...PRIMER ON VENTURE CAPITAL IN MAINE . Charles J. Spies III Chief Executive Officer Timothy P. Agnew Principal Author The Finance Authority of Maine and Masthead Venture Partners would like to acknowledge and thank Governor John E. Baldacci, former Governor Angus S. King, Jr. and the Maine Legislature, who have consistently supported the efforts of Maine entrepreneurs, and the programs and services of the Finance Authority of Maine. Through their determination and support, Maine has developed perhaps the best array of programs and services for financing fledgling technology-based businesses of any state in the nation Copyright 2003 Finance Authority of Maine. All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means without the prior written permission of the Finance Authority of Maine. Finance Authority of Maine, 5 Community Drive, P.O. Box 949, Augusta, ME 04332-0949 Tel: (207) 623-3263 or (800) 228-3734 TYY: (207) 626-2717 E-mail:info@famemaine.com Web Site: www.famemaine.com April 2003 2 TABLE OF CONTENTS PAGE CHAPTER 1: CHAPTER 2: CHAPTER 3: CHAPTER 4: CHAPTER 5: CHAPTER 6: CHAPTER 7: APPENDIX A: APPENDIX B: INTRODUCTION .................................................................................. 1 WHAT VENTURE CAPITAL IS (AND IS NOT)...................................... 3 HOW VENTURE CAPITAL INVESTORS WORK ................................... 6 HOW TO APPROACH VENTURE INVESTORS...
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...e-Journal VENTURE CAPITAL IN INDIA D. P. WARNE*; PINKI INSAN** *Chaudhary Devi Lal University, Sirsa, Haryana-125055. **Shah Satnam Ji P.G. Girls College, Sirsa, Haryana- 125055. ABSTRACT India is the largest democracy on the planet and second most populous country in the world. Its extraordinary history is intimately tied to its geography. A meeting ground between the East and the West, it has been invader’s paradise. In the last one and half decades, India has proved itself as a destination for Information Technology (IT) and Business Process Outsourcing (BPO). India is also fast emerging as a major center for cutting-edge research and development (R&D) projects for global multinational companies. Lot of activities are happening in India in various sectors such as IT, BPO, Knowledge Process Outsourcing (KPO), Semiconductors, Biotechnology, Textiles, Manufacturing, and Engineering recently. This study is an attempt to explore the trends and developments in Venture Capital financing in India through an in‐depth analysis of these investments over the last 5 years (2005‐2009). INTRODUCTION The Venture capital sector is the most vibrant industry in the financial market today. Venture capital is money provided by professionals who invest alongside management in young, rapidly growing companies that have the potential to develop into significant economic contributors. Venture capital is an important source of equity for start-up companies. Venture capital can be visualized...
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...The Basic Venture Capital Formula (No Dilution) This method is used to determine how much should the venture capitalist invest in a company to obtain a certain required rate of return RRI after long period of time. Example: Let us suppose that venture capitalist want to invest $10mm in company X that would not require any additional capital through 6 years and the company expect to earn $9mm dollar in year 6, and this company has commanding price / earnings (PER) equal to 22. The venture capitalist expect 60% required rate of return (RRI). Fact summary Required rate of return RRI: Investment: Term: Year 6 net income: Year 6 PER: 60% $10mm 6 $9mm 22 Required future value (investment) = (1 + IRR) years x (investment) = (1 + .6)6 x ($10mm) = $167.8 mm So the venture capitalist’s stocks value should be equal $167.8mm in year 6 to achieve 60% annual return. Total Terminal Value = PER x Terminal Net Income = 22 x $9mm = $198mm after 6 years the company as whole would worth $198mm. Final ownership required = ������������������������������������������������ ������������������������������������ ������������������������������ ������������������������������������������������������������ ������������������������������ ������������������������������������������������ ������������������������������ Final ownership required = $167.8mm / $198mm = 84.34%. The required percent ownership after 6 years should be 84.34% “and it is equal to beginning percent ownership because the company doesn’t...
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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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...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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...Start Up Stage (창업단계) 1) 개요 창업단계의 벤처기업은 최근에 설립된 회사로서 보통 상업화가 가능한 제품을 보유하고 있으며 경영진이 구성되고, 사업계획서가 작성되어 있다. 창업단계에 필요한 창업자금은 제품개발을 완성하고 사업계획을 가지고 기업화하는 단계에 필요하지만, 높은 위험이 따르기 때문에 벤처케피탈들도 이 단계에서 투자를 꺼리는 것이 보통이다. 따라서 일반적인 경우는 기업가의 자기자금이나 개인적인 담보에 의한 대출들로 자금을 조달 할 수 밖에 없는데 이에는 한계가 있기 때문에 창업이 순조롭게 이루어지지 않는 경우가 많다. 하지만 오늘날 많은 벤처캐피탈이 매우 잠재력이 높은 기업을 발견하여 조기에 상당한 수익을 얻기 위하여 앞을 다투고 있다. 개인적 네트워크를 통한 자금조달 이외에 국내외에서 어떠한 방법으로 창업단계의 기업이 자금을 조달 할 수 있는지 살펴보도록 하겠다. 2) Private Equity Investment 'Private Equity'란 Public Equity(상장주)와 반대되는 개념으로서 기업공개 이전 상태에 있는 비상장기업의 지분(비상장주) 의미로도 쓰이지만, 비상장기업에 대해 협상(private negotiation)을 통하여 다양한 형태의 투자를 전문적으로 수행하는 투자자금(fund) 또는 투자조직으로 더 많이 사용된다. Private Equity (Fund)는 공모(public offerings)가 아닌 사모(private placements)방식에 의해 조달된 재원을 통하여 주로 비상장 기업에 투자하는 자금(funds) 또는 투자방법을 의미한다. Private Equity의 종류는 크게 창업단계 및 초기 성장단계(early stage investment) 기업에 대한 투자를 전문적으로 수행하는 '벤처캐피탈'과 초기 성장단계 투자를 제외한 모든 형태의 비상장기업에 대한 투자를 지칭하는 'Private Equity'로 구분된다. Private Equity 투자프로세스를 살펴보면, 적극적인 투자 전략하에 투자대상을 발굴하고, 기업정밀실사 및 투자조건에 대한 협상을 통하여 투자를 실행하며 투자 이후에는 투자기업의 기업가치 증대를 위한 다양한 노력을 기울임으로써 투자수익을 극대화 한다. 이와 같이 Private Equity 투자는 상장기업에 대한 투자와는 달리 투자대상 기업이 속한 산업 및 업종에 대한 전문적인 지식을 바탕으로 투자대상 기업을 발굴하고 유리한 투자조건을 이끌어 낼 수 있는 협상력과 투자수익 제고를 위한 투자기업의 기업가치 증대능력이 요구되는 전문적인 투자 방식이다. 비상장기업의 자금조달의 필요성과 자금조달 규모, 기업의 성숙도에 따라 각기 다른 형태의 투자 방법이 출현할 수 있다. (아래 그림 참조) 아래 그림과 같이, Seed Stage에서 Star-up Stage에 이르는 시기, 즉, 구체화된 사업아이디어에 대한 R&D투자를 통해 상업화가 가능한 제품을 개발하는 단계에서는 기업화 초기단계에 천사처럼 나타나 필요한 자금을...
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...VENTURE CAPITAL There will be entrepreneurs who will be technically qualified but they will not be having the required amount of capital to finance their business. Venture capital is a type of funding for a new or growing business. It usually comes from venture capital firms that specialize in building high risk financial portfolios. With venture capital, the venture capital firm gives funding to the startup company in exchange to the returns in the future. IMPORTANCE OF VENTURE CAPITAL FINANCING The following are the importance of venture capital financing. 1. Promoting Entrepreneurs: Just as a scientist brings out his laboratory findings to reality and makes it commercially successful, similarly, an entrepreneur converts his technical know-how...
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...Unit 5 Discussion Board Jennifer Prince Venture Capital Venture Capital is an important step for a rapidly growing company; however, you cannot get something for nothing. Venture capitalists expect something in exchange for handing over cash. Technology and life sciences are the sectors that have recently been receiving the most VC investments, which is good for our medical device product. Investment in biotechnology and medical device companies combined rose by 50% to $2.1 billion over the first quarter of 2010. (staff, 2010) Our business is one that is in a sector that VC’s will tend to back and likely experience exceptional growth and because we only get one chance to make a first impression our plan must be clear and precise. Designing a power-point presentation 20 – 30 pages long or about 90 minutes to explain the business plan, detail our medical device and our market, and explain why we have the competitive edge. The plan to use equity financing for our medical device company will simply allow us to share ownership of our business in exchange for money. Venture capitalists and angel investors are our target, as this will allow us to pay back the loan through a fixed duration of time so that we may focus on making the medical devices for the greater good of medical communities and their patients. (Go4Funding, 2010) With the help of an experienced and accredited professional legal consultant or accountant, we can obtain the necessary paperwork for developing the entire...
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...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 can reduce the transaction costs associated with monitoring as they launch the extensive process of...
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...1.1 What is Venture Capital? Venture capital is a segment of private equity industry, which focuses on early-stage, high-potential, start-up companies. The venture capital fund earns money by owning equity in the companies it invests in, which usually have a new technology or business in high technology industries, such as biotechnology and IT, however with high risk. Funds are typically established as limited partnerships, which is a contract between institutional investors who become limited partners and the fund manager. The basic intermediation structure of venture capital and private equity funds is graphically summarized in Figure 1. Figure.1 Venture Capital Financial Intermediation Venture capital is a specific form of industrial finance(part...
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...Venture capital (VC) is monetary capital gave to early stage, high-potential, development new businesses. The venture capital store procures cash by owning value in the organizations it puts resources into, which typically have a novel innovation or plan of action in high innovation businesses, for example, biotechnology and IT. The ordinary venture capital speculation happens after the seed financing round as the first round of institutional capital to store development (likewise alluded to as Series A round) in light of a legitimate concern for creating a return through a consequent acknowledgment occasion, for example, an IPO or exchange offer of the organization. Venture capital is a sort of private equity. In addition to angel investing, equity crowd funding and other seed funding options, venture capital is attractive for new companies with limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or complete a debt offering . In return for the high risk that venture capitalists accept by putting resources into little and less develop organizations, venture capitalists typically get huge control over organization choices, notwithstanding a significant allotment of the organization's proprietorship (and subsequently esteem). Venture capital is likewise connected with occupation creation (representing 2% of US GDP), the learning economy, and utilized as an intermediary measure...
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...Investment Banking and Venture Capital Assignment No:-2 Regulation of Venture Capital By SEBI - What is Venture Capital? Venture Capital financing is a process whereby funds are pooled in for a period of around 10 years and investing it in venture capital undertakings for a period of 3 to 5 years with an expectation of high returns. To protect the funds of the investors against the risk of losses, venture capital fund provides its expertise, undertake advisory function. Venture Capital financing had been a popular source of funding in many countries and served as a lucrative bait to create a similar industry in India as well. Regulations of Venture Capital: VCF are regulated by the SEBI (Venture Capital Fund) Regulations, 1996. The regulation clearly states that any company or trust proposing to carry on activity of a VCF shall get a grant of certificate from SEBI. Section 12 (1B) of the SEBI Act also makes it mandatory for every domestic VCF to obtain certificate of registration from SEBI in accordance with the regulations. Hence there is no way that an Indian Venture Capital Fund can exist outside SEBI Regulations. However registration of Foreign Venture Capital Investors (FVCI) is not mandatory under the FVCI regulations. A VCF and registered FVCI enjoy several benefits: • No prior approval required from the Foreign Investment Promotion Board (FIPB) for making investments into Indian Venture Capital Undertakings (VCUs). • As...
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...------------------------------------------------- Assignment 1 Does the land of Venture Capital have a national competitive advantage for Private Equity? Checcarelli Betti Francesco Hawlasewicz Maja Janssen Wim Kees Irina Müller Doing Business in Emerging Markets Fall Term 2014 04. November 2014 Abstract This assignment conducts an analysis of Israel using Porter’s Diamond model with a focus on the Private Equity industry. The aim is to understand if Israel has a national competitive advantage for the PE industry. Factor conditions National level. The country’s natural endowment is rather weak, forcing the nation to focus on knowledge-based industries (i.e. software, biotech, etc…) rather than being heavily dependent on natural resources. The ongoing hostilities with its neighbouring countries shaped the economic landscape, having a positive effect on Israel’s defence industry, which in turn provided a foundation for wide parts of the country’s high-tech industries. In addition, the near east led to even closer collaboration between Israel and the US, which is the top foreign investot in Israel, accounting $19.7 billion of the $74.4 billion in FDI in 2012, or 26.5% of the total (Kumar et al., 2009, p. 11). PE activity. These preconditions, supported by a strong education system within science and engineering-related subjects, helped Israel to build up one of the country’s most important strategic assets: specialized know-how and well-educated...
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...REPORT KUALA LUMPUR VENTURE CAPITAL The objective of Kuala Lumpur International Venture Capital Symposium 2011, held in Kuala Lumpur on 11th and 12th of October 2011, was to promote local and foreign capitalists to invest in high technology industries. Many leading figures and experts in venture capital, entrepreneurs, business people and government leaders were invited to put light on the importance of venture capital industries for a better economic. This report focuses the talk delivered by Dr. Rob Adams; who is currently associated in the faculty of the MBA program at University of Texas, Austin. His area of interest is entrepreneurship and is considered an authority on the subject. He is also the author of the book titled: “If You Build It Will They Come”, which he also presented in this symposium. During his presentation, Dr. Adams explained how market validation is crucial to a successful venture. To illustrate this he presented two case studies. The first one was about Motorola’s project called Iridium while the second case study’s subject was Apple’s iPod. Even though the technology that Iridium offered was far more sophisticated and ahead of its time than iPod; nevertheless, Iridium failed because of poor marketing strategy and false assumptions about their tentative customers. iPod, on the other hand, was not a technological breakthrough rather a design breakthrough and was highly criticized and considered a flop idea. However, it targeted the right customers...
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...Abstract There are literally hundreds of thousands of college athletes in the United States, every one of whom was recruited in some way by the school that they decided to attend. In most cases, high athletes will consider multiple schools before eventually making a final decision. As a former college athlete myself, I took part in this exact decision making process, and can recall just how difficult and time consuming it proved to be. Today’s athletic world lacks a networking website that provides athletes and college recruiters with a convenient platform in order to connect with one another. The site will also link tournament directors with coaches of travel teams in order to address the same issues. Sportal will be the website to solve these problems. Product/Service description Each athlete will have his or her own personal Sportal page, stating basic information including current school, height and weight, game statistics, lifting amounts, running times, and player videos. Also included on the athlete’s personal page will be a “Commitment Status.” This will let potentially interested college recruiters know whether or not an athlete has already made a verbal or written commitment to a certain school. This will help save large amounts of time in the areas of research, phone calls, and visits to athletes who have already made a commitment to play somewhere else. Users will be able to choose whether or not their profile will be public or private to the remainder...
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