Tuesday 15 April 2014

Versatile Role of Venture Capital Firms in Startups

New entrepreneurs often face lot of difficulties in obtaining funds. Some approach venture capital (VC) firms in India to get started. Before approaching any VC firm, it is advisable to understand what venture capital funds is all about and what to expect from it.

Venture Capital Firms in India, Venture Capital Companies in India


Are you New to Venture Capital

Venture capital funds in India, also termed as private capital or seed capital, comes to the rescue of startups that may not have sufficient operating background to qualify for conventional loans through a bank. In majority of cases, such companies end up having a deal of profit sharing with the VC firms by offering them equity in the company.

To obtain venture capital funds is not easy. Unless your business plan demonstrates high rates of return within a stipulated five year stretch, there are good chances that the request for venture capital funds will be turned down.

What to Expect

Some of the major services and offerings that you can expect from a venture capital companies in India may include:

Business Consultations – Several venture capital firms are teamed with a well qualified crew of business consultants well versed in specific market trends and future. Leveraging their experience, expertise and intelligence the start up firm may avoid several snags associated with start-up business ventures.

Management Advisors – Ironically, not all entrepreneurs make good business managers. As venture capital firms mostly claim a percentage of equity in the start-up firm, they often have a say in the way firm is managed. For startups with non-management expertise, this can be an added benefit.

Human Resources – To team up with the best talent in startup firms, venture capital firms mostly offer consultants specialists in hiring. It helps start up firm avoid the pitfalls of recruiting wrong people for their company.

Additional Resources – There are myriads of legal matters, tax and payroll matters that a startup has to struggle with. It is quite normal for a venture capital firm to take interest in offering such resources due to their vested interest in the success of the company.

Synopsis

Nonetheless, this type of funding is not accurate for every startup, several start up firms acquiring venture capital are able to thrive and turn into giants in their respective segments.  The companies having high growth potential like electronics manufacturers, agribusinesses, green technologies, and other high-tech ventures are mostly witnessed performing well with venture capital funding. Before deciding if venture capital is right for you, ensure considering what to expect out of it.

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