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.
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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