Significance and Benefits of Venture capital Firms in India

Venture capital firms in India provide funds/capital that is committed for longer term to assist unquoted agri-tech companies flourish. Venture capital helps if you are a start up, wish to expand your business, buy a part of your parent company, turn around or revive a firm, buy a company.

PE firms that are focused on agri-tech domain are mostly interested in companies that are capable of displaying high potential for growth in five to seven years. In addition, such companies should also ensure that they have a great and experienced team with an ability to transform the business goals into a reality.

Inclination towards Agribusiness Companies
Of late venture capital funds in India, raised by PE firms had exhibited great interest on the Agribusiness companies, and have invested $126 million in nine Indian companies in this sector in the initial six months of year 2013. It is nearly 75% more compare to $72 million invested in six companies in the same time last year, as per the stats from Venture Intelligence (research service firm).

Benefits to Small Company
The major advantage that a small company raising venture capital is that in case you obtain funds from a lender, irrespective of your business’s success or failure, the lender owns a legal right to all of the interest on the loan along with the repayment interest of the capital. But in venture capital, the shareholders earning is driven by companies’ profit and growth.

Role in Indian Economy
Companies under venture capital firms are developed to be more profitable and efficient that directly contributes to the mainstream economy of India too. It also motivates the managers and staffs as the management receives carried interest, including part of profits. Overall it is the combine benefit of employees, business and also the country. In brief, the small companies that are about to collapse due to insufficient funding, can become a promising and growing company, contributing to the economy of India, after the intervention of PE firms.

Synopsis
Venture capital is a respite to small companies that could not fetch bank loans and are in dire need of funds for growth! Ultimately it is the win-win situation for all – the small company, the venture capital firm in India!

Venture Capital Firms in India – An Overview

If you are planning to establish, expand or grow your brand new business you must be looking for the company or individual who can take the risk of investing money on your business. Any bank will probably deny providing loan for your ventures, you being a new and inexperienced player.

This is where venture capital firms in India come into picture. They are often willing to accept a risky investment, on the basis of the business plan you have presented before the firm and have proven how the business will succeed.

What is Venture Capital Firm

It’s a group of investors who receive income from wealthy individuals who are keen on growing their wealth. They take the money and invest it in more risky businesses. As the investments are risky, these venture capital firms take a small share in the invested company. This small sharing is worth it to the enterprises, as they are not able to receive the funds needed from any other source.

How Venture Capital Companies in India Works

These firms work under a particular investment model. This investment profile is in the form of a document that defines the types of businesses the firm is ready to invest in. Thus by targeting their investments to specific types of businesses; like Omnivore Partners that invests in startup agricultural technology companies in India to improve farm productivity, enhance agro sustainability and seek transformation of Indian agriculture; the companies can learn the ropes of a specific industry, and thus in future can decide better investment plans based on their experience. These venture capital funds in India not only support startup businesses but also offer address expansion financing needs of promising businesses. Albeit, it is rare, as the growing and successful businesses can get the bank loans.

When a venture capital firm gets the money from the investors, it puts the money in a fund, which is then invested in various companies, expecting that the companies will repay the money in nearly three to seven years. When the invested company takes their business to the public and begins to selling bonds and stocks, the money is paid back to the venture capital firm, along with interest.

Synopsis

Venture capital firms are great source of funds for those promising startup businesses that cannot get any funds from otherwise. There are several venture capital companies in India, like omnivore partners that can help you establish or expand your business. If you approach them, they like your business plan, you may find the financer for your business. So, if you have any business plan ready, it’s time to take action, but ensure that you approach the right VC firm for venture capital funds to take your business to the next level!