Page 230 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Sukhpreet Kaur, Lovely Professional University
Unit 16: Venture Capital

Unit 16: Venture Capital Notes

CONTENTS
Objectives
Introduction

16.1 Meaning of Venture Capital
16.2 Features of Venture Capital
16.3 Techniques of Venture Capital

16.4 Indian Venture Capital Scenario
16.5 Private Equity
16.6 Summary
16.7 Keywords
16.8 Self Assessment

16.9 Review Questions
16.10 Further Readings

Objectives

After studying this unit, you will be able to:

State the meaning of venture capital
Explain the features of venture capital
Define techniques of venture capital
Discuss Indian venture capital scenario

Introduction

Venture capital is a post-war phenomenon in the business world mainly developed as a sideline
activity of the rich in USA. The concept, thus, originated in USA in 1950s when the capital
magnets like Rockfeller Group financed the new technology companies.
The concept became popular during 1960s and 1970s when several private enterprises started
financing highly risky and highly rewarding projects. To denote the risk and adventure and
some element of investment, the generic term "Venture Capital" was developed. The American
Research and Development was formed as the first venture organization which financed over
100 companies and made profit over 35 times its investment. Since then venture capital has
grown' vastly in USA, UK, Europe and Japan and has been an important contribution in the
economic development of these countries.
Of late, a new class of professional investors called venture capitalists has emerged whose
specialty is to combine risk capital with entrepreneurs management and to use advanced
technology to launch new products and companies in the market place.
Undoubtedly, it is the venture capitalist's extraordinary skill and ability to assess and manage
enormous risks and extort from them tremendous returns that has attracted more entrants.

LOVELY PROFESSIONAL UNIVERSITY 225