, but their concepts are totally different from the traditional
moneylenders. They know very well that if they may suffer losses in some
project, the others will compensate the same due to high returns. They take
active participation in the management of the company as well as provide
the expertise and qualities of a good banker, technologist, planner and
managers. Thus, the venture capitalist and the entrepreneur literally act as
partners.
1 “Venture Capital”, accessed February 18, 2014
http://business.gov.in/business_financing/venture_capital.php

1.2 Benefits of VC over other Funding Methods
Venture capital has a number of advantages over other forms of finance:
 It injects long term equity finance which provides a solid capital base
for future growth.
 The venture capitalist is a business partner, sharing both the risks and
rewards. Venture capitalists are rewarded by business success and the
capital gain.
 The venture capitalist is able to provide practical advice and
assistance to the company based on past experience with other
companies which were in similar situations.
 The venture capitalist also has a network of contacts in many areas
that can add value to the company, such as in recruiting key
personnel, providing contacts in international markets, introductions
to strategic partners, and if needed co-investments with other venture
capital firms when additional rounds of financing are required.

1.3 A Brief History
One of the first steps toward a professionally-managed venture capital
industry was the passage of the Small Business Investment Act of 1958. The
1958 Act officially allowed the U.S. Small Business Administration (SBA)
to license private "Small Business Investment Companies" (SBICs) to help
the financing and management of the small entrepreneurial businesses in the
United States. It is commonly noted that the first venture-backed startup is
Fairchild Semiconductor (which produced the first commercially practical
integrated circuit), funded in 1959 by what would later become Venrock
Associates.
During the 1960s and 1970s, venture capital firms focused their investment
activity primarily on starting and expanding companies. More often than not,
these companies were exploiting breakthroughs in electronic, medical, or
data-processing technology. As a result, venture capital came to be almost
synonymous with technology finance.
The public successes of the venture capital industry in the 1970s and early
1980s (e.g., Digital Equipment Corporation, Apple Inc., Genentech) gave
rise to a major proliferation of venture capital investment firms. The number
of firms multiplied, and the capital managed by these firms increased ten
folds over the course of the decade.
Growth in the venture capital industry remained limited throughout the
1980s and the first half of the 1990s.

The late 1990s were a boom time for venture capital. Initial public offerings
of stock for technology and other growth companies were in abundance, and
venture firms were reaping large returns.
The NASDAQ crash and technology slump that started in March 2000 shook
virtually the entire venture capital industry as valuations for startup
technology companies collapsed. Over the next two years, many venture
firms had been forced to write-off large proportions of their investments, and
many funds were significantly "under water" (the values of the fund's
investments were below the amount of capital invested). The revival of an
Internet-driven environment in 2004 through 2007 helped to revive the
venture capital environment.
Currently, Venture Capital Environment is at all time high leading to
emergence of all together new businesses. Innovations are sprouting at fast
speed and VC investments are helping them for realizing full potential of
Entrepreneurs.

1.4 Venture capital financing process
There are typically six stages of venture round financing offered in Venture
Capital that roughly correspond to these stages of a company's development.
 Seed funding: Low level financing needed to prove a new idea, often
provided by angel investors. Crowd funding is also emerging as an
option for seed funding.
 Start-up: Early stage firms that need funding for expenses associated
with marketing and product development
 Growth (Series A round): Early sales and manufacturing funds
 Second-Round: Working capital for early stage companies that are
selling product, but not yet turning a profit
 Expansion: Also called Mezzanine financing, this is expansion
money for a newly profitable company
 Exit of venture capitalist: Also called bridge financing, 4th round is
intended to finance the "going public" process
Between the first round and the fourth round, venture-backed companies
may also seek to take venture debt.

1.5 What do VCs look for?
Venture capitalists are higher risk investors and, in accepting these risks,
they desire a higher return on their investment. The venture capitalist
manages the risk/reward ratio by only investing in businesses which fit their
investment criteria and after having completed extensive due diligence.
Venture capitalists have differing operating approaches. These differences
may relate to location of the business, the size of the investment, the stage of
the company, industry specialization, structure of the investment and
involvement of the venture capitalists in the company’s activities.
The venture capital firm will ask prospective investee companies for
information concerning the product or service, the market analysis, how the
company operates, the investment required and how it is to be used,
financial projections, and importantly questions about the management team.
All the above questions should be answered in the Business Plan. Assuming
the venture capitalist expresses interest in the investment opportunity, a good
business plan is a pre-requisite.

2 VENTURE CAPITAL IN INDIA AND BUSINESS CONFIDENCE
2.1 Industry Overview
India currently has more than about 400 Venture capital firms. The Venture
Capital industry has shown an exponential upward curve from investments
of about USD 57 billion in 2008 to USD 140 billion in 2013. Unlike before
as observed in the early stages of the industry’s growth the investments were
inclined largely towards the Real Estate and IT sector, but within 7 years of
success stories now in 2014 venture capital firms are now interested in
nearly all sectors.
With developing Indian entrepreneurship standards, government support,
policies and globalization policies there are vast opportunities for private
equity investors to capitalize on.
Among cities, companies headquartered in Bangalore and Mumbai were the
favourite among VC investors during 2013 attracting 49 investments each,
followed by Delhi-based companies that accounted for 24 investments and
Chennai-based companies with 21 investments. Gurgaon and Hyderabad
followed with 15 deals and 8 deals respectively
Preferred regions for VC investments are Mumbai, Delhi & NCR, and
Bangalore, followed by Chennai and Hyderabad. Tier-2 cities like Lucknow
and Chandigarh are slowly catching up in attracting VC Investments.

2.2 Strengths and Challenges ofIndia
India is an attractive market with a challenging business environment. Its
appeal lies in its competitive labor costs, lucrative domestic market, and its
skilled workforce. Foreign investors also applaud its strong management and
business education system, as well as its improving telecommunications
infrastructure. However, the country’s weaknesses are its under-developed
infrastructure and a restrictive operative environment.
Key Strengths
 Local Labor Costs
 Domestic Market
 Business and Management Education
 Skilled Services Workforce
 Telecommunications Infrastructure
Key Challenges
 Legislative and administrative environment
 Transport and logistics infrastructure
 Corporate Taxation
 Ease of doing business

2.3 Growth of Venture Capital Industry
Up to 1996: The Early Years:
 Funds that were mobilized for venture investment were small in value.
 The venture capitalists in those times were mostly from a banking
background.
 Banks approached the subject of venture funding much likely they
approached debt financing of a project.
 The accent was on the asset-side of the balance sheet. And the focus
on innovation and business building was low.
 Value creation as a focus had not yet been fully discovered, and exit
strategies were being thought more around the life-term of the fund.
 Valuations were low.
 No competition between VCs.
 Indian entrepreneurs had not yet discovered the venture capital route
to funding and growth and it reflected in the small amounts that were
invested.
 There was little or no active participation of venture capitalists in
entrepreneurial activities such as financial structuring, business
strategy.
 Business enhancement through networks.
1997 to 2000: The Rock ‘n’ Roll Years:
 The SEBI guidelines of 1996 acted as huge incentive for domestic and
foreign venture capital companies to focus their attention on India.

 The range of venture capitalists now spanned incubators, angel
investors, classic venture capitalists and even private equity players.
And the lines between them had begun to blur.
 Venture capitalists were instrumental in introducing risk taking too
many, members of the professional class.
2001 Onwards: The Reality Years:
 The number of people who had got in to venture capital game was
truly impressive.
 In addition to the seasoned players, there were finance and noon
finance professionals of different hues entering the industry and
people with little or no experience running the companies.
 Venture capital community is finally recognizing that the evolution
and business is an on-going process. This added to the return of the
business maturation cycle of five to seven years, portends a less
frenetic and more sustained pace of venture activity.
 Domestic Venture Capital firms have realised the potential of Indian
Entrepreneurs.
 Legislative support has seen tremendous reforms.
 According to surveys by International agencies like Deloitte, EY;
Foreign Investors attractiveness among India is increasing.

2.4 Business Confidence Index
About Business Confidence Index
Business Confidence Index (BCI) is an economic indicator that measures the
amount of optimism or pessimism that business/investment managers feel
about the prospects of business in their countries/organisations. It also
provides an overview of the state of the economy. It is usually based on
survey of such managers.
BCI is usually given by industrial organisations conducting such economic
surveys. In India, Business Confidence is given by Confederation of Indian
Industries.
About CII
The Confederation of Indian Industry (CII) is an association of Indian
businesses which works to create an environment conducive to the growth of
industry in the country.
CII is a non-government, not-for-profit, industry-led and industry-managed
organization, playing a proactive role in India's development process.
Founded in 1895, CII has over 7100 members, from the private as well as
public sectors, including SMEs and MNCs, and an indirect membership of
over 90,000 enterprises from around 257 national and regional sectoral
industry bodies.

CII works closely with Government on policy issues, interfacing with
thought leaders, and enhancing efficiency, competitiveness and business
opportunities for industry through a range of specialized services and
strategic global linkages.
About CII’s Business Confidence Index
Every quarter CII provides Business Confidence survey results in the form
of Index for forthcoming quarters. The CII’s Business Confidence Index is
an indicator designed to measure the degree of optimism on the state of the
economy in India that business owners are expressing through their activities
of investing and spending. Decreasing business confidence often implies
slowing economic growth because business owners are likely to decrease
their investment. The idea is that the more confident business owners and
managers feel about the economy, their companies, their jobs and incomes,
the more likely they are to make investments and purchases.
Business Confidence in India increased to 54.90 in the fourth quarter of
2013 from 45.70 in the third quarter of 2013. Business Confidence in India
is reported by the Confederation of Indian Industry (CII). From 2005 until
2013, India Business Confidence averaged 59.3 reaching an all time high of
71.8 in March of 2007 and a record low of 45.7 in September of 2013. In
India, the Business Confidence Index (BCI) is based on a sample size of
around 300 companies covering all industry sectors, including small,
medium and large enterprises from different regions. BCI is calculated as a
weighted average of the Current Situation Index (CSI) and the Expectation
Index (EI), with greater weight given to EI as compared to CSI. These
indices are based on three questions on the performance of the economy,

respondent’s industry and respondent’s company. Respondents are asked to
rate the current and expected performance on a scale of 0 to 100. A score
above 50 indicates positive confidence while a score above 75 would
indicate strong positive confidence.

3 INTRODUCTIONTO THE STUDY
3.1 Backgroundof the Study
Today due to the economic crisis and the change in job market,
Entrepreneurship has gained interest. A number of young people in India
today, plans to setup their own ventures and capitalize this opportunities. In
today’s highly dynamic economic climate with regular technological
inventions, few traditional business models may survive but margin lies
more towards more innovative business ideas. Now, along with
conglomerates that fuel economic growth SMEs and other innovative
businesses have gained the momentum towards contribution in it.
Starting and expanding an enterprise has its own risk and is never easy.
There are number of parameters that contribute to its success or downfall.
Some of these include:
 Should one choose Venture Capital or any other mode of finance?
 Which sector one should start its venture in?
 What array of businesses are points of attraction among Venture
Capitalists?
 What is possible near future growth in sector of one’s choice?
The study helps in providing answers to these questions by analysing status
of Venture Capital in India, Which sectors are on rise, what is the confidence
level of Indian and Foreign investors.

3.2 Needfor the Study
The need of study has following facets:
 The study has been conducted for gaining the practical knowledge
about Venture Capital Finance in India
 The study has been undertaken as a part of MBA curriculum for the
partial fulfilment of the requirement of MBA degree by Kurukshetra
University, Kurukshetra.
 There is a limited Academic Literature available regarding Venture
Capital Finance in India.

3.3 Objectives of Study
As we know Venture Capital Finance is no more in the dormant stage in
India. But there is a dearth of academic research on the topic. In order to fill
the gap the study has been undertaken. The main objectives of study are:
 To know the current scenario of venture capital finance in India
 To predict the future rate of growth of Venture Capital Finance
 To lookout for market share of different economic sectors in terms of
Venture Capital Investments
 To analyse growth of venture capital investment in different sectors of
economy
 To analyse whether Business Confidence Index can predict growth
rate of Venture Capital Investments

3.4 Scope of Study
 The study is about Venture capital Finance in India. So any kind of
financing other than Venture Capital is out of scope. Also, data of any
country other than India is out of scope of this study.
 This study has used CII’s Business Confidence. Any other Business
Confidence Survey doesn’t hold in scope of the study.
 Only studies of Venture Capital Investments are in scope. Factors
responsible for such investments are out of scope.

4 LITERATURE REVIEW
Although there is limited literature available for Venture Capital Finance in
Indian context, there are extensive texts available on Venture capital all over
the world. Following are some insightful work done by different
academicians and researchers in the same line.
I M Panday “The process of developing venture capital in India” -
Technovation, Volume 18, Issue 4, April 1998
This study investigates the process of developing venture capital in a
developing country — India. The discussion documents the experiences of
the largest venture capital firm in India (TDICI) in initiating and developing
the concept of venture capital as well as learning the venture capital
business. The history of modern venture capital in India is of recent origin; it
only goes back to the mid-eighties. In the initial years, venture capital firms
(VCFs) in India encountered a number of problems in developing their
businesses. From the in-depth case study of TDICI, it is found that the firm
went through the initial constraint of not knowing the venture capital
business well, and learnt through experience. It faced problems in raising
funds and evaluating prospective ventures. It initially focused its investment
in the high-technology business, but gradually shifted the focus towards
other potentially high-growth, high-profitable businesses, not just high-tech
businesses. It is also noticed that TDICI undertook a number of business
development initiatives to popularise the venture capital business in India. It
introduced a simple organisational structure for facilitating quick decision-
making, and developed innovative funding and financing mechanisms.

Dossani, R. and Kenney “Creating an Environmentfor Venture Capital in
India”- M. World Development, 30 (2) 227–253 (2002)
The institution of venture capitalism is a difficult one to initiate through
policy intervention, particularly in developing countries with unstable
macroeconomic environments and histories of state involvement in the use
of national capital and in the composition of production. India has all these
constraints. The emergence of a thriving software services industry after
1985 created the raw material that venture capital could finance, thus
achieving a critical precondition for venture capital's growth. It was
followed by efforts to create a venture capital industry. After several
setbacks, some success has been achieved largely due to a slow process of
moulding the environment of rules and permissible institutions. The process
was assisted by the role of overseas Indians in Silicon Valley's success in the
1990s. Yet, in terms of what is needed, most of the work remains to be done.
Inevitably, this will be the result of joint work by policymakers and
practitioners.
Asim Mishra “Indian Venture Capitalists (VCs): Investment Evaluation
Criteria” - ICFAI Journal of Applied Finance, Vol. 10, No. 7, pp. 71-93,
July 2004
This paper analyses the validity of venture evaluation model in India by
directly comparing the relative importance of evaluation criteria on the
funding decision with the relative importance to factors influencing venture's
empirical performance. In the light of the differences in investment
opportunities around India, and the nature of industrial development in

South East Asia in general, the author anticipated that the investment criteria
employed by Venture Capital Firms (VCFs) in India would differ. A
questionnaire was administered to venture capitalists (regular members of
Indian Venture Capital Association) to determine the criteria they use to
decide on funding new ventures. The response rate was 100%. A list of forty
two criteria was developed on previously developed lists. The criteria fell
into six groups: the entrepreneur's personality, the entrepreneur's experience,
characteristics of the product or service, characteristics of the market,
financial consideration and characteristics of venture management team.
Answers were given on a four point rating scales. The results reveal that
criteria adopted by Indian VCs are different from those adopted by VCs in
other countries including US. The results also confirm that the
Sayed Ahmed Naqi and Samanthala Hettihewa “Venture capital or
private equity? The Asian experience”- Business Horizons Volume 50, Issue
4, July–August 2007
Venture capital in Asia has exhibited remarkable growth over the last two
decades. Researchers and practitioners have, however, expressed doubts as
to whether what is being reported as venture capital in Asia can really be
classified as such. Authors of scholarly studies often avoid this debate and,
consequently, fail to caution readers about the applicability of their research
findings. Through an exploration of the history, development, and
composition of venture capital in Asia, this article not only confirms
significant differences between Asian and traditional venture capital, but
also finds that venture capital in Asia differs little from what is commonly
called private equity. As such, a need exists within the venture capital

literature to recognize this peculiarity of the Asian venture capital market.
Moreover, venture capitalists considering expansion into Asia must
comprehend the nature of the Asian market in order to avoid disillusionment
and frustrations which may result from inadequate understanding.
A. Thillai Rajan “Venture capital and efficiency of portfolio companies” -
IIMB Management Review, Volume 22, Issue 4, December 2010
Venture Capital (VC) has emerged as the dominant source of finance for
entrepreneurial and early stage businesses, and the Indian VC industry in
particular has clocked the fastest growth rate globally. Academic literature
reveals that VC funded companies show superior performance to non VC
funded companies. However, given that venture capitalists (VCs) select and
fund only the best companies, how much credit can they take for the
performance of the companies they fund? Do the inherent characteristics of
the firm result in superior performance or do VCs contribute to the
performance of the portfolio company after they have entered the firm? A
panel that comprised VCs, an entrepreneur and an academic debated these
and other research questions on the inter-relationships between VC funding
and portfolio firm performance. Most empirical literature indicates that the
value addition effect dominates the selection effect in accounting for the
superior performance of VC funded companies. The panel discussion
indicates that the context as well as the experience of the General Partners in
the VC firms can influence the way VCs contribute to the efficiency of their
portfolio companies.

5 RESEARCHMETHODOLOGY
Research Methodology is a way to systematically solve the research
problem. In it, step-by-step methods are followed to solve a particular
problem. It refers to a search for knowledge. It can also be defined as a
scientific and systematic search for pertinent information on a specific topic.
The study is carried out around different sources of data regarding Venture
Capital Finance in India. The data is analysed using different functions of
Microsoft Office Excel 2007 and Microsoft Office Word 2007. The main
statistical tools used are Correlation, Exponential Growth and Linear
Forecast.
5.1 Data Collection
The study is based on secondary data on Venture Capital Investments. The
data is collected from different publications and online resources including
 SEBI’s Handbook of Statistics on Indian Securities Markets
 SEBI’s website
 Indian Venture Capital Association reports
 Bain & Company’s reports
 CII, Deloitte and E&Y survey results
 Trading Economics website
 and many other books, publications, reports and articles

5.2 ResearchDesign
Research Design is the way in which the research is carried out. It works as
a blue print. Research Design is the arrangement of conditions for the
collection and analysis of data in a manner that aims to combine relevance to
the research purpose with economy in procedure.
The Research design for the study is descriptive in nature. The research is
done with analog observations. Predictive analysis is done in order to know
pattern of near future investment patterns.
5.3 Limitations of Study
The Study is based on the data provided by different sources, any
incorrectness or biasness in same might also have been resulted in same for
this study.

6 ANALYSIS AND INTERPRETATION
6.1 Analysing Growth of Venture Capital Finance in India and
Forecasting VC Investments in near future
To understand the scenario of venture capital investments in India, firstly we
looked at the Total Investment Details of SEBI Registered Venture Capital
Funds (VCF) and Foreign Venture Capital Investors (FVCI) as of Dec 31 of
each year starting 2007.
Year Total VC Investments (in Rs. Crores)
2007 28260
2008 33939
2009 42059
2010 47859
2011 56868
2012 55542
2013 69520
Table 1: Cumulative Total Investment Details of SEBI Registered Venture
Capital Funds (VCF) and Foreign Capital Investors (FVCI) as of Dec 31 of
each year

With the help MS Word Excel, Growth Rate is determined for given values
from year 2007-2013 and prediction for next two years is made using
following GROWTH function:
GROWTH(known_Ys, known_ Xs, New_Xs, constant)
Here,
Ys = Known Values of Total Investments
Xs = Year corresponding to known Ys (2007-2013)
New Xs = Year for which Value to be forecasted (2014), (2015)
Constant = None
Following are the Forecasted Values of Total Investment in 2014 and 2015
using Growth function.
Year Expected Total VC Investments
(in Rs. Crores)
2014 80988
2015 93383
Table 2: Forecasted values of Total Investments by Venture Capital Funds
as of Dec 31 of 2014 and 2015

When values of Venture Capital Investments in India from 2007 to 2013 and
their forecasted values for 2014 and 2015 are plotted on a Line Graph,
following curve is obtained:
Fig 1. Line Graph of Total Venture Capital (VC) investments from year
2007 to 2013 along with forecasted values for year 2014 and 2015
Interpretation
Fig. 1 shows the Line Graph of Total Venture Capital (VC) investments
from year 2007 to 2013 along with forecasted values for year 2014 and
2015. The black curve shows Exponential Growth curve for same. We can
infer that Venture Capital Investments in India have grown exponentially. If
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
2007 2008 2009 2010 2011 2012 2013 2014 2015
Total VC Investments (inRs. Crores)
Total Investments (in Rs. Crores) Expon. (Total Investments (in Rs. Crores))

same trend continues, the investments by VC in India will be increasing in
near future.
Also, Investments have been slow in one year dropping from Rs. 56868
crores in 2011 to Rs. 55542 crores in 2012 but they have gained their
momentum back in 2013 by increasing more that 25%. The Value of
Investments in 2014 and 2015 is predicted to be near Rupees 81 and 93
thousand crores respectively.

6.2 Analysis of Venture Capital Investments in different sectors of
economy
Now we look at the different sectors of Economy details Venture Capital
Investments of SEBI Registered Venture Capital Funds (VCF) and Foreign
Capital Investors (FVCI) as of Dec 31 of each year (FVCFs)
>Year
v Sectors of Economy
2007 2008 2009 2010 2011 2012 2013
Information
technology
2169 2520 2864 3319 4322 4481 5325
Telecommunications 990 1076 4268 7469 7516 7086 7798
Pharmaceuticals 1076 1229 1478 1325 1132 1151 1006
Biotechnology 385 634 461 289 283 278 326
Media/ Entertainment 470 906 1434 1006 1124 739 1406
Services Sector 2475 2976 3529 2677 2973 2809 3697
Industrial Products 2047 1951 2344 1355 2014 2107 2377
Real Estate 6348 6311 8185 9783 10831 9987 12048
Others 16749 24413 27158 20637 26673 26903 35535
Table 3: Cumulative Total Investment Details of SEBI Registered Venture
Capital Funds (VCF) and Foreign Capital Investors (FVCI) as of Dec 31 of
each year

Table 3 shows Annual Venture Capital Investments data for different sectors
of economy. Different sectors of economy for which data has been obtained
are Information Technology, Telecommunications, Pharmaceuticals,
Biotechnology, Media/Entertainment, Services Sector, Industrial Products
and Real Estate.
Now in order to analyse percent share of Venture Capital Investment in 2013
for each different sector following pie chart is obtained.
Fig 2. Total VC Investment Share of different sector of Economy in India
8%
11% 2%
1%
2%
5%
3%
17%
51%
Sector-wise Venture Capital Investments in
India in 2013
Information technology
Telecommunications
Pharmaceuticals
Biotechnology
Media/ Entertainment
Services Sector
Industrial Products
Real Estate
Others

Interpretation
In 2013, Real Estate is the biggest sector of Venture Capital Investments,
followed by Telecommunications and Information Technology. Services
Sector stands at 4th position followed by Industrial Products sector and
Media/Entertainment sector. Pharmaceutical and Biotechnology sector has
least share of Venture Capital Funds among 8 sectors.

To understand the scenario of growth in each sector, line graphs have been
obtained using values from Table 3. In each graph, a black coloured trend
line is obtained which shows forecasted linear trend of respective sector.
Fig 3. Total Venture Capital (VC) investments curve from year 2007 to 2013
in Information Technology Sector. It also shows forecasted linear trend line.
Information Technology (IT) has been high growth factor all these years.
According to Bain India Private Equity report 20142, IT is expected to be
one of the most attractive sectors for PE and VC investments in the next two
years. We can infer that IT is going to be one of the high growth sectors
attracting large amount of Venture Capital in year 2014 and 2015.
2 INDIA PRIVATE EQUITY REPORT 2014 - Bain & Company and IVCA
0
1000
2000
3000
4000
5000
6000
7000
8000
2007 2008 2009 2010 2011 2012 2013
Informationtechnology
Information technology Linear (Information technology)

in Real Estate Sector. It also shows forecasted linear trend line.
As India is developing country and Real Estate is an utmost important need
of any developing nation. Real Estate sector has always seen reasonable
growth and is still attracting investment. It can be inferred that this sector
will be growing in 2014 and 2015 in terms of Venture Capital Investment.
0
2000
4000
6000
8000
10000
12000
14000
16000
2007 2008 2009 2010 2011 2012 2013
Real Estate

.
in Telecommunication Sector. It also shows forecasted linear trend line.
Telecommunication sector has seen some of the biggest investments in 2009
and 2010 making it Hot Favorite sector of Venture Capital Investment in
those years. Following bad news of scams and cancelation of 2G licenses the
sector has not attracted much investment from year 2010. Although
Forecasted Linear 7 year trend line projects it as high growth sectors but
when we look at data from last 4 years, Telecommunications has been
laggard leading to very slow growth in upcoming years.
0
2000
4000
6000
8000
10000
12000
14000
2007 2008 2009 2010 2011 2012 2013
Telecommunications

.
in Media/Entertainment Sector. It also shows forecasted linear trend line.
Media/Entertainment Sector has seen moderate growth in past years. In
2013, Venture Capitalists have shown significant interest. There were good
numbers of deals in the sector. The sector is further going to show moderate
growth depending upon current factors affecting the sector.
0
200
400
600
800
1000
1200
1400
1600
2007 2008 2009 2010 2011 2012 2013
Media/Entertainment

.
in Services Sector. It also shows forecasted linear trend line.
2009 and 2013 are the only years of high growth for Services Sector.
Because of less inclined forecasted linear trend of the investments in the
sector, there will be moderate growth in venture capital investments in India
in upcoming years.
0
500
1000
1500
2000
2500
3000
3500
4000
2007 2008 2009 2010 2011 2012 2013
Services Sector

.
in Industrial Products’ Sector. It also shows forecasted linear trend line.
Industrial Products sector is a source of high employment opportunities for
less skilled labor. The sector has not seen much growth in terms of venture
capital investments. Because of less inclined forecasted linear trend of the
investments in the sector, there will be slow growth in venture capital
investments in India in upcoming years.
0
500
1000
1500
2000
2500
2007 2008 2009 2010 2011 2012 2013
Industrial Products

in Pharmaceutical Sector. It also shows forecasted linear trend line.
Fig 10. Total Venture Capital (VC) investments curve from year 2007 to
2013 in Biotechnology Sector. It also shows forecasted linear trend line.
Fig. 9 and Fig. 10 shows Total Venture Capital (VC) investments curve from
year 2007 to 2013 and forecasted linear trend in Pharmaceutical and
0
200
400
600
800
1000
1200
1400
1600
2007 2008 2009 2010 2011 2012 2013
Pharmaceuticals
0
100
200
300
400
500
600
700
2007 2008 2009 2010 2011 2012 2013
Biotechnology

Biotechnology Sector. These sectors have been sectors of declining growth
since 2009. There is not much growth expected in 2014 and 2015 from these
sectors.
Interpretation
There are different sectors of Economy in India. Out of all above mentioned
Economic Sectors, few sectors are attracting more Venture Capital Funds
than others.
With analysis of each sector we can categorize them by rate of growth of
investments over 7 years.
 Information Technology and Real Estate have continuously seen High
Growth and are predicted to do so in coming years. For Entrepreneurs
these sectors can be fruitful to start their venture in.
 Telecommunication and Media/Entertainment have been areas of
Moderate Growth and may do better in coming years. For
Entrepreneurs these sectors can be fruitful but they must keep caution
while starting their venture in.
 Services Sector and Industrial Products Sector are areas of very Slow
Growth in terms of VC investments in these areas. One must have
strong know how of these sectors while starting any business.
 Pharmaceuticals and Biotechnology are Sectors of Declining Growth
in VC Investments. One may have hurdles in getting investments for
ventures in these sectors.

6.3 CII’s Business Confidence Index and Venture Capital Investment
Growth
Confederation of Indian Industry (CII) provides Business Confidence Index
about confidence among industry about doing business in India. Here we do
comparative study of Business Confidence and Percent change in total
investments, VCFs Investments and FVCFs investment in each quarter
starting June 2011.
Quarter CII
Busine
ss
Confid
ence
Index
Chang
e in
Busine
ss
Confid
ence
Total
invest
ment
%
chang
e in
total
invest
ment
VCFs
invest
ment
%
chang
e in
VCFs
invest
ment
FVCF
investm
ent
% change
in FVCFs
investme
nt
Jun-11 54844 26222 37098
Sep-11 66.2 55536 1.26 26896 2.57 37635 1.45
Dec-11 66.7 0.5 56868 2.4 27592 2.59 38730 2.91
Mar-12 62.5 -4.2 59408 4.47 28920 4.81 39815 2.8
Jun-12 53.6 -8.9 61056 2.77 29238 1.1 41277 3.67
Sep-12 48.6 -5 53574 -12.25 29924 2.35 33291 -19.35
Dec-12 52.9 4.3 55542 3.67 31556 5.45 33773 1.45
Mar-13 55 2.1 62866 13.19 31336 -0.7 41174 21.91
Jun-13 51.3 -3.7 63310 0.71 31669 1.06 40848 -0.79
Sep-13 49.9 -1.4 64336 1.62 30975 -2.19 43140 5.61
Dec-13 51.3 1.4 69520 8.06 35400 14.29 44889 4.05
Correlation
Coefficient
0.48 0.3 0.41
Mar-14 51.2
Jun-14 45.7
Sep-14 54.9
Table 4: CII’s Business Confidence Index values, Change in Business
Confidence, Percentage Change in VCFs, FVCFs and Total Venture Capital
Investment in each Quarter from June 2011

Here,
Change in Business Confidence
= Business Confidence Current year - Business Confidence in Previous year
Percent Change in investment
= (
𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑖𝑛 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑌𝑒𝑎𝑟−Investment in previous year
𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑖𝑛 𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑌𝑒𝑎𝑟
) ∗ 100
Correlation Coefficient has been derived using MS Excel’s CORREL
Function on given values of data.
CORREL(array1,array2)
For our analysis here,
Array 1 = Array of values Change in Business Confidence
Array 2 = Array of values of Percentage Change in VCFs, FVCFs and Total
VC Investments
% change in total
investment
% change in VCFs
investment
% change in FVCFs
investment
Correlation
Coefficientwith
change in CII’sBCI
0.48 0.3 0.41
Table 5: Correlation Coefficient between Change in CII’s Business
Confidence Index values and Percentage Change in VCFs, FVCFs and Total
Venture Capital Investment in each Quarter from Jun 2011 to Dec 2013
Interpretation
Table 4 shows data of CII’s Business Confidence Index values, Change in
Business Confidence, Percentage Change in VCFs, FVCFs and Total
Venture Capital Investment in each Quarter from June 2011. In table 5,
Correlation Coefficient is used to measure the significance of Business

Confidence survey by CII in case of Venture Capital Investments in the
country.
The correlation coefficient between Change in Business Confidence and
percent change in Total Investment, VCFs Investments and FVCFs
Investments comes out to be 0.48, 0.3 and 0.41 respectively. The correlation
coefficient turns out to be positive between the index values and investment
data. Although not significant at precision levels of 0.01 and 0.05, we can
infer that there is Positive Relation between Index and Venture Capital
Investment Rate.
For forthcoming (March 2014 – 51.2 and June 2014 – 45.7) quarters CII
Business Confidence Index shows a decrease in confidence values, therefore
we can infer that Venture Capital Investment in these quarters can be less
than Investments in last quarter of 2013.
But as we can see Business Confidence for September 2014 is going
significantly up (54.9), we can infer that there will be increase in Venture
Capital Investments in that quarter.

7 Findings and Conclusion
7.1 Findings
 There was an exponential increase in Venture capital from 2007 till
date
 It is predicted that there will be good amount of Venture Capital
Investments about to occur in 2014 and 2015.
 Around Rs. 81000 crores of VC investments will be made in 2014
 2015 will see VC investments of around Rs 93400 Crores.
 Real Estate Sector gets maximum share of Total Venture Capital
Investments among different sectors of Economy in 2013, followed by
Telecommunications and Information Technology.
 Among different sectors of economy, Information Technology and
Real Estate are sectors with high growth rate of Venture Capital
Investment and is expected to do well in comings years as well.
 In terms of Venture Capital investments made Telecommunications
and Media/Entertainment sectors are growing at medium pace.
Telecommunications have seen decline only in recent years, the most
obvious reason for it is the policy paralysis and scams around this
sector in India.
 Services Sector and Industrial Products Sectors are not attracting
much VC investments and growing very slow.
 Sectors of Pharmaceuticals and Biotechnology have been left quite far
in attracting VC investments. They have shown declining trend and
there is less hope from these sectors in upcoming years.

 Every Quarter, CII provides values Business Confidence Index based
on the perception of investors. When these values are correlated with
Investment details SEBI registered Venture Capital Funds (VCFs) and
Foreign Venture Capital Funds (FVCFs), they showed a positive
Correlation.
 The CII’s Business Confidence Index for First two quarters of 2014
i.e. March 2014 and June 2014 has decreased from their previous
quarters. This will have negative effect on Venture Capital
Investments i.e. The Total Venture Capital investments will decrease
in these quarters.
 For 3rd Quarter of 2014 i.e Sep 2014, The Business Confidence is
quite high and has increased sharply. This increase in confidence in
3rd quarter signifies the increase in Venture Capital Investments in
India towards end of this year.
 Business Confidence Surveys like CII’s can predict the flow of
Venture Capital Investments in Long Term but cannot surely predict
small term movements in Investments Values.

7.2 Conclusion
Venture capital financing has become a part of the popular business in India.
VC investments are growing at an exponential rate and one who is starting
or expanding his business can look it as a good option of financing its
venture.
For predicting the scenario of Venture Capital Investments in India in
upcoming years, analysts can look at Business Confidence Index by CII. Our
study shows that values of the Index and amount of Investments are
correlated. With our analysis we can infer that there will be an increase in
Venture Capital Investments in 3rd quarter of 2014.
In India, Information Technology and Real Estate are sectors with High
Growth in VC Investments whereas Pharmaceuticals and Biotechnology are
sectors with Declining Growth in VC Investments.

8 REFERENCES
8.1 Bibliographic References
Bloomfield, Stephen. 2005. Venture Capital Funding - A practicle guide to raising
funds. s.l. : Kogan Page Limited, 2005.
Brigham, Eugene F. and Houston, Joel F. 2009. Fundamentals of Financial
Management. s.l. : South-Western Cengage Learning, 2009. Vol. 12.
CII Business Confidence Index Falls Sharply in Q2FY14. 2013. s.l. : Confederation of
Indian Industries, 2013, Economy Matters.
Economic and business prospects for 2014. Affairs, Policy and Public. 2014. 2014, CII.
Empirical Study on Venture Capital and Private Equity Investments: US & India.
Pandey, Dheeraj and Rajan, Thillai A. 2011. 2011. International Conference on
Technology and Business Management.
2012. Handbook of Statistics on Indian Securities Market. : SEBI, 2012.
2013. Handbooks of Statistic on the Indian Economy : Reserve Bank of India, 2013.
2014. INDIA PRIVATE EQUITY REPORT. : Bain & Company and Indian Venture
Capital Association, 2014.
Venture Capital and Private Equity in India: An Analysis of Investments and Exits.
Rajan, Thillai A and Deshmukh, Ashish. IIT Madras Journal.

8.2 Web References
Report of K B Chandrasekhar Committee on Venture Capital, SEBI
http://www.sebi.gov.in/commreport/sebicomm.html
Venture Capital, Business Portal of Government of India
http://business.gov.in/business_financing/venture_capital.php
Venture Capital for MSMEs, SIDBI Ventures http://www.sidbiventure.co.in/
Venture capital, Wikipedia
http://en.wikipedia.org/wiki/History_of_private_equity_and_venture_capital
Search Results on Venture Capital, Business Today http://businesstoday.intoday.in
Venture capital investments in India slide to $1.4 bn: Ernst & Young, Indian Express
http://indianexpress.com/article/news-archive/web/venture-capital-investments-in-india-
slide-to-1-4-bn-ernst-young/
VC Industry to grow in India: Deloitte, Indian Express
http://indianexpress.com/article/news-archive/web/vc-industry-to-grow-in-india-deloitte/
2014 to be year of adjustments; investment cycle may take time to revive, Team VCC
http://www.vccircle.com/news/alternative-investment/2014/02/19/2014-be-year-
adjustments-investment-cycle-may-take-time
Should you take seed funding from a VC ?, Yourstory India
http://www.yourstory.com/2014/03/seed-funding-vc/
$1.6 Billion invested in Indian Startups in around 300 deals in 2013, YourStory India
http://www.yourstory.com/2013/12/1600mn-invested-in-indian-startups-in-2013/

9 SUGGESTEDREADINGS
How to get registered as a Venture Capital Fund - SECURITIES AND
EXCHANGE BOARD OF INDIA
Impact of Budget 2014-15 on Startup Companies - YOURSTORY.COM
India Private Equity Report 2014 – BAIN & COMPANY

APPENDIX
Appendix I - Data Sets
Data Set 1: Industry wise Cumulative Investment Details of SEBI Registered
Venture Capital Funds (VCF) and Foreign Capital Investors (FVCI)
Particulars as on December 31,
2013
(Rs. in Crore)
Sectors of Economy VCF FVCI Total*
Information Technology 954 4499 5325
Telecommunication 1468 7013 7798
Pharmaceuticals 420 646 1006
Biotechnology 222 142 326
Media/Entertainment 1148 827 1406
Services Sector 2428 2353 3697
Industrial Products 1252 1444 2377
Real estate 11482 1758 12048
Others 16026 26209 35535
Total 35400 44889 69520
*excludes Rs.10769
crore of FVCI
investments through
VCFs
Note:
1. The above report is compiled on the basis of
quarterly information submitted to SEBI by
registered Venture Capital Funds and Foreign
Venture Capital Investors.
2. Due to change in reporting format with effect from
the quarter ended 31st March 2010, the investment
details for the March '10 and December '09 quarter
are not strictly comparable.

Data Set 2: Cumulative Investment Details of SEBI Registered Venture Capital
Funds (VCF) and Foreign Capital Investors (FVCI)
Quarter Cumulative
net
investments
by all
VCFs as at
the end of
the quarter
Cumulative
net
investments
by all
FVCIs at
the end of
the quarter
Total
investment
(*)
Mar-07 11270 7856 17621
Jun-07 12868 10706 20310
Sep-07 14264 13401 23218
Dec-07 17325 15384 28260
Mar-08 19955 16705 31682
Jun-08 20128 16926 32379
Sep-08 22488 16165 34772
Dec-08 21216 19800 33939
Mar-09 22771 23047 37578
Jun-09 22192 24151 37151
Sep-09 24102 25849 40560
Dec-09 24893 26827 42059
Mar-
10
18273 28894 39051
Jun-10 21500 30722 43686
Sep-10 22977 33102 47843
Dec-10 23023 33241 47859
Mar-11 25576 35593 52688
Jun-11 26222 37098 54844
Sep-11 26896 37635 55536
Dec-11 27592 38730 56868
Mar-12 28920 39815 59408
Jun-12 29238 41277 61056
Sep-12 29924 33291 53574
Dec-12 31556 33773 55542
Mar-13 31336 41174 62866
Jun-13 31669 40848 63310
Sep-13 30975 43140 64336
Dec-13 35400 44889 69520

Data Set 3: CII Business Confidence Index from “Economy Matters”
Data Set 4: India’s Business Confidence from “Trading Economies”

Appendix II - Glossary of Terms and Abbreviations
Abbreviations
BCI Business Confidence Index
CII Confederation of Indian Industries
CSI Current Situation Index
EI Expectation Index
E&Y Ernst & Young
FVCI Foreign Venture Capital Investors
IT Information Technology
MBA Masters of Business Administration
NASDAQ National Association of Securities Dealers Automated Quotations
NCR Nation Capital Region
SBA Small Business Administration
SBICs Small Business Investment Companies
SEBI Securities and Exchange Board of India
SME Small and Medium scale Enterprise
TDICI Technology Development and Information Company of India
VC Venture Capital
VCF venture capital firms
VCs Venture Capitalists
Terms
Acquisition
The establishment of control in one business entity by another, often with the assistance
of private equity. Third party acquisition is a common Exit Mechanism for private equity
funds.
Acquisition Financing
Capital provided to a company to finance its controlling interest in another entity for
growth purposes.
Angel
A wealthy individual who invests in entrepreneurial firms. Although angels perform
many of the same functions as venture capitalists, they invest their own capital rather
than that of institutional or other individual investors.

Bridge Financing
Capital provided on a short-term basis to a company prior to its going public or its next
major private equity transaction.
Capital Gains
The proceeds obtained on the sale of assets
Deal
Each transaction involving a private equity fund or funds in a given portfolio company
represents one round of financing. Each financing is made up of one or more investments,
depending on the presence of co-investors. Financings are also known as deals
Due Diligence
The process of assessing the business and financial viability of a potential investment
target, as well as the potential terms and conditions of an investment agreement.
Financings and Investments
Each transaction involving a private equity fund or funds in a given portfolio company
represents one round of financing. Each financing is made up of one or more investments,
depending on the presence of co-investors. Financings are also known as deals
Fund
A pool of capital raised periodically by a venture capital organisation. Usually in the
form of limited partnerships, venture capital funds typically have a ten-year life, though
extensions of several years are often possible.
Institutional Investor
Pension funds, insurance companies, endowments, charitable foundations, mutual funds
and other non-bank financial institutions that are often key suppliers to private equity
funds. In Canada, certain large institutional investors also have in-house progra

Institutional Venture Capital
The organized market for venture activity, based on an industry of management firms and
funds, as distinct from the informal investment mark.
Internal rate of return (IRR)
The discount rate equating the present value of cash outflows with the present value of
cash inflows.
Investment adviser
A financial intermediary who assists investors, particularly institutions, with investments
in venture capital and other financial assets. Advisers assess potential new venture funds
for their clients and monitor the progress of existing investments. In s
Investment banks
Financial institutions that organise the provision of medium to longer-term loans, usually
for larger amounts than clearing banks. Later they can play an important role in the
process of “going public” by advising on the terms and price of public issues a
Merger
The strategic combination of one business entity with another, often with the assistance
of private equity.
Mezzanine Capital
A specialized form of private equity, characterized chiefly by use of Subordinated Debt,
or preferred stock with an equity kicker, to invest largely in the same realm of companies
and deals as buyout funds
Refinancing
The purchase of the venture capital investors' or others' shareholdings by another
investment institution.

Rescue/turnaround
To finance a company in difficulties or to rescue it from receivership.
Restructuring/ Turnaround Financing
Capital provided to a established firm, usually in a traditional sector, that is undergoing
financial distress or a major re-organization, but is perceived as having long-term
commercial viability.
Seed Financing
Capital provided to facilitate commercialization of new product concepts, often from
laboratories, research centres or entrepreneurs. If successful, a seed financing may result
in a Start-up.
Start-up Financing
Capital provided to facilitate the first-time establishment of a legal company structure
around a marketable product concept
Venture capitalist
A general partner or associate at a venture capital organisation.
Write-off
The write-down of a portfolio asset to the value of zero, with the result that the private
equity investor or investors go without proceeds upon disposition.

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