Venture Capital - V Sem
Venture Capital - V Sem
Venture Capital - V Sem
proven technologies and established markets. However, high technology need not be pre- requisite for venture capital. Venture capital has also been described as unsecured risk financing. The relatively high risk of venture capital is compensated by the possibility of high returns usually through substantial capital gains in the medium term. Venture capital in broader sense is not solely an injection of funds into a new firm, it is also an input of skills needed to set up the firm, design its marketing strategy, organize and manage it. Thus it is a long term association with successive stages of companys development under highly risk investment conditions, with distinctive type of financing appropriate to each stage of development. Investors join the entrepreneurs as co-partners and support the project with finance and business skills to exploit the market opportunities. Venture capital is not a passive finance. It may be at any stage of business/production cycle, that is, start up, expansion or to improve a product or process, which are associated with both risk and reward. The Venture capital makes higher capital gains through appreciation in the value of such investments when the new technology succeeds. Thus the primary return sought by the investor is essentially capital gain rather than steady interest income or dividend yield. The definition of Venture capital isThe support by investors of entrepreneurial talent with finance and business skills to exploit market opportunities and thus obtain capital gains.
Venture capital commonly describes not only the provision of start up finance or seed corn capital but also development capital for later stages of business. A long term commitment of funds is involved in the form of equity investments, with the aim of eventual capital gains rather than income and active involvement in the management of customers business.
1.2
Important Concepts
1.2.1 Venture Capitalist: A venture capitalist (also known as a VC) is a person or investment firm that makes venture investments, and these venture capitalists are expected to bring managerial and technical expertise as well as capital to their investments. In return, they will ask for an equity position in the company, usually in proportion to their risk and the amount of their investment. They have a stake in your company because their future returns are tied to its performance. 1.2.2 Venture Capital Fund: A venture capital fund refers to a pooled investment vehicle (often an LP or LLC) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans. Venture capital is most attractive for new companies with limited operating history that are too small to raise capital in the public markets and are too immature to secure a bank loan or complete a debt offering. In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies, venture capitalists usually get significant control over company
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decisions, in addition to a significant portion of the company's ownership (and consequently value).
1.2.3 Venture Capital Company: A company organized to provide seed capital to a business in its formation stage, or in its first or second stage of expansion. Funding is obtained through public or private pension funds, commercial banks and bank holding companies, , private venture capital firms, insurance companies, investment management companies, bank trust departments, industrial companies seeking to diversify their investment, and investment bankers acting as intermediaries for other investors or directly investing on their own behalf.
1.3
History
With few exceptions, private equity in the first half of the 20th century was the domain of wealthy individuals and families. The Vanderbilts, Whitneys, Rockefellers and Warburgs were notable investors in private companies in the first half of the century. In 1938, Laurance S. Rockefeller helped finance the creation of both Eastern Air Lines and Douglas Aircraft and the Rockefeller family had vast holdings in a variety of companies. Eric M. Warburg founded E.M. Warburg & Co. in 1938, which would ultimately become Warburg Pincus, with investments in both leveraged buyouts and venture capital.
Before World War II, money orders (originally known as "development capital") were primarily the domain of wealthy individuals and families. It was not until after World War II that what is considered today to be true private equity investments began to emerge marked by the founding of the first two venture capital firms in 1946: American Research and Development Corporation(ARDC) and J.H. Whitney & Company. ARDC was founded by Georges Doriot, the "father of venture capitalism" with Ralph Flanders and Karl Compton (former president of MIT), to encourage private sector investments in businesses run by soldiers who were returning from World War II. ARDC's significance was primarily that it was the first institutional private equity investment firm that raised capital from sources other than wealthy families although it had several notable investment successes as well. J.H. Whitney & Company was founded by John Hay Whitney and his partner Benno Schmidt. Whitney had been investing since the 1930s, founding Pioneer Pictures in 1933 and acquiring a 15% interest in Technicolor Corporation with his cousin Cornelius Vanderbilt Whitney. By far Whitney's most famous investment was in Florida Foods Corporation. The company developed an innovative method for delivering nutrition to American soldiers, which later came to be known as Minute Maid orange juice and was sold to The Coca-Cola Company in 1960. J.H. Whitney & Company continues to make investments in leveraged buyout transactions and raised $750 million for its sixth institutional private equity fund in 2005.
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1.3.2 Early Venture Capital and The Growth of Silicon Valley: Sand Hill Road in Menlo Park, California, where many Bay Area venture capital firms are based. 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. During the 1960s and 1970s, venture capital firms focused their investment activity in primarily electronic, on starting or and expanding companies. More often than not, these companies were exploiting breakthroughs medical data-processing technology. As a result, venture capital came to be almost synonymous with technology finance. An early West Coast venture capital company was Draper and Johnson Investment Company, formed in 1962 by William Henry Draper III and Franklin P. Johnson, Jr. The growth of the venture capital industry was fueled by the emergence of the independent investment firms on Sand Hill Road, beginning with Kleiner, Perkins, Caufield & Byers and Sequoia Capital in 1972.
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By the early 1970s, there were many semiconductor companies based in the Santa Clara Valley as well as early computer firms using their devices and programming and service companies.Throughout the 1970s, a group of private equity firms, focused primarily on venture capital investments, would be founded that would become the model for later leveraged buyout and venture capital investment firms. In 1973, with the number of new venture capital firms increasing, leading venture capitalists formed the National Venture Capital Association (NVCA). The NVCA was to serve as the industry trade group for the venture capital industry.Venture capital firms suffered a temporary downturn in 1974, when the stock market crashed and investors were naturally wary of this new kind of investment fund. It was not until 1978 that venture capital experienced its first major fundraising year, as the industry raised approximately $750 million with the passage of the Employee Retirement Income Security Act (ERISA) in 1974. 1.3.3 Venture Capital In The 1980s: 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. From just a few dozen firms at the start of the decade, there were over 650 firms by the end of the 1980s, each searching for the next major "home run". While the number of firms multiplied, the capital managed by these firms increased by
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only 11% from $28 billion to $31 billion over the course of the decade. The growth of the industry was hampered by sharply declining returns and certain venture firms began posting losses for the first time. In addition to the increased competition among firms, several other factors impacted returns. The market for initial public offerings cooled in the mid-1980s before collapsing after the stock market crash in 1987 and foreign corporations, particularly from Japan and Korea, flooded early stage companies with capital. In response to the changing conditions, corporations that had sponsored in-house venture investment arms, including General Electric and Paine Webber either sold off or closed these venture capital units. Additionally, venture capital units within Chemical Bank and Continental Illinois National Bank, among others, began shifting their focus from funding early stage companies toward investments in more mature companies. Even industry founders J.H. Whitney & Company and Warburg Pincus began to transition toward leveraged buyouts and growth capital investments. 1.3.4 The Venture Capital Boom and The Internet Bubble (1995 to 2000): Growth in the venture capital industry remained limited throughout the 1980s and the first half of the 1990s increasing from $3 billion in 1983 to just over $4 billion more than a decade later in 1994.
After a shakeout of venture capital managers, the more successful firms retrenched, focusing increasingly on improving operations at their portfolio companies rather than continuously making new investments. Results would begin to turn very attractive, successful and would ultimately generate the venture capital boom of the 1990s. Former Wharton Professor Andrew Metrick refers to these 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. The late 1990s were a boom time for venture capital, as firms on Sand Hill Road in Menlo Park and Silicon Valley benefited from a huge surge of interest in the nascent Internet and other computer technologies. Initial public offerings of stock for technology and other growth companies were in abundance and venture firms were reaping large returns. 1.3.5 The Bursting of the Internet Bubble and the Private Equity Crash (2000 to 2003): The technology-heavy NASDAQ Composite index peaked at 5,048 in March 2000, reflecting the high point of the dot-com bubble. The Nasdaq crash and technology slump that started in March 2000
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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). By mid-2003, the venture capital industry had shriveled to about half its 2001 capacity. Nevertheless, PricewaterhouseCoopers' MoneyTree Survey shows that total venture capital investments held steady at 2003 levels through the second quarter of 2005. Although the post-boom years represent just a small fraction of the peak levels of venture investment reached in 2000, they still represent an increase over the levels of investment from 1980 through 1995. As a percentage of GDP, venture investment was 0.058% percent in 1994, peaked at 1.087% (nearly 19 times the 1994 level) in 2000 and ranged from 0.164% to 0.182 % in 2003 and 2004. The revival of an Internet-driven environment in 2004 through 2007 helped to revive the venture capital environment.
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Ramp up; and Exit Because there are no public exchanges listing their securities, private companies meet venture capital firms and other private equity investors in several ways discussed in the process and also by way of summits where companies pitch directly to investor groups in face-to-face meetings, including a variant know as "Speed Venturing", which is akin to speed-dating for capital. This need for high returns makes venture funding an expensive capital source for companies, and most suitable for businesses having large up-front capital requirements which cannot be financed by cheaper alternatives such as debt. That is most commonly the case for intangible assets such as software, and other intellectual property, whose value is unproven. In turn this explains why venture capital is most prevalent in the fast-growing technology and life sciences or biotechnology fields. If a company does have the qualities venture capitalists seek including a solid business plan, a good management team, investment and passion from the founders, a good potential to exit the investment before the end of their funding cycle, and target minimum returns in excess of 40% per year, it will find it easier to raise venture capital. To start a new company or to bring a new product to the market, the venture may need to attract financial funding. There are several categories of financing possibilities. If it is a small venture, then perhaps the venture can rely on family funding,
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loans from friends and personal bank loans. For more ambitious projects, some companies need more than what mentioned above, some ventures have access to rare funding resources that is called Angel investors. These are private investors who are using their own capital to finance a ventures need. However, these funding methods are rare. Apart from these investors, there are also venture capitalist firms who are specialised in financing new ventures against a lucrative return. Apart from the financial resources these firms are offering; the VC-firm also provides the necessary expertise the venture is lacking, such as legal or marketing knowledge. This is also known as Smart Money.
2.2
2.2.1 Seed Stage: This is where the financing takes place. It is considered as the setup stage where a person or a venture approaches a VC-firm for funding for their idea/product. During this stage, the person or venture has to convince the firm why the idea/product is worth to invest in. The VC-firm will investigate into the technical and the economical feasibility (Feasibility Research) of the idea. If the idea is not feasible at this stage, and the VC-firm does not see any potential in the idea/product, the VC-firm will not consider
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financing the idea. However if the idea/product is not directly feasible, but part of the idea is worth for more investigation, the VC-firm may invest some time and money in it for further investigation.
2.2.2 Start-up Stage: If the idea/product is qualified for further investigation and/or investment, the process will go to the second stage; this is also called the start-up stage. At this point many exciting things happen. A business plan is presented by the attendant of the venture to the VC-firm. A management team is being formed to run the venture. If the company has a board of directors, a person from the VC-firms will take seats at the board of directors. While the organisation is being set up, the idea/product gets its form. The prototype is being developed and fully tested. In some cases, clients are being attracted for initial sales. The management-team establishes a feasible production line to produce the product. The VC-firm monitors the feasibility of the product and the capability of the management-team from the board of directors. To prove that the assumptions of the investors are correct about the investment, the VC-firm wants to see result of market research to see whether the market size is big enough, if there are enough consumers to buy their product. They also want to create a realistic forecast of the investment needed to push the venture into the next stage. If at this stage, the VC-firm is not satisfied about the progress or result from market research, the VC-firm may stop
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their funding and the venture will have to search for another investor(s). When the cause relies on handling of the management in charge, they will recommend replacing (parts of) the management team.
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2.2.3 Second Stage: At this stage, we presume that the idea has been transformed into a product and is being produced and sold. This is the first encounter with the rest of the market, the competitors. The venture is trying to squeeze between the rest and it tries to get some market share from the competitors. This is one of the main goals at this stage. Another important point is the cost. The venture is trying to minimize their losses in order to reach the break-even. The management-team has to handle very decisively. The VC-firm monitors the management capability of the team. This consists of how the management-team manages the development process of the product and how they react to competition. If at this stage the management-team is proven their capability of standing hold against the competition, the VC-firm will probably give a go for the next stage. However, if the management team lacks in managing the company or does not succeed in competing with the competitors, the VC-firm may suggest for restructuring of the management team and extend the stage by redoing the stage again. In case the venture is doing tremendously bad whether it is caused by the management team or from competition, the venture will cut the funding. 2.2.4 Third Stage: This stage is seen as the expansion/maturity phase of the previous stage. The venture tries to expand the market share they gained in the previous stage. This can be done by selling more amount of
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the product and having a good marketing campaign. Also, the venture will have to see whether it is possible to cut down their production cost or restructure the internal process. This can become more visible by doing a SWOT analysis. It is used to figure out the strength, weakness, opportunity and the threat the venture is facing and how to deal with it. In some cases, the venture also investigates how to expand the life-cycle of the existing product/service. At this stage the VC-firm monitors the objectives already mentioned in the second stage and also the new objective mentioned at this stage. The VC-firm will evaluate if the management-team has made the expected reduction cost. They also want to know how the venture competes against the competitors. The new developed follow-up product will be evaluated to see if there is any potential. 2.2.5 Bridge/Pre-public Stage: In general this stage is the last stage of the venture capital financing process. The main goal of this stage is to achieve an exit vehicle for the investors and for the venture to go public. At this stage the venture achieves a certain amount of the market share. This gives the venture some opportunities like for example:
Hostile-takeover; Merge with other companies; Keeping away new competitors from approaching the market; Eliminate competitors. Internally, the venture has to reposition the product and see where the product is positioned and if it is possible to attract new
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segments. This is also the phase to introduce the follow-up product/services to attract new clients and markets. As we already mentioned, this is the final stage of the process. But most of the time, there will be an additional continuation stage involved between the third stage and the Bridge/pre-public stage. However there are limited circumstances known where investors made a very successful initial market impact might be able to move from the third stage directly to the exit stage. Most of the time the venture fails to achieves some of the important benchmarks the VC-firms aimed.
2.3
The venture capital activity is a sequential process involving the following six steps:
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2.3.1 Deal origination: In generating a deal flow, the VC investor creates a pipeline of deals or investment opportunities that he would consider for investing in. Deal may originate in various ways like the referral system, active search system, and intermediaries. Referral system is an important source of deals. Deals may be referred to VCFs by their parent organisaions, trade partners, industry associations, friends etc. Another deal flow is active search through networks, trade fairs, conferences, seminars, foreign visits etc. 2.3.2 Screening: VCFs, before going for an in-depth analysis, carry out initial screening of all projects on the basis of some broad criteria. For example, the screening process may limit projects to areas in which the venture capitalist is familiar in terms of technology, or product, or market scope. The size of investment, geographical location and stage of financing could also be used as the broad screening criteria. 2.3.3 Due Diligence: Due diligence is the industry jargon for all the activities that are associated with evaluating an investment proposal. The venture capitalists evaluate the quality of entrepreneur before appraising the characteristics of the product, market or technology. Most venture capitalists ask for a business plan to make an assessment
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of the possible risk and return on the venture. Business plan contains detailed information about the proposed venture. 2.3.4 Deal Structuring: In this process, the venture capitalist and the venture company negotiate the terms of the deals, that is, the amount, form and price of the investment. This process is termed as deal structuring. The agreement also include the venture capitalist's right to control the venture company and to change its management if needed, buyback arrangements, acquisition, making initial public offerings (IPOs), etc. 2.3.5 Post Investment Activities:
Once the deal has been structured and agreement finalised, the venture capitalist generally assumes the role of a partner and collaborator. He also gets involved in shaping of the direction of the venture. The degree of the venture capitalist's involvement depends on his policy. It may not, however, be desirable for a venture capitalist to get involved in the day-to-day operation of the venture. If a financial or managerial crisis occurs, the venture capitalist may intervene, and even install a new management team. 2.3.6 Exit: Venture capitalists generally want to cash-out their gains in five to ten years after the initial investment. They play a positive role in directing the company towards particular exit routes. A venture may exit in one of the following ways:
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Initial Public Offerings (IPOs) Acquisition by another company Purchase of the venture capitalist's shares by the
2.4
2.4.1 Equity: Many VCFs provide equity but generally their contribution does not exceed 49 percent of the total equity capital. Thus, the effective control and majority ownership of the firm remains with the entrepreneur. They buy shares of an enterprise with an intention to ultimately sell them off to make capital gains. 2.4.2 Conditional Loan: It is repayable in the form of a royalty after the venture is able to generate sales. No interest is paid on such loans. In India, VCFs charge royalty ranging between 2 to 15 percent; actual rate depends on other factors of the venture such as gestation period, cost-flow patterns, riskiness and other factors of the enterprise. 2.4.3 Income Note: It is a hybrid security which combines the features of both conventional loan and conditional loan. The entrepreneur has to
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pay both interest and royalty on sales, but at substantially low rates. 2.4.4 Other Financing Methods: A few venture capitalists, particularly in the private sector, have started introducing innovative financial securities like participating debentures, introduced by TCFC is an example.
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3.1
Introduction
The venture capital system as practiced in the industrial countries, particularly the USA, does not exist in India. In the USA, given its highly progressive industrial environment and entrepreneurial culture, it is normal for an entrepreneur or inventor of a new product/process to set up a company to produce and market the product by obtaining finance through the sale of the company shares to VCFs which are readily willing to share the risk in return for future gains. India is emerging as a Global innovation centre with many opportunities in its basket. India has the ability to build market leading companies that serve both global and domestic markets. It is moving beyond supplier of low-cost services to higher value products. Quality of entrepreneurship is also on the ascending curve. This chapter deals with the introduction of venture capital, its historical background, structure and legal framework in India. It further explains the current status of VC in India, including stages, industry, cities and finally the investment process. Starting and growing a business always require capital. There are a number of alternative methods to fund growth. These include the owner of proprietors own capital, arranging debit finance, or
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seeking an equity partner, as is the case with private equity and venture capital. Private equity is a broad term that refers to any type of non-public ownership equity securities that are not listed on a public exchange. Private equity encompasses both early stage (venture capital) and later stage (buy-out, expansion) investing. In the broadest sense, it can also include mezzanine, fund of funds and secondary investing. Venture capital is a means of equity financing for rapidly growing private companies. Finance may be required for the startup,development/expansion or purchase of a company. Venture Capital firms invest funds on a professional basis, often focusing on a limited sector of specialization (e.g. IT, infrastructure, health/life sciences, clean technology etc). The goal of venture capital is to build companies so that the shares become liquid (through IPO or acquisition) and provide a rate of return to the investors (in the form of cash or shares) that is consistent with the level of risk taken. With venture capital financing, the venture capitalist acquires an agreed proportion of the equity of the company in return for the funding. Equity finance offers the significant advantage of having no interest charges. It is patient capital that seeks a return through long-term capital gain rather than immediate and regular interest payments, as in the case of debt financing. Given the nature of equity financing, venture capital investors are therefore exposed to the risk of the company failing. As a result the venture
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capitalist must look to invest in companies which have the ability to grow very successfully and provide higher than average returns to compensate for the risk. When venture capitalists invest in a business they typically require a seat on the companys board of directors. They tend to take a minority share in the company and usually do not take day-to-day control. Rather, professional venture capitalists act as mentors and aim to provide support and advice on a range of management, sales and technical issues to assist the company to develop its full potential.
3.2
Capital to be invested in companies based on innovative technologies started by first generation entrepreneur. This made VC investment highly risky and unattractive. Nonetheless about half a private initiative were taken. At the same time World Bank organized a VC awareness seminar and selected 6 institutions to start VC investment in India. This included TDICICI (ICICI), GVFL,Canbank Venture Capital Fund, APIDC, RCTC and ILF (now known as Pathfinder). The other significant organizations in private sector were ANZ Grindlays, 3i Investment Services Limited, IFB, Jar dine Electra. After the reforms were commenced in 1991, CCI guidelines were abolished and VC Industry became unregulated. In 1995, Government of India permitted Foreign Finance companies to make investments in India and many foreign VC private equity firms entered India. In 1996, after the lapse of around 8 years, government again announced guidelines to regulate the VC industry. Though there were many shortcomings when these guidelines were at the starting point. These guidelines did not create a homogeneous level playing field for all the VC investors. This impeded growth of domestic VC industry. Lack of incentives also made Indian Corporate and wealthy individuals shy of VC funds. With the result, VC scene in India started dominated by foreign equity fund. In 1997, IT boom in India made VC industry more significant. Due to symbiotic relationship between VC and IT industry, VC got more prominence as a major source of funding for the rapidly
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growing IT industry. Indian VCs which were so far investing in all the sectors changed their focus to IT and telecom industry. The recession during 1999-2001 took the wind out of VC industry. Most of the VC either closed down or wound-up their operations. Almost all of them with the exception of one or two like GVFL changed their focus to existing successful firms for their growth and expansion. VC firms also got engaged into funding buyouts, privatization and restructuring. Currently, just a few firms are taking the risk of investing into the start-up technology based companies. The above development of venture capital in India can be summarized into four phases. Phase I Formation of TDICI in the 80s and regional funds as GVFL and APIDC in the early 1990. Phase II Entry of Foreign Venture Capital funds (VCF) like Draper, Warburg Pincus between 1995-1999. Phase III 2000 onwards, Emergence of successful India-centric VC firms like Helion, Infinity, Chryscapital, Westbridge, etc. Phase IV (Current) Global VCs and PE firms actively investing in India. A significant feature of venture capital financing in India, which is little recognized, is the support from commercial banks provided for small scale industries. The small scale industries in India run both the risks inherent in a venture capital project-the failure of management and the high risks in the venture.
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3.3
manpower in the world. Given such vast potential in IT, software and also in the field of service industries, biotechnology, telecommunications, media and entertainment, medical and health services and other technology based manufacturing and product development, venture capital industry can play a catalytic role to put India on the world map as a success story. The notion of venture capital is catching up in India after it was introduced in the budget for the year 1986-87. A five percent cess was levied on all know-how import payments for the creation of a venture fund by IDBI. ICICI (Industrial Credit and Investment Corporation of India) also started venture capital activity in the same year. Many public and private sector firms have entered the venture capital industry now.
3.4
3.4.1 Special Financial Institutions and Their Financing Schemes: In India, the Industrial Financial Corporation of India (IFCI), Industrial Development Bank of India (IDBI) and the industrial Credit and Investment Corporation of India (ICICI) are the major three institutions, which are engaged in the financing of high tech new ventures. The difference and similarities between three schemes of IFCI, IDBI and ICICI are discernible from the objectives sought to be pursued under the broad characteristics of the schemes precisely explained below.
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3.4.1.1
Risk Capital Scheme of IFCI: The IFCI began its equity financing through its Risk Capital Foundation (RCF) by providing risk capital assistance on soft terms to first generation entrepreneurs. The corporation envisages providing assistance to technologists and the professionals who do not have adequate resources of their own for contributing to equity capital of the industrial projects undertaken by them with a view to enlarging entrepreneurial base for wider dispersal of ownership and control of industry in the national interest. The corporation is continuing its effort through the newly formed Risk Capital and Technology Finance Corporation Ltd. (RCTFC) set up in 1988 as a wholly owned subsidiary of the IFCI. RCTFC was established with an objective of providing financial support to such activities in the area of innovative technology, pollution. energy conservation and environmental
3.4.1.2
Technology Development & Information Company of India Ltd. (TDICI) of ICICI : Encouraged by the response to technology financing, ICICI floated a separate companyTechnology Development and Information Company of India (TDICI) in collaboration with UTI in 1988. Apart from Venture Capital financing TDICI activity profile includes technology consultancy services and technology escort services such as marketing , business management, export marketing and guidance for individual venture capital projects etc. TDICI makes investments in highly risky projects promising high return in future. It gives
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preference to companies, which are unable to raise public share capital and would not be financed by anyone else. In addition to equity participation (up to a maximum of 49 percent) undertaken by typical venture capital companies, TDICI offers the unique option of conditional loans. The entrepreneur neither pays interest on it nor does he have to repay the principal amount. If the venture succeeds, TDICI recovers back its investment in the form of royalty on sales which ranges between 2 percent to 8 percent. On the contrary, if venture fails to take off even after 5 Yrs, TDICI will consider writing off the loan. TDICI usually has a nominee on the Boards of companies with whom it enters into long-term contracts. TDICI assists such venture projects in arranging working capital finance, recruiting senior executives. It also takes advice of the outside experts in taking various decisions. Some of the projects financed by ICICI include: Mastek a Bombay based software firm in which TDICI invested Rs.42 lakh in equity in 1989 went public in 1992. It showed an annual growth of 70 percent to 80 percent in the turnover. Temptation Foods which exports frozen vegetables and fruits, went public in November, 1992. The TOICI invested Rs.50 lakh in its equity. 3.4.1.3 Seed Capital Scheme or Venture Capital Fund of IDBI: IDBIs scheme is known as Seed Capital Scheme intended to help create a new generation of entrepreneurs
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who have the requisite traits of entrepreneurship but who lack financial resources to promote industrial ventures. The assistance is provided for meeting the risk capital requirements of entrepreneurs IDBI is doing well under the venture capital fund scheme by assisting the projects which are engaged in the promotion and development of indigenous technology that is new and untested in India. The financial assistance is provided under this scheme in the areas of chemical, software electronics, biotechnology, food products and medical equipment. The project cost varies between Rs.5 lakh to Rs.250 lakh. IDBI provides assistance both for financing the cost of fixed assets as well as for meeting the operating expenses in the form of unsecured loans carrying a concessional interest rate of 6 percent p.a. during the early stages of development. 3.4.2 Funds Promoted by State Level Institutions: Funds promoted by state level institutions include 3.4.2.1 APIDC Venture Capital Ltd. (A-VCL): This is a wholly owned by the Andhra Pradesh Industrial Development Corporation LTd. It aims at specializing
venture fund Management Company. It has been entrusted with the management of a fund, namely APIDC Venture Capital Fund. It is established with a capital of 13.5 crore contributed by APIDC, IDBI, Andhra Bank and IOB and
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investments with the objective of bringing technological innovations in order to improve quality, reduce energy consumption, increase competition and enhanced exports. 3.4.2.2 Gujarat Venture Finance Ltd.(GVFL):The GVFL has been promoted by Gujarat Industries Investment Corporation Ltd., (GIIC) in association with Gujarat Lease Finance Corporation Ltd., Gujarat Alkalies and Chemicals Ltd. And Gujarat State Fertilizer Corporation Ltd.GIIC holds 40 percent of the equity capital of the GVFL and the rest is contributed by other three organizations. The GVFL is a fund management company, and presently acts as a trustee manager of a venture fund, namely (GVCF) Gujarat Venture Capital Fund, started in 1990. GVFL provides finance for innovations in technology leading to an improvement in product quality and energy conservation, for launching new products based on imported technology. 3.4.3 Funds Promoted by Public Sector Banks: A good example is Canara Bank Venture Capital Fund (CVCF). This fund has been promoted by Canara Bank and its subsidiary Canbank Financial Services Ltd. (CANFINA). It was set up in 1989 as a trust. It provides finance in the form of equity, conditional loans, conventional loans or both. Its capital base is Rs.24 crore. The Fund aims at providing financial support for commercial exploitation of new technologies, technology up gradation to improve quality etc.
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3.4.4 Private Agencies: Venture capital funds set up in the private sector include 1. Credit Capital Venture Fund(CCVF), 2. 20th Century Venture Capital Fund, 3. India Investment Fund, 4. Indus Venture Capital Fund (IVCF) and 5. SBI Capital Venture, Capital Fund. 3.4.4.1 Credit Capital Venture Fund (CCVF): The Credit Capital Venture Fund (India) was established in 1986. It has a capital base of 10.8 crore. The principal shareholders are Credit Capital Finance Corporation, Bank Of India, Asian Development Bank and Common Wealth Development Corporation. It finances ventures promising high returns with maximum assistance limited to Rs50 lakh. It also provides value added services in an advisory role and actively participates in marketing, recruitment and management affairs. Thus it helps the entrepreneurs to realize maximum returns.It has also launced 10 states funds of Rs.10 crores each. It is now known as lazard Credit Capital Fund (India)Ltd. (LCCVF). 3.4.4.2 20th Century Venture Capital Fund : It was promoted by 20th century Finance Ltd.and has a resource base of Rs.20 crore.The fund aims at reviving the sick industries and help first generation entrepreneurs. 3.4.4.3 India Investment Fund: It is Indias first private venture capital fund mainly subscribed by Non -resident Indians (NRIs). The Fund is an offshore company predominantly by NRI owned investors incorporated in early
projects or often young as well as established Indian companies which can demonstrate a potential for sustained growth. The maximum assistance made available to one venture is limited to Rs.1 crore. The principal investment objective of the fund is long term capital appreciation. Merchant Banking Division of Grindlays Bank has been retained as the advisers for the Fund which evaluates and recommends specific investment proposals. The fund follows hands off approach in making the investment. 3.4.4.4 Indus Venture Capital Fund (IVCF): This fund was promoted by Shri T.Thomas, the former Director of Unilever. The Indus Venture Management Ltd. (IVML) has been entrusted with the management of (IVCF). IVCF has a capital resource of Rs.21 crore contributed by IVML, the IDBI, IFCI, Deutsche Bank, International Finance Corporation (Washington) and a few other national and international organizations. 3.4.4.5 SBI Capital Venture Capital Fund: This fund has been set up by the SBI Capital Markets Ltd. To finance ventures through its bought out deals. The objective behind the fund is to promote new capital issues by purchasing them when capital market is sluggish and disposing them off at times when market picks-up. The fund has a capital base of Rs.10 crore.
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3.4.5 Overseas Venture Capital Funds: Overseas Venture Capital Funds look for investment in areas ensuring high and guaranteed returns such as tourism, hospitals, air transport, information technology, communication, pharmaceutical, consumer durables, food processing industry, machinery components and textile etc. Following are some of the examples where foreign venture capitalists have undertaken investments: 3.4.5.1 Global Insurance giant, AIG has tied up with IL & SF to float a 150 million venture fund. 3.4.5.2 IL & SF is also planning to launch a $ 100 million fund with the ADB. 3.4.5.3 3.4.5.4 George, Sors has already floated the Indocean Fund. NIKKO Securities has tied up with Walden AND San Francis Company to float a venture capital fund with a minimum capital of $ 50 million.
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CHAPTER 4 STRUCTURE OF VENTURE CAPITAL FUNDS AND SUPPLY OF VENTURE CAPITAL IN INDIA
4.1 Structure of Funds in India
Given Indias peculiar Regulations and investment environment, three main types of fund structure exist: one for domestic funds and two for offshore ones. 4.1.1 Domestic Funds: Domestic Funds (i.e. one which raises funds domestically) are usually structured as: I) a domestic vehicle for the pooling of funds from the investor and II) a separate investment adviser that carries those duties of asset manager. The choice of entity for the pooling vehicle falls between a trust and a company (India, unlike most developed countries does not recognize a limited partnership), with the trust form prevailing due to its operational flexibility. 4.1.2 Offshore Funds: Two are the common alternatives available to offshore investors: the offshore structure or the unified structure. 4.1.2.1 Offshore Structure: Under this structure, an investment vehicle (an LLC or an LP organized in a jurisdiction outside India) makes investments directly into Indian portfolio companies. Typically the assets are managed by an offshore
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manager, while the investment advisor in India carries out the due diligence and identifies deals. 4.1.2.2 Unified Structure: When domestic investors are expected to participate in the fund, a unified structure is used. Overseas investors pool their assets in an offshore vehicle that invests in a locally managed trust, whereas domestic investors directly contribute to the trust. This is later used to make the local portfolio investments. India is still a small portion of the overall PE Market in Asia. The size of the Asian PE market in the world is US$ 174.2 billion. While the share of Indian private equity is just US$ 11.1 billion in Asian venture capital industry.
number of deals dipped by 148 percent, with just 27 deals invested US$ 117 million. This decline is due to the VC firms raising the bar with their investments risk. The due diligence is taking longer as they are scrutinizing every aspect of the companies they are looking to invest in. 4.2.1 Private Equity in India: Indias growth in Private Equity Investment during the last five years is more than astounding (approximately at 240 percent). Even more bewildering is their rise from a country that barely existed on the PE landscape as far as 1997. In 2005 the value of PE deals had increased by 75 i.e. their number rose up from 71 in 2004 to 146 in 2005 ( with more than 10 deals over US$ 50 million). According to the Asian Development Bank 2006, with more than 100 India-centric VCFs/PEFs and forecasts investments ranging between US$ 25-35 bn by 2011, India would stay on the map of all the major players in the industry together with China. Profitability of the deals is increasing as well, with a burgeoning share of divestments ranging in the 100 percent to 500 percent IRR area. Since 2004 some deals over the 500 percent IRR have appeared, signaling an extension not only in quantity but also in the quality/ critical mass of the deals. On the dim side a small intensification of negative range IRR is almost inevitable with the growing number of deals.
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The reasons cited most commonly for deals falling through in India are differences over valuation, combined with the fact that family owned businesses are finding it difficult to hand over rights to a private equity firm in the view of the availability of numerous funding options. The same applies to listed companies, as these are held under tight control, usually by the founders and act more like privately held firms. In 2006, the geographical scope of players grew wider with a considerable attention from Japanese, Middle East and European firms piching their tents in India. Some of the new names include Mitsui, Sumitomo (Japan), Ishtamar and Abraj capital ( Gulf). Acting as a magnet was 2005s sensational deal, when Warburg Pincus sold a chunk of its stake in cellular player Bharti TeleVentures for US$ 560 m. So far, Warburg (which invested US$ 300 m in Bharti between 1999 and 2000) has made US$ 1.1 billion selling two-thirds of its 18 percent stake in Bharti. Some of the U.S. titans have freshly entered or are just about to make a move. At the same time the arms of Blackstone and Carlyle have opened their Indian funds and will strike their first deal in the nearest future. 4.2.2 Distribution of Investments by Deal Size: The distribution of investment by no. of deal shows the maximum no of deals in the investment range of amount from US$ 0-2 million to US$ 15 million and above. The maximum no. of deals is in the range of US$ 5-10 million i.e. the total no. of deals in this
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range were 20 during the year 2007. These investments are mostly related with the expansion and growth stage. Then the range of US$ 0-2 million has total no. of 13 deals of early stage and the least no. of deals are in the range of US$ 15million and above i.e. 3 deals. 4.2.3 Investment by Stage: An analysis of financing by investment stages indicate
Financing in start up companies was 44%, later stage companies financing is 23%, in other early stages the venture capital financing is 18% and the least financing is in seed stage, i.e 15%. Further, the major contributors to the funds were:
Technology Small Industries Development Bank of India (SIDBI), in association with Ministry of Information Technology, Govt. of India, has set up a 10 year close ended venture capital fund called the "National Venture Fund for Software and IT industry" (NFSIT). Prime Minister, Atal Behari Vajpayee launched this fund in December 1999. NFSIT has a corpus fund of Rs. 100 crore and is a dedicated IT Fund with a focus on small-scale sector. The objective of the fund, besides meeting total financial requirements of the units, is to enable these units to achieve rapid growth rates and develop and maintain global competitiveness. The fund endeavours to develop international networking and enable assisted units to attract co-investments from international venture capitalists. International linkages will help the assisted units to get a listing with foreign stock markets viz. NASDAQ,thereby achieving better valuations and offering alternate exit routes to the investors. A portion of the Fund has been earmarked for incubation projects that involve high risks and might be used for development of software products. Software products require rigorous risk evaluation for which high degrees of expertise including international linkages are required. The fund managed to attract a number of high-class professionals as investment managers in the Asset Management Company. Many state governments have already set up venture capital funds for the IT sector in partnership with local state financial
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institutions and SIDBI. These states include: Andhra Pradesh, Karnataka, Delhi, Kerala, Gujarat, and Tamil Na du.
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Financial Services Sector (24%) got the biggest share of Investment, followed by Telecom & Media (17%), Engineering & Construction (15%) and IT & ITES (13%). Source: India Venture Capital & Private Equity Report 2009, created by Thillai Rajan & Ashish Deshmukh of IIT, Madras1. During first half of 2009, with 14 investments worth about $ 75 million, Information technology (IT) and IT-enabled services (ITeS) companies accounted for about 52 percent of the deals (63 percent in value terms). Within IT and ITeS, online services firms retained their status as the favourites, accounting for over 57 percent of the investments (by volume) within the industry. Domestic demand driven sectors like financial services (especially microfinance), health and education also continued to attract the VC attention.
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4.2.5 Investment in IT and Service Sector: The following graph indicates the growth of venture capital and angel investments in India's IT software and services sector:
It must be noted that during 1999, approximately 80 percent of the estimated US$ 30 billion worth of venture capital invested in United States, went to technology firms. India too, with its strengths in innovation and IT technology has attracted several Venture Capital firms.
In 2000 alone, 20 new venture capital funds have registered with SEBI, taking the total number to 30. In fact, VC or Angel investments in high tech firms in India have grown by over 5,000 percent from Rs. 70 crore to projected Rs. 2,200 crore between 1996 and 2000. And this figure is expected to grow to Rs. 50,000 crore by 2008. 4.2.6 Investment by Geographical Area:
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Venture capital investments are also influenced by the geographical area or location of the entrepreneurs project. The table below shows the different location / cities where the venture capitalists are interested in funding the projects. While companies based in South India attracted a higher number of investments, their peers in Western India attracted a far higher share of the pie in value terms. According to the IVCA report February 2008, the most attracting city for the PE investments is Mumbai having 109 deals, valuing US$ 5,995 million in 2007 which was 50 percent more than the no. of deals in 2006, followed by Delhi/ National Capital Region with 63 investments worth almost US$ 2.7 billion and Bangalore with 49 investments worth US$ 700 million. Top Cities Attracting VC Investments in India Particulars City 2006 No of Value Deals Mumbai Delhi/NCR* Bangalore Chennai Hyderabad Pune Ahmedabad Kolkata * National Capital Region includes Noida & Gurgaon Source: IVCA Report, February 20082. 69 41 40 22 17 10 M) 1,780 395 1,525 354 492 1,114 2007 No of Value (US$ M) 5,995 2,688 685 824 1,380 492 339
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A restricted definition of venture capital is followed in India for the purpose of tax concessions. The approved venture capital firms are eligible for tax exemption on the capital gains on equity investments. From 1996 until 2000, the securities and Exchange Board of India (SEBI) was empowered to regulate only domestic funds, leaving a consistent edge to foreign investors. The SEBI (Venture Capital Fund) Regulations, 1996 clearly states that any company or trust proposing to carry on activity of a VCF shall get a grant of certificate from SEBI. Section 12 (IB) of the SEBI Act also makes it mandatory for every domestic VCF to obtain certificate of registration from SEBI in accordance with the regulations. In order to monitor (if not regulate) foreign investment in the VC sector the SEBI introduced a new set of regulations applicable to offshore funds, called the SEBI Regulations,2000. Hence there is no way that an Indian Venture Capital Fund can exist outside SEBI Regulations. However registration of Foreign Venture Capital Investors (FVCI) is not mandatory under the FVCI regulations. (Source: Indian Venture Capital Journal, Volume 1/Issue 1 2005, Indian Private Equity: Venturing into India, p.34-38; Fenwick & West LLP [Greguras, Stafford and Gopalan 2006], 2006 Update on Structuring Venture Capital and Other Investments in India.)
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5.1
Size: Total investment not to exceed Rs.100 million. Technology: New and relatively untried or very closely held or being taken from pilot to commercial stage or incorporating some significant improvement over the existing ones in India. Entrepreneur: Relatively new, professionally or technically qualified persons with inadequate resources or backing to finance the project. Aggregate minimum capital commitments from its investors should be Indian Rupees 50 million. A VCF cannot invest more than 25 percent of its aggregate Capital Commitments in any one Venture Capital Undertaking (VCU). These conditions do not apply if the financial assistance is provided for the revival of sick units. Venture Capital excludes financing of enterprises engaged in trading, broking, investment or
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financial services, and agency or liaison work. A venture capital firm in India is required to invest at least 75 percent of its funds in venture capital activity, and must be managed by professionals.
5.2
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The FVCI will have to appoint a domestic custodian and open a special, non-resident currency account at a bank. FVCIs registered with the SEBI are entitled to benefits such as: Transfer of shares between residents and non-residents will not be subjected to the restrictive pricing guidelines existing for the FDI route. Exemption from both entry and exit pricing regulations (especially significant in case of strategic sale or buy-back arrangement with promoters) Taxation to be borne by Funds investing in India can range from 0 to 40 percent according to temporal and jurisdictional factors. Many Offshore and Domestic Funds choose the jurisdiction of Mauritius to take avail of the benefits applicable under the double taxation avoidance treaty (DTAT). Under the India-Mauritius DTAT, any capital gain earned by a resident of India is exempt from tax in India. Further, the withholding tax (WHT) on dividend also gets reduced to 5 percent as against normal applicable WHT of 20 percent. In other words, there is no Indian tax on sales of shares in an Indian company by a Mauritius company.
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6.1
Entrepreneurial Environment.:
US startups have excessive regulation, procedure and bureaucracy that add cost and generally frustrate innovation. Its a huge pain. Yet painful as it may be, others have it worse. As a rough proxy for national bureaucratic-ness, the time and procedure required to set up a foreign-owned business compare as follows:
At one extreme, it takes more than 15 times longer to set up a foreign-owned business in Brazil (vs US). Another proxy for
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government-imposed burden is tax, for which Brazil gets more poor marks with taxes at a whopping 38.8% of GDP.
While China, India and Brazil have made varied strides to improve their business climates in recent years, Russia registered an actual decline in the 2009-10 Global Competitiveness Report. Russia dropped 12 places to 63rd, largely because of a perceived lack of government efficiency, judicial independence and property rights.
6.2
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Compounding the issue, IPOs from Russian companies dried up in 2008 and 2009 while Indias IPO market crashed around 97% from Rs 922.18 billion to Rs 20.33 billion. Venture capital has always had its challenges in emerging markets, even in the good times before the 2007 collapse. For example, 20 venture capital funds investing in 74 Brazilian firms between 2003 2006 posted negative overall returns. While overall US venture capital returns over the past decade have also been negative, one 2005 study showed that private equity funds across emerging markets (including a mix of venture capital and larger private equity transactions) similarly produced an IRR of negative 0.3% over 5- and 10-year horizons.
6.3
Future Outlook:
With thicker bureaucracies, greater volatility and historically challenging environments, one might expect the future of BRIC venture capital to be gloomy at least gloomier than that of the US. However, oddly enough, the exact opposite seems true. In a recent survey of over 500 global venture capitalists, an overwhelming percentage of VCs predicted venture investing growth in Brazil, China and India (Russia was not sampled) over the next five years. Meanwhile 85% of respondents predicted declines in US venture capital over the same period.
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This is cruel irony or poetic justice, depending on ones viewpoint. The past few years have been tough for everyone, especially BRIC nations. However going forward, BRIC nations may have a light of hope at the end of their venture capital tunnel. As for the US, unless significant steps are taken the light at the end of its tunnel may turn out to be an oncoming train Posted By: Thomas Thurston on the August 2, 20103 Thomas Thurston is the President and Managing Director of Growth Science International, LLC is a renowned thought leader in specialized bodies of corporate strategy and investment methodology.
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7.1
Investor Sequoia Capital India Ventureast Intel Capital Helion Venture Partners DFJ India
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Nexus India Capital NEA IndoUS Ventures IDG India Ventures Kleiner Perkins
0 0 0 1
1 0 0 3 3 1 -
4 5 6 0 1 4 -
9 9 5 6 2 4 -
2 0 0 0 3 1 3
16 14 11 10 10 10 3
7.2
Norwest Venture Partners 13.9 Helion Venture Partners Nexus India Capital DFJ India Ventureast NEA IndoUS Ventures Canaan Partners Kleiner Perkins IDG India Ventures 7 2 -
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7.3
Investor Sequoia Capital India Helion Venture Partners Nexus India Capital Ventureast NEA IndoUS Ventures IDG India Ventures
Inventus Capital Partners Norwest Venture Partners DFJ India Kleiner Perkins Intel Capital Canaan Partners -
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Report By: Arun Prabhudesai on March, 20104 Arun Prabhudesai is founder / chief editor at trak.in. He jumped the Entrepreneurship bandwagon in early 2008 after a long 13 year stint in I.T Industry.
CHAPTER 8 CASE STUDY SEQUOIA CAPITAL INVESTS RS.60 CRORE IN QUICK HEAL TECHNOLOGIES
Company to foray into new markets and products
developed product portfolio. With this investment Sumir Chadha, Managing Director, Sequoia Capital India will join the board of the company. Sumir Chadha, Managing Director, Sequoia Capital India said, Quick Heal is today the first choice computer security product for consumers and business owners. We are confident that the company will continue to strengthen its dominant position in India and replicate this success in overseas markets. Quick Heal has a suite of award-winning computer security products that are installed in corporate, small businesses and consumers homes protecting their computers from viruses and other security threats. The Quick Heal Total Security product, addresses a wide range of distinct security needs that protect the PC from online and offline threats, in addition to providing privacy protection and PC optimization. The company also added a unique feature to Quick Heal Total Security called the PC2Mobile Scan, which enables users to scan, detect and delete malware, spyware and viruses from mobile phones. The Indian anti-virus market touched Rs 350 crore last year, of this Quick Heal's share is around 30-35 per cent, said the company. Quick Heal recorded revenues of Rs 103 crore last year. He further added that in comparison to the large antivirus and security companies, Quick Heal has 30-35% market share in Indias antivirus market. Worldwide security software revenue is forecast to surpass $16.5 billion in 2010, an 11.3 percent increase from 2009 revenue of $14.8 billion, according to Gartner, Inc.
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Kailash Katkar, Managing Director and CEO, Quick Heal Technologies said, Theres a need of antivirus products for corporates at the gateway and for the development of such products there is a need for investment. Even the development of antivirus products for mobile phones requires a lot of research and development entailing the requirement of investments. This investment is important for Quick Heal Technologies as 80 out of its staff of 350 are in the R&D function. And with a 20-25% total revenue being annually spent in R&D activities, this investment is right in place to give it a further thrust. He also said, We are proud to have Sequoia Capital partner us in our quest to be a global market leader in computer security. While we continue to build on the strong platform in the domestic market, we will also look to expand our global network through organic and inorganic growth. Sanjay Katkar, Chief Technology Officer, Quick Heal Technologies said, The Quick Heal brand is today synonymous with high quality computer security solutions for consumers and business owners. We will invest in strengthening our product portfolio to expand our product offerings to cater small, medium and large corporations. The investment transaction was facilitated by RippleWave Equity, the sole financial advisor to this transaction who helped bring Sequoia Capital and Quick Heal together.
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Sequoia Capital currently manages funds capitalized at close to US $1.8 billion and invests across venture, growth and late stage opportunities in India. It takes a long term view on investments and plays the role of an active, value added partner to entrepreneurs, business families and management teams. Over the last 9 years, Sequoia Capital has invested in more than 50 Indian companies including Caf Coffee Day, Comviva (Bharti Telesoft), Dr Lal Pathlabs, Edelweiss, Firstsource, GVK Biosciences, Idea Cellular, Ind-Barath Power, Just Dial, Shaadi.com and SKS Microfinance. Sequoia Capital operates out of offices in Bangalore, Mumbai and New Delhi. Globally, Sequoia Capital has an unparalleled track record of partnering with entrepreneurs to create global market leaders. Sequoia Capital has been an early investor in companies such as Google, Cisco, Yahoo, YouTube, Oracle, and Apple Computers. Sequoia Capital maintains dedicated teams in the US, China, India and Israel.
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Technologies also operates through a network of dealers and channel partners in more than 50 countries worldwide. Article Posted On 17th August, 2010 on: http://www.sequoiacap.com/india/news/sequoia-capital-invests-rs60-crore-in-quick-heal-technologies5
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CONCLUSION
This project has discussed about venture capital in detail in the first two chapters the latter part has portrayed the image of a blossoming but risky Indian Venture Capital scene. The first part expounded, in brief, the history of venture capital in India, categories of VC providers, objective and vision for VC in India how funds investing in India are structured, the loopholes that advantaged foreign funds over domestic ones for years and the preference given to Mauritius as a foreign heaven for low taxed investments in the Indian private equity scene. The second part described the regulatory framework, and development of VC with current size of investments, their subdivision through various stages, the differences with their world averages, and their sectoral subdivisions. Furthermore, it continued by depicting the situation in competitor markets such as China. Thus, it is apparent that the Indian market is in an investment boom (at 0.61 percent of GDP Private Equity investment has about the same ratio as the U.S: or Sweden) and set to grow considerably in the coming years at a rate of about 60 percent. In the end a comparison was given U.S, Brazil, Russia, India and China based on few aspects and then a list of top venture capitalists in India is given and lastly a case study on Indias top venture capitalist, i.e , Sequoia Capital investing in Quick Heal Technologies has been shown.
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BIBLIOGRAPHY
I. Books:
1. Pawar Vandana, Venture Capital (Global And Indian Experience), New Century, Mumbai, 1999. 2. Brian Coyle, Venture Capital And Buyout, Cibpublishing, 1999. 3. Pandey I.M, Venture Capital (Indian Experience), Prentice Hall, 2003.
II.
Websites:
1.
http://growthsci.com/blog/vc_update_us_bric/ - Comparison of Venture Capital Between India and Other Nations http://en.wikipedia.org/wiki/Venture_capital Introduction, history, venture capital firms and funds http://www.sequoiacap.com/india/news/sequoia-capitalinvests-rs-60-crore-in-quick-heal-technologies - Case Study
2.
3.
III.
Reports:
1. Source Of Investment by Industry Pie Diagram: India Venture Capital & Private Equity Report 2009, created by Thillai Rajan & Ashish Deshmukh of IIT, Madras1. 2. Source of Top Cities Attracting VC Investments in India: IVCA Report, February 2008.
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3. Comparison of Venture Capital Between US, Brazil, Russia, India and China Posted By: Thomas Thurston on the August 2, 2010.
4. Report on Top Venture Capitalists in India by Investments By: Arun Prabhudesai on March, 2010. 5. Article on Case Study of Sequoia Capital Investing In Quick heal Technologies Posted On 17th August, 2010 on http://www.sequoiacap.com/india/news/sequoia-capitalinvests-rs-60-crore-in-quick-heal-technologies
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