venture capital
CHAPTER -1
INTRODUCTION
1.1 INTRODUCTION
Venture capital, a financial innovation of the twentieth century, is a long-term liquid investment, which can be in the form of equity, quasi-equity and sometimes debt in new and high-risk ventures. Venture capital became better known after the famous legend of Apple Computers, which started out in the US in 1977 with the capital firm, Arthur Rock & Co. Apple Computers then made it to the Fortune 500 and Arthur Rock & Co. attained height in Venture capital industry. However the success of Venture Capital in USA stimulated world countries to practice on Venture capital.
A number of technocrats are seeking to set up shop on their own and capitalize on opportunities. In the highly dynamic economic climate that surrounds us today, few ‘traditional’ business models may survive. Countries across the globe are realizing that it is not the conglomerates and the gigantic corporations that fuel economic growth any more. The essence of any economy today is the small and medium enterprises.
This growing trend can be attributed to rapid advances in technology in the last decade. Knowledge driven industries like InfoTech, health-care, entertainment and services have become the cynosure of bourses worldwide. In these sectors, it is innovation and technical capability that are big business-drivers. This is a paradigm shift from the earlier physical production and ‘economies of scale’ model.
However, starting an enterprise is never easy. There are a number of parameters that contribute to its success or downfall. Experience, integrity, prudence and a clear understanding of the market are among the sought after qualities of a promoter. However, there are other factors, which lie beyond the control of the entrepreneur. Prominent among these is the timely infusion of funds. This is where the venture capitalist comes in, with money, business sense and a lot more.
1.2 WHAT IS VENTURE CAPITAL?
Venture Capital is
INTRODUCTION
1.1 INTRODUCTION
Venture capital, a financial innovation of the twentieth century, is a long-term liquid investment, which can be in the form of equity, quasi-equity and sometimes debt in new and high-risk ventures. Venture capital became better known after the famous legend of Apple Computers, which started out in the US in 1977 with the capital firm, Arthur Rock & Co. Apple Computers then made it to the Fortune 500 and Arthur Rock & Co. attained height in Venture capital industry. However the success of Venture Capital in USA stimulated world countries to practice on Venture capital.
A number of technocrats are seeking to set up shop on their own and capitalize on opportunities. In the highly dynamic economic climate that surrounds us today, few ‘traditional’ business models may survive. Countries across the globe are realizing that it is not the conglomerates and the gigantic corporations that fuel economic growth any more. The essence of any economy today is the small and medium enterprises.
This growing trend can be attributed to rapid advances in technology in the last decade. Knowledge driven industries like InfoTech, health-care, entertainment and services have become the cynosure of bourses worldwide. In these sectors, it is innovation and technical capability that are big business-drivers. This is a paradigm shift from the earlier physical production and ‘economies of scale’ model.
However, starting an enterprise is never easy. There are a number of parameters that contribute to its success or downfall. Experience, integrity, prudence and a clear understanding of the market are among the sought after qualities of a promoter. However, there are other factors, which lie beyond the control of the entrepreneur. Prominent among these is the timely infusion of funds. This is where the venture capitalist comes in, with money, business sense and a lot more.
1.2 WHAT IS VENTURE CAPITAL?
Venture Capital is