Money is very important and it becomes even more important when you’re gearing to start a company. You can always look forward to a Venture Capitalist to raise funds for your startup. Venture Capitalists are people who invest in early stage businesses that have a high potential to grow in future. They traditionally receive equity in the startup business in return for funding it. However, nowadays the trend involves demanding a mixture of debt financing and equity.
Venture Capital Funds have a number of advantages over any other funding methods for startups. They inject long term equity finance which acts as a solid capital base for future growth. They even act as a business partner, who shares both the risks and rewards of the business. In addition to this, Venture Capitalist funds are high on practical knowledge and advice from their past experiences with other companies. They also come with a network of contacts that can add value to your startup.
Related – India’s Top VC Tech Investors 2014
In India, the Venture Capital Funds can be categorized into the following groups:-
Promoted by Public Banks-
These type of Venture Capitalist funds are promoted by Public Banks. SBI Capital Markets Ltd and Canbank Venture Capital Fund are some examples of these kinds of VC funds.
- SBI Capital Markets Ltd. (SBICAP) –
It is the country’s largest domestic Investment Bank, which offers the entire gamut of corporate advisory and investment banking services. These services include structured Debt placement, stressed assets resolution, Merger & Acquisitions, Private Equity, Project Advisory and loan Syndication and Capital Markets. Founded in 1986, SBICAP has an aim of providing professional, credible and customer-focused investment banking services. Headquartered in Mumbai, SBICAP provides diversified financial advisory and investment banking services, innovative ideas and unparalleled execution to their clients across all stages of the business cycle. It is a wholly owned subsidiary and the Investment Banking arm of State Bank of India, which is the largest commercial bank in the country.
- Canbank Venture Capital Fund Ltd. (CVCFL) –
Founded on 21st October, 1989, CVCFL is a wholly owned subsidiary of Canara Bank. The bank is the first Public Sector Bank to set up a Venture Capital fund that is duly registered with SEBI. It is a premier domestic Venture Capital Fund which believes in adopting a General Fund Philosophy. CVCFL’S corpus is contributed by Financial Institutions, Insurance Companies and Public Sector Banks. The fund has set up five funds worth INR 6200 Million till now. Out of these five funds, two are now closed. The fund’s portfolio investments are spread across diverse industrial segments.
Promoted by the Central Government controlled development finance institutions –
This group contains Venture Capital Funds that are promoted by development finance institutions that are controlled by the Central Government of the country. The examples are as follows –
- IFCI Venture Capital Funds Ltd. (IFCI Venture) –
IFCI Venture was promoted by the IFCI Ltd. as a Risk Capital Foundation in 1975. IFCI Venture Capital Funds Ltd. finally came into existence as a Venture Capital fund in February 2000. They have an expertise in providing corporate advisory services, leveraging thirty years of experience in undertaking investment. These advisory services aim to provide fair, independent and informed assessment for undertaking decisions through the Investment cycle from deal identification to exit planning.
- SIDBI Venture Capital Limited (SVCL) –
Incorporated in July 1999, SVCL is a wholly owned subsidiary of SIDBI. It has a mission of catalyzing entrepreneurship by providing capital and other strategic inputs for building growth opportunities and maximize returns on investment. SVCL has managed a lot of funds over the years. These include SME Growth Fund, National Venture Fund for Software and Information Technology, Samridhi Funds and India Opportunities Fund.
Promoted by State Government Controlled development finance Institutions –
This group includes Venture Capital Funds which are promoted by development finance institutions controlled by state government. Some of the famous examples are:-
- Hyderabad Information Technology Venture Enterprises Limited (HITVEL) –
It manages the HIVE Fund contributed by Small Industries Development Bank of India, A.P Industrial Development Corporation Ltd., and A.P Industrial Infrastructure Corporation Limited. HITVEL is the asset management company under Srei Venture Capital Limited, which is the subsidiary of Srei Infrastructure Finance Limited. HITVEL has successfully completed several early stage investments in various Information Technology companies in the country. Its fund HIVE II focuses on targeting the IT ITES Sector in India.
- Kerala Venture Capital Fund Private Limited –
The Kerala Venture Capital Fund Pvt. Ltd. is functioning as the asset managing company of the Kerala Venture Capital Fund. Its main function is to manage the venture capital. The fund which was registered on September 14th, 1999, has eight active Director/Partners. The fund is currently Strike off Status.
- Gujarat Venture Finance Limited (GVFL) –
Founded in 1990, GVFL is regarded as the pioneer of Venture Capital in India. It works as an independent, autonomous Board managed venture finance company in Gujarat. Founded at the initiative of World Bank, GVFL has encouraged and supported innovative ideas and entrepreneurs in the past. One feature which distinguishes GVFL from all other VCs is its broad spectrum support to its funded entities that ranged from governance support to strategic support. Over the last twenty years, the fund has spawned 7 funds which have supported 81 companies. GVFL focuses on providing venture capital to technology oriented startups.
- Punjab InfoTech Venture Fund –
Founded in 1999, this Chandigarh based Fund is a Venture Capital Fund managed by Punjab Venture Capital Limited. The fund provides startup, growth and seed capital to startups in India. The fund invests in small and medium enterprises, primarily in the Software and Information Technology Sectors. The size of the fund is estimated to be $4 million.
Overseas Venture Capital Funds –
This group comprises of Venture Capital funds from outside India. Some of the Examples are as follows –
- BTS India Private Equity Fund Ltd. –
This Switzerland based Private Equity fund specializes in buy outs, mid stage, late stage and expansion stage investments. Founded in 2006, the fund prefers to invest in companies based in India. It invests in small and medium sized businesses. The fund does not invest its resources in early stage enterprises as it prefers enterprises that have established themselves over a period of two to three years. The fund seeks to invest in manufacturing, technology enabled services, telecommunications, packaging, pharmaceuticals and life sciences, textiles, healthcare and services.
- Walden International Investment Group –
It focuses its investments on opportunities in early stage and expansion stage companies. The group invests in companies across Emerging Technologies, Semiconductors, Software and IT services and Internet & Digital Media sectors. It helps companies in finding business resources, talent and market beyond their domestic terrain. The group has a very powerful and unique network of corporate, government and personal relationships across the world. They help the companies in accessing the right people in potential strategic partners that can make a huge difference in the growth of their companies. They are long term investors and seek to invest in companies that have a potential of making it huge in their markets.
- SEAF India Investment and Growth Fund –
SEAF started in the year 1989 as the CARE Small Business Assistance Corporation (CARESBAC), a single member non-governmental organization owned by the international relief and development organization, CARE. CARESBAC finally became SEAF in 1995 after it spun out of CARE. The fund has invested in a diversified range of India based companies with sustainable competitive advantages and high growth potential. It primarily invests in fast growing and dynamic sectors like media and entertainment, information & technology, life sciences and healthcare etc.
Promoted by Private Sector Companies-
This category consists of Venture Capital funds promoted by Private Sector Companies. Some Examples are:-
- Infinity Venture India Fund-
The fund seeks to invest in technology and related companies. Founded in 1999, it is the country’s first institutionalized fund that brought Indian entrepreneurs and overseas entrepreneur together. It closed fund raising in 2000 and has invested in about eighteen companies. Most of these investments have been in Series A or Seed fund. The Fund follows a research based methodology in order to identify potential investment areas and understand emerging markets/technologies.
- IL&FS Trust Company Limited (ITCL) –
Founded in the year 1995, ITCL is a part of IL&FS Group. It holds a Debenture Trustee license from SEBI. It is one of the largest Independent corporate Trustees in the country which offers Fiduciary and Trusteeship services to Governments, Infrastructure and Financial Services sector, High net worth individuals and Families. As of March, 2014, ITCL has administered over INR 445,600 crores in assets under a gamut of Corporate and Family Office Trusteeship services from its offices in Mumbai, Delhi, Kolkata, and Bangalore. It clients include Financial Institutions, Governments and their agencies, Corporations and all other entities that access credit markets and debit capital.