Saturday 15 March 2014

Contribution of Venture Capital Firms in Mainstream Economy of India


Venture Capital Companies are groups of investors that privately invest in companies, particularly startups. The preferred sections are generally in the technology or agriculture sector. In exchange of this investment they often demand some controlling equity or company functioning. They also contribute in the form of business management experience, networking etc. thus adding value to the companies they fund. Some of the specific roles of VC firms in the growth and development of a startup include:


Indian VC Firms


Identifies Appropriate Firm for Investment

They are in search of innovative, industry-leading technologies and agribusinesses that have been developed under right management with potential for growth and return of investment. The VC fosters potential by offering financial backing for stirring new ideas, and also providing some flexibility to widen their research and explore multiple avenues of research, for increasing their possibilities of success.

Identifies Value Stimulators

Having experience in biotech and business development the VC firms enable startup companies to identify and formulate value drivers. They ascertain where to steer corporate development, and help prioritize and allocate resources, with an aim it will add value to the company.

Creates Benchmarks

VCs role is to coordinate with the company management for establishing operational milestones in the functioning of the company. This requires coordination between VC and management on defined objectives and priorities. For this the company founders "shop" for appropriate VC to find the right match for them.

Formulates a Strategic Plan

The VC wants ROI within a stipulated time frame and thus plans an exit strategy as per the milestones set out initially while funding the company. They help establishing a strategic plan for the company to reach their objective using the milestones as markers, which often stretch up to 5-7 years.

Ensures Company Professionalization

They help in hunting and recruiting competent resources and are involved in the overall corporate plan to ensure the day-to-day management of the company professionally by experienced and expert professionals.

Provides Networking Opportunities

The VC also helps the company by identifying the sources of later financing. They are well connected through networking with other investors. Using these connections they help promote their companies in the marketplace by introducing it to technology-collaboration partners.

Monitors the Competition

Venture capital firms in India are well aware of the competition and remain vigilant to make it to the marketplace ahead of the competition of business owner. Again it's also because they won't like to lose out on their investment in the company due to the competition.

Synopsis
Above said are the most important contributions of venture capital funds in India when it invest in any startup company and support them to compete and establish in the Indian marketplace.