Campaign

Topic Covered

NAF Win Global Finance covered the topic of “Venture Capital” in the weekly campaign. Various viewpoints of this topic were covered which, includes the following:

01

What is Venture Capital?

Venture capital (VC) may be a sort of private equity financing that investors provide to startup companies and little businesses that are believed to possess long-term growth potential. Venture capital generally comes from well-off investors, investment banks, and therefore the other financial institutions.
Those people who invest their money in this type of capital are known as venture capitalist. This type of venture capital investment is formed when a speculator buys shares of such a corporation and becomes a financial partner within the business.

02

Features of Venture Capital

  • It includes high Risk
  • There is lack of Liquidity
  • Long term horizon
  • Equity participation and capital gains
  • Risk capital investments are made in innovative projects.
  • Suppliers of risk capital participate within the management of the corporate.
  • 03

    Methods of Venture Capital Financing

    • Equity- generally not exceed 49%. Retained till the projects make profit
    • Participating debentures- lower interest till the unit makes profit. Paid back as per predetermined schedule
    • Conditional loan- both interest and royalty

    How it Works ?

    04

    Process of Venture Capital

    This process of V.C. mainly involves six steps which are as follow;

  • Deal origination
  • Screening
  • Evaluation
  • Negotiation
  • Post investment activities
  • Exit Plan
  • 05

    Types of Venture capital

    A) Early Stage Financing:
    Early stage financing has three sub divisions;

  • Seed financing
  • Start up financing
  • First stage financing
    B) Expansion Financing:
    Expansion financing may be categorized into

  • Second-stage financing,
  • Bridge financing and
  • Third stage financing or Mezzanine financing.
    C) Acquisition / Buyout
  • 06

    Disadvantages of Venture capital

  • Dilution of ownership and control.
  • It is a lengthy and complicated process.
  • it’s an uncertain sort of financing
  • May lead to undervaluation.
  • May require high Return on Original Investment.
  • May release the fund from time to time.
  • This is the complete summary of the week campaign

    Win Global Finance