INTRODUCTION:-

Venture capital is available for investment, in an enterprise that offers the profitability of profit along with the possibilities of loss. Venture capital is for the firms who can not convince public to with the idea they have. Venture capitalist may be individual or institution or partnership firm who are financially strong.

Venture capital is an investment in the form of equity, quasi-equity and sometimes debt straight or conditional, made in new or untried concepts, promoted by a technically or professionally qualified entrepreneur.

The term venture capital comprises of two words that is “Venture” and “Capital”. Venture is a course of processing the outcome of which is uncertain but which is attended the risk or danger of “Loss”. “Capital” means recourses to start an enterprise. To connote the risk and adventure of such a fund, the generic name venture capital was coined.

In the venture capital entrepreneurs have new ideas, products, or services, and intended to start a small business. But all of they can not go for public financial market because, it is very difficult to convenience investor. In the initial stages they should depend on private equity for their investment and growth needs. Venture capital funds, Private equity funds and angel investors all these are private equity funds, but have difference on the amount required to be raised from these three.

The SEBI has defined the Venture Capital Fund in its Regulation 1996 as a fund established in the form of a company or trust which raises money through loans, donation, and issue of securities or units as the case may be and makes or proposes to make investments in accordance with the regulations.

ORIGIN OF VENTURE CAPITAL

The concept of venture capital originated in the USA during the nineteenth and early twentieth centuries when the European investors along with American natives were involved in the backing of construction of new industries such as rail-roads, oil and glass. In the 1946, the American Research and Development was formed as the first venture organization which financed nearly for 11 years about 100 companies and made 35 times its investment.

Perhaps the most famous legend of them all is Apple Computer, which started out in the US in 1977 with capital provided by an obscure venture capital firm, Arthur Rock & Company.

Venture capital funding in India was started at the initiative of the government, when IDBI established its first venture capital fund in 1987. Before liberalization most of the focus of entrepreneurs was in building empires- large size companies, with little or no competence in terms of technology. A large herd of entrepreneurs have entered knowledge and technology intensive and IT-related industries.

THE GROWTH OF VENTURE CAPITAL IN INDIA

In the present scenario venture capital grow very fast and involved in high degree of risk in expectation of earning high rate of return.

Table 1 shows the total investment in India from 2004-2007. Three city regions—Bangalore (38 percent), Mumbai (21 percent), and Chennai (14 percent)—attract the largest investment, when Delhi (11 percent), Hyderabad (8 percent), and Pune (5 percent) are included, than these six cities account for an even greater percentage of overall VC investment. The most technology-oriented city Bangalore, have received approximately 40 percent of all Venture Capital investment. The second largest recipient is Mumbai.

Table 1: Venture Capital Investments in India by City, 2004–2007
(more than 5 investments per city)

Table 2 shows the sector and market wise total investment in India from 2004-2007. Indian firms are internationally oriented (73 percent); only 27 percent focus on the domestic market. With respect to sector concentration, VC investing in India favors the services sector (46 percent) and software (13 percent).

Table 2: VC Investments in India by Sector and Market, 2004–2007.
* Domestic firms are identified as those that made no apparent attempt to serve overseas markets.

Top Venture Capitalists in India by Investments

This research also explains the list of  top venture capitals based on number of investments, value of their investments and total funds raised by them from 2005-2009.

Number of Investments

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