1. Venture Capital & Private Equity Department of Business Administration,St.Josephs Engineering College, Vamanjoor. April 4, 2008

2. Structure of Ownership

Sole-Proprietor-Ownership Not Transferable

Partnership-Ownership Not Transferable

Joint Stock Company:

- Private LimitedRestricted Transferable Ownership

- Public Limited.Unrestricted Transferability; Listed Company.Ownership is a Tradeable Commodity

3. Classes of Funding

Ownership Funding: Equity Shares, Preference Shares and Reserves

Debt Funding: Debentures, Bonds and Long Term Loans

4. Relevance of Debt Funding?

Gestation Period

Security Related

Compulsion of Payment of Interest

Compulsory Redemption

No Risk Bearing

Lesser Importance to Leverage due to Falling Tax Rates

Popularity of Zero Debt Capital Structure

5. Beauty of Equity

Risk Bearing

No Need to Pay Dividend

No Redemption

No Security To be Offered

Wider Knowledge of Working

6. Equity Related Funding Agencies

Angel Investors- High Networth Individuals

Venture Capital-Partnership With Limited Liability Partners

Private Equity-Partnership With Limited Liability Partners

7. Venture Capital: Features

Funding Mainly by Subscribing to Equity Shares

Evaluation of the Business Idea, more by Intuition than by Standardised Evaluation Techniques

Prescribing Performance Benchmarks

Right of Management Buyin

New High Risk High Growth Industry

Exit Schedule

8. Enabling Environment

Free Licensing Policy

Well Developed Capital Markets

New Projects

Low Taxation Policy

Professional Promoters

Risk Funding Culture

Enterprise Culture

Educational Institutions

Absorption of IT

Presence of Surplus Funds

Opening Up of the Economy

9. Stages of Financing

Seed Financing

Start-Up Financing

First Stage Financing

Second Stage Financing

Mezzanine Financing

Bridge Financing

Management Buy-Out

Management Buyin

Turnaround Financing

10. Venture Capital & Private Equity

New Companies V Existing Companies

Investment Horizon 7 Years V 5 years

Restricted Areas of Operation V Many Areas of Operation

Differences Fading Away

Private Equity is a Popular Expression

11. Structure of Private Equity

Limited Liability Partnership

Limited Partners and Unlimited Partners

Limited Partners Provide Capital

Limited Partners get limited Dividend

Limited Partners Have Unlimited Access to Information and a Permanent Office in the Organisation

Unlimited Partners manage the Business

They get Most of the Profits in the Form of Bonus

One is Elected As the Chairman

Others may be Managing Directors

They also Control the Companies Funded

12. Active Private Equity

HSBC Private Equity India Fund Limited

Alliance Venture Capital Advisors Ltd

JF Electra Advisors India Ltd

Draper International Ltd.

Temasek

New Vernon

Texas Pacific

Chrys Capital

New Bridge

General Atlantic

Blackstone

Underbridge

13. THANK YOU