...About Venture Capital (VC) | Starting and growing a business always require capital. There are a number of alternative methods to fund growth. These include the owner or proprietor’s own capital, arranging debt finance, or 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 start-up, development/expansion or purchase of a company. Venture Capital firms invest funds on a professional basis, often focusing on a limited sector of specialization (eg. 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...
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...this paper, an attempt is made to delineate the deficiencies of the existing financial system in Bangladesh to cater to financing needs of SMEs or new potential entrepreneurs and a proposal has been given to develop the venture capital industry to meet financing and non-financing needs of SMEs. SMEs play a vital role within Bangladesh’s economy in terms of creation of industrial outputs and generation of employment. Even though they play a significant role they face problems in securing investment or manage finance to develop their ideas or to expand their existing business. It is not possible for Bangladesh to accelerate economic growth without catering to the financing needs of SMEs, Thus, the paper proposes the development of the venture capital industry as an additional financial intermediary to Cater to financing and non-financing needs of SMEs. The paper discusses available sources of finance for SMEs and the Constraints of these sources. There are basically three sources from which SMEs may receive finance. These are banks, non-government organizations (NGOs) and the capital market. Then, we discuss the advantages that venture capitalists have over banks in catering to the funding needs of SMEs. It is argued that venture capitalists perform the role of ‘active investors’ by way of offering both financial and non-financial commitment to the investee company, which is essential in a market characterized by a high level of uncertainties. Also, it is argued that venture capitalists...
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...Venture Capitalist ENGL106-Week 2 IP American Intercontinental University Kendrick Little April 22, 2012 Abstract This is a paper to define and explain what venture capitalism is as well as what venture capitalists do in their business. Venture Capitalist An venture capitalist a person who provides capital is for the financing of growing, a new upstarting or struggling businesses. Venture capitalists are the general partners in the venture capitalist process. The capital itself provides long term finances to help companies that are not as lucrative as other large companies and it just simply keeps the company from failing. Venture capital can primarily help with a lot of things such as buying out a company, save a struggling one, upstart a new or expand an existing one. The venture capitalist profit is dependent solely on the company they have invested in, if the company is showing good signs of turnaround or having a good amount of success then the venture capitalist has made a good investment and will benefit from the success financially. Venture capitalist usually works very closely with the partner in the venture capital firm which develops a partnership. The general partners of the company role serves as the managers of the firm and will also in some cases take on the role as advisor to the vc’s to which the funds are made. In the Unites States of America venture capital firms can be set up or structured as limitied liability companies, by doing so the...
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...®nancial growth cycle Allen N. Berger a a,b,* , Gregory F. Udell c Board of Governors of the Federal Reserve System, Washington, DC 20551, USA b Wharton Financial Institutions Center, Philadelphia, PA 19104, USA c Kelley School of Business, Indiana University, Bloomington, IN 47405, USA Abstract This article examines the economics of ®nancing small business in private equity and debt markets. Firms are viewed through a ®nancial growth cycle paradigm in which different capital structures are optimal at dierent points in the cycle. We show the sources of small business ®nance, and how capital structure varies with ®rm size and age. The interconnectedness of small ®rm ®nance is discussed along with the impact of the macroeconomic environment. We also analyze a number of research and policy issues, review the literature, and suggest topics for future research. Ó 1998 Published by Elsevier Science B.V. All rights reserved. JEL classi®cation: G21; G28; G34; E58; L89 Keywords: Venture capital; Small business lending; Bank; Mergers 1. Introduction The role of the entrepreneurial enterprise as an engine of economic growth has garnered considerable public attention in the 1990s. Much of this focus * Corresponding author. Tel.: 1 202 452 2903; fax: 1 202 452 5295; e-mail: aberger@frb.gov. 0378-4266/98/$19.00 Ó 1998 Published by Elsevier Science B.V. All rights reserved. PII S 0 3 7 8 - 4 2 6 6 ( 9 8 ) 0 0 0 3 8 - 7 614 A. N. Berger, G. F. Udell / Journal...
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...Venture Capitalist ENGL106-Week 2 IP American Intercontinental University Kendrick Little April 22, 2012 Abstract This is a paper to define and explain what venture capitalism is as well as what venture capitalists do in their business. Venture Capitalist An venture capitalist a person who provides capital is for the financing of growing, a new upstarting or struggling businesses. Venture capitalists are the general partners in the venture capitalist process. The capital itself provides long term finances to help companies that are not as lucrative as other large companies and it just simply keeps the company from failing. Venture capital can primarily help with a lot of things such as buying out a company, save a struggling one, upstart a new or expand an existing one. The venture capitalist profit is dependent solely on the company they have invested in, if the company is showing good signs of turnaround or having a good amount of success then the venture capitalist has made a good investment and will benefit from the success financially. Venture capitalist usually works very closely with the partner in the venture capital firm which develops a partnership. The general partners of the company role serves as the managers of the firm and will also in some cases take on the role as advisor to the vc’s to which the funds are made. In the Unites States of America venture capital firms can be set up or structured as limitied liability companies, by doing so the...
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...and incomplete Do not quote without authors’ permission How Do Venture Capitalists Choose Investments? by Steven N. Kaplan and Per Strömberg* First Draft: August 2000 This Draft: August 2000 Abstract In this paper, we consider how venture capitalists (VCs) choose or screen their investments by studying the contemporaneous investment analyses produced by 10 venture capital firms for investments in 42 portfolio companies. Consistent with most academic and anecdotal accounts, we find that it is common for VCs to consider explicitly the attractiveness of the opportunity – the market size, the strategy, the technology, customer adoption, and competition – the management team, and the deal terms. We also provide evidence on how the venture capitalists expect to monitor those investments. In at least half of the investments, the VC expects to play an important role in recruiting management. Finally, we complement the investment analyses with information from the financial contracts for the investments and consider the relation of the analyses with the contractual terms and with subsequent performance. In both analyses, the evidence suggests that the VC’s initial appraisal of the management team is important. Stronger management teams obtain more attractive contracts and are more likely to take their companies public. G24: Investment banking; Venture Capital; Brokerage G32: Financing policy; Capital and ownership structure * Graduate School of Business, University...
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...Chapter 3 Partnership Liquidation and Incorporation; Joint Ventures The title of each problem is followed by the estimated time in minutes required for completion and by a difficulty rating. The time estimates are applicable for students using the partially filled-in working papers. Pr. 3–1 Doris, Elsie & Frances Partnership (20 minutes, easy) Journal entries for liquidation of an insolvent general partnership having a partner who is unable to pay entire capital deficit to the partnership. Pr. 3–2 Olmo, Perez & Quinto LLP (20 minutes, easy) Journal entries for liquidation of a solvent limited liability partnership having an almost insolvent partner who cannot pay entire loan from partnership or capital deficit. Pr. 3–3 Hal, Ian, Jay & Kay LLP (20 minutes, easy) Preparation of cash distribution program for a liquidating limited liability partnership. Pr. 3–4 Carson & Worden LLP (20 minutes, easy) Cash distribution program for liquidation of a limited liability partnership, and journal entries for realization of assets and distributions of cash to creditors and partners. Pr. 3–5 Luke, Mayo & Nomura LLP (20 minutes, easy) Given the statement of realization and liquidation for a limited liability partnership, prepare journal entries for the liquidation. Pr. 3–6 Luna, Nava & Ruby LLP (30 minutes, easy) Compute total loss from liquidation of a limited liability partnership, prepare a statement of realization...
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...Letter of Transmittal March 22, 2016 Dr. Salehuddin Ahmed Faculty Masters of Business Administration BRAC University Subject: Submission of project paper on “Venture Capital Firm” Dear Sir, We are pleased to present our project paper of startup of a “Venture Capital Firm” after a long and rigorous teamwork. We have tried to integrate the knowledge that you have imparted upon us into various topics in the report. This report consists of the overview of our venture capital firm “SEED”.. We hope that you would be kind enough to have your insight in our paper .We will be glad to answer any of your queries regarding the study and report. Sincerely Yours Acknowledgement At first we would like to express our gratitude to Almighty Allah who makes us able to prepare this project paper with good health and sound mind. Then we would like to express our deepest gratitude and warmest appreciation to our research supervisor Dr. Salehuddin Ahmed, whose assistance and guidance was outstanding for the successful completion of this project paper. Without his help, it was impossible for us to complete this project paper. His excellent method of guiding helped us to understand this critical title easily. We also thanked him for kindly assigning us such a nice and significant title which we are always supposed to remember gratefully. Table of Content Section | Page No. | 1. Background and justification of the project | | 2. Objectives of the...
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...University of Pennsylvania ScholarlyCommons Wharton Research Scholars Journal 5-1-2006 Valuation of Venture Capital Securities: An Options Based Approach A. Lloyd Thomas University of Pennsylvania This paper is posted at ScholarlyCommons. http://repository.upenn.edu/wharton_research_scholars/36 For more information, please contact repository@pobox.upenn.edu. Wharton School Valuation of Venture Capital Securities: An Options Based Approach Disciplines Business | Finance and Financial Management This journal article is available at ScholarlyCommons: http://repository.upenn.edu/wharton_research_scholars/36 Valuation of Venture Capital Securities 1 Valuation of Venture Capital Securities An Options Based Approach Wharton Research Scholars 2005-2006 Investigator: A. Lloyd Thomas Supervising Professor: Dr. Raffi Amit Copyright © A. Lloyd Thomas, 2006 Valuation of Venture Capital Securities 2 Table of Contents Table of Contents................................................................................................................ 2 Introduction......................................................................................................................... 3 Venture Capital Financing Negotiations......................................................................... 3 Venture Capital Securities .............................................................................................. 6 Common Stock...
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...Debt Versus Equity Financing Paper Ranithia Settles December 16, 2013 ACC 400 Kylene Smith In this reading the following objectives will be discussed, the definition of debt financing, equity financing along examples of each. This reading will also discuss which alternative capital structure is has more advantages and an explanation will be given. Debt Financing Debt financing is defined as the method of financing in which a company receives a loan and gives its promise to repay the loan ( (Entrepreneur.com, 2013). An example of debt financing is secured loans. Secured loans are loans that require collateral of some sort. There are several types of securities such as guarantors, who sign an agreement stating they will guarantee payment of the loan. Equipment provides 60- 65 percent of its valuable as collateral for the loan, and real estate is either commercial or private can be counted for up to 90 percent of its assessed value. Unsecured loans are typically short term as they require payment with six to eighteen months, Intermediate-term loans are to be paid back within three years, and then there are long-term loans that require payment from the cash flow of the business in five years or less. Equity Financing Equity financing is defined as method in which a company issues shares of its stock and receives money in return (Entrepreneur.com, 2013). Depending on how the equity capital is raised it is possible to bow out anywhere from 25-75% of the business. An example...
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...manufacturing company. This paper will address the best practical way too increase revenues and to decrease the cost of Protector and Gamble with techniques learned. Final Quantitative Analysis Project Quantitative analysis (QA) can be described as a scientific approach to managerial decision making (Render, et al 2015). This technique can be described as a behavior using mathematical modeling and research. QA covers variety of applications that can assist business to increase the cost and lower the cost of doing business. The QA approach is to develop a clear and concise approach to the problem and correct them. Protector and Gamble (P & G) is a business that produce several product such as, detergent, beauty products, healthcare and grooming products etc. With today market competing firms has attempted to duplicate their products with cheaper/generic ingredients similar to their product which results in a decrease in the revenue. Protector and Gamble needs to address this problems using quantitative analysis techniques and decision making concepts. Protector and Gamble Company must increase sales by investing in new ventures. Quantitative analysis is needed in order to determine the most effective path the company should take. A clear understanding must of the net present value of the new venture must be reviewed in order to determine its viability. The best concept is to simulation of the venture that is to create a real life situation of the new venture. Listed...
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...1. INTRODUCTION TO INDIAN MARKETS THERE ARE TWO TYPES OF MARKETS IN INDIA MONEY MARKET Money market is a market for debt securities that pay off in the short term usually less than one year, for example the market for 90-days treasury bills. This market encompasses the trading and issuance of short term non equity debt instruments including treasury bills, commercial papers, bankers acceptance, certificates of deposits, etc. In other word we can also say that the Money Market is basically concerned with the issue and trading of securities with short term maturities or quasi-money instruments. The Instruments traded in the money-market are Treasury Bills, Certificates of Deposits (CDs), Commercial Paper (CPs), Bills of Exchange and other such instruments of short-term maturities (i.e. not exceeding 1 year with regard to the original maturity) CAPITAL MARKET Capital market is a market for long-term debt and equity shares. In this market, the capital funds comprising of both equity and debt are issued and traded. This also includes private placement sources of debt and equity as well as organized markets like stock exchanges. Capital market can be divided into Primary and Secondary Markets. PRIMARY MARKET In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading avenue in which already existing/pre- issued securities are traded amongst investors. Secondary market could be...
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...Venture Financing in India A. Sahay* Abstract Innovation is stated to be the initiating force for a new venture but venture finance is the life blood for entrepreneurship. Innovation is the fuel for igniting the Entrepreneurial engine, Venture capital revs up the engine fast till it attains sustainable speed to change the gears from idea to entity, eventually reaching IPO stage. The paper starts with Research and Development Cess Act, 1986 and covers the development in the field till 2003 and presents an analysis of venture investments as well as future prospects . The history of Venture capital (VC), its advent in India, Characteristics of VC, Government guidelines on VC, Classification of VC in India, Types of V and their analysis has been dealt in the C paper. . Introduction Since Independence till early1990s, the Government has been playing the role of an entrepreneur as well. This was on account of the policy direction which propounded socialistic society and mixed economy. There was dearth of capital, infrastructure facilities and entrepreneurship in the country. During this period, the Government developed infrastructural base such as roads, railways, electricity, ports, banks, financial institutions, insurance etc through the public sector enterprises which were supposed to attain commanding heights of the economy. The environment thus created resulted in the people of India becoming job seekers and the Government itself became a dominant entrepreneur and job provider...
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...institutions (NBFIs) represent one of the most important parts of a financial system. In Bangladesh, NBFIs are new in the financial system as compared to banking financial institutions (BFIs). Starting from the IPDC in 1981, a total of 25 NBFIs are now working in the country. As on June 30, 2001 the total amount of paid up capital and reserve of 24 NBFIs stood Tk.6901.8 million (BB, 2002). The NBFIs sector in Bangladesh consisting primarily of the development financial institutions, leasing enterprises, investment companies, merchant bankers etc. The financing modes of the NBFIs are long term in nature. Traditionally our banking financial institutions are involved in term lending activities, which are mostly unfamiliar products for them. Inefficiency of BFIs in long-term loan management has already leaded an enormous volume of outstanding loan in our country. At this backdrop, in order to ensure flow of term loans and to meet the credit gap, NBFIs have immense importance in the economy. In addition, non-bank financial sector is important to increase the mobilization of term savings and for the sake of providing support services to the capital market. The focus of this paper is to highlight the necessity and importance of NBFIs to strengthen the financial system for rapid economic development of the country. 1. Introduction Building a sound financial system is an immense necessity for the economic development of a country. The main task of the financial system is to mobilize funds from...
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...Venture Financing in India A. Sahay* Abstract Innovation is stated to be the initiating force for a new venture but venture finance is the life blood for entrepreneurship. Innovation is the fuel for igniting the Entrepreneurial engine, Venture capital revs up the engine fast till it attains sustainable speed to change the gears from idea to entity, eventually reaching IPO stage. The paper starts with Research and Development Cess Act, 1986 and covers the development in the field till 2003 and presents an analysis of venture investments as well as future prospects . The history of Venture capital (VC), its advent in India, Characteristics of VC, Government guidelines on VC, Classification of VC in India, Types of V and their analysis has been dealt in the C paper. . Introduction Since Independence till early1990s, the Government has been playing the role of an entrepreneur as well. This was on account of the policy direction which propounded socialistic society and mixed economy. There was dearth of capital, infrastructure facilities and entrepreneurship in the country. During this period, the Government developed infrastructural base such as roads, railways, electricity, ports, banks, financial institutions, insurance etc through the public sector enterprises which were supposed to attain commanding heights of the economy. The environment thus created resulted in the people of India becoming job seekers and the Government itself became a dominant entrepreneur and job provider...
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