S.R.

LUTHRA INSTITUTE OF MANAGEMENT

CLASS: S.Y.MBA (3rd Semester)

SUBJECT: MANAGEMENT OF FINANCIAL SYSTEM

TOPIC:Examples of venture capital

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INTRODUCTION:
Among the various financing options entrepreneurs can turn to when starting a new company is venture capital. Venture capital is money that is given to help build new startup firms that often are considered to have both high-growth and high-risk potential. These companies generally center on health care or new technology, including things such as software, the Internet and networking. In addition,a new breed of venture capital firms has recently formed to focus solely on investing in socially responsible companies. Entrepreneurs often turn to venture capitalists for money because their company is so new, unproven and risky that more traditional forms of financing, such as through banks, aren't readily available. Unlike other forms of financing where entrepreneurs are only required to pay back the loan amount plus interest, venture capital investments most commonly come in exchange for ownership shares in the company to ensure they have a say in its future direction. Not all venture capital investments take place when a company is first being founded. Venture capitalists can provide funding throughout the various stages of a company's progression. Research from the National Venture Capital Association revealed that in 2010, venture capitalists invested approximately $22 billion into nearly 2,749 companies, including 1,000 of which received funding for the first time. Among the more famous companies to receive venture capital during their startup periods are Apple, Compaq, Microsoft and Google.

LIST OF VENTURE CAPITAL COMPANIES IN INDIA

Accel Partners India Artheon Ventures Artiman Ventures August Capital Partners Blue Run Ventures DFJ India Epiphany Ventures

Helion Venture Partners IFCI Venture Capital Funds India Innovation Investors Infra Co Asia Development Ltd. Inventus (India) Advisory Company JAFCO Asia Netz Capital Nexus India Capital Ojas Venture Partners Reliance Venture SAIF Partners Sequoia Capital Tuscan Ventures Trident Capital Veddis Ventures Venture East

EXAMPLES
1) Aura herbal textiles ltd Aura set up its plant in Ahmedabad with seed
funding from GVFL Limited Levis has started sourcing organic fabric from an Ahmedabad-based firm, Aura Herbal Textiles, for its herbal T-shirts. Aura Herbal was incubated at Indian Institute of Management-Ahmedabads Centre for Innovation, Incubation and

Entrepreneurship. We are working with Levis to provide organic material for their herbal T-shirts. The company is likely to launch the product in Europe and US this year. Fabrics are manufactured without involving chemicals at any step, says Arun Baid, who started the company in 2002 with wife Sonal. When contacted,Levis,however,refused to comment on the development. Aura also plans to introduce herbal undergarments in India this year besides foraying into retail business. In conventional dyeing, around 8,000 chemicals are used to dye fabric. Some chemicals may affect skin adversely.But,we aim to add eco-friendly products not just to earn money but also to prevent global warming and pollution related to

textiles, says Baid,who already has over 500 clients in Europe,US,Australia and besides being associated with the Taj Spa Hotels supplying entire bath range, spa collection and home textiles. Aura set up its plant in Ahmedabad with seed funding from GVFL Limited,a state government-promoted venture capital fund.The company sources herbs and other raw materials through made-to-order contracts with farmers in Madhya Pradesh and parts of South India. Our target turnover is Rs 4 crore this year and we aim to double it over the next couple of years, says Baid, who has plans to enter the capital market in a few years time.

2) GVFL invests in Sahajanand Laser Technology.

GVFL, Indias pioneer Venture Capital Company today announced an investment of Rs. 40 million in Sahajanand Laser Technology Limited, Indias one of the largest manufacturers of Laser Systems for Diamond Industry. GVFL will make the investment from its Rs. 296 million Gujarat IT Fund. Sahajanand Laser Technology based in Gandhinagar will be utilizing the funds in the expansion of their range of high end laser machines. Picking up innovative technology companies early and nur turing them to leadership is GVFLs forte. Sahajanand Laser pioneered the laser technology for diamond industry in India. With India emerging as the global destination for diamond cutting and adding value to small and very small diamond roughs, Sahajana nd has the potential to become a definite winner with GVFLs effective nurturing and constant support, says Mr. Vishnu Varshney, CEO of GVFL Ltd. Sahajanand Laser is the 61 st investment being made by GVFL in innovative technology companies across India. Sahajanand Laser is the first Indian Company to introduce a Fiber Laser Machine in India. We have ushered a revolution in the development of laser systems for diamond industry and feel that with GVFLs support we can kick -start our expansion growth exponentially, adds Mr. Arvind Patel, Managing Director of Sahajanand Laser. Mr. Patel is a renowned technologist known for his inventions in the field of Laser Machines. He has several patents to his credit and has also received many national awards for his innovative laser technology.

3) Groupon is a deal-of-the-day website that features discounted gift certificates

usable at local or national companies. Groupon was launched in November 2008, and the first market for Groupon was Chicago, followed soon thereafter by Boston, New York City, and Toronto. By October 2010 Groupon served more than 150 markets in North America and 100 markets in Europe, Asia and South America and had 35 million registered users.[4][5][6][7] Groupon outgrew the campaign website ThePoint.com in November 2008. Its name blends group and coupon. Groupon's first deal was a half -price offer for pizzas for the restaurant on the first floor of its building in Chicago.[ The idea for Groupon was created by now-ousted CEO and Pittsburgh native Andrew Mason. The idea subsequently gained the attention of his former employer, Eric Lefkofsky, who provided $1 million in "seed money" to develop the idea. In April 2010, the company was valued at $1.35 billion. According to a December 2010 report conducted by Groupon's marketing association and reported in Forbes Magazine and the Wall Street Journal, Groupon was "projecting that the company is on pace to make $1 billion in sales faster than any other business, ever". However, a report from Forrester Research in October 2011 suggested that the Groupon business model was a "disaster" and that the firm had become an example of "how fast an Internet darling can fall. In its first earnings release as a public company, Groupon reported a 2011 fourth-quarter loss of $9.8 million on an adjusted basis, disappointing investors. Additional investor concern arose after the company restated 2011 revenues downward in March 2012.

4) Alan Patricof is one of the most experienced and successful VCs around. He
was one of the ounders of Apax Partners which is one of the most successful venture and private equity companies in European history and his investment successes include Apple Computer and AOL. Most recently he founded an early stage venture fund called Greycroft Partners based in New York and they have just closed their second fund. Raising the money for that second fund was hard work, even for a man with Alans experience, and he has written at length on exactly what they had to do on Business Insider. The whole post is well worth a read. Im going to bring out three highlights.

5) Silicon Valley-based VC firm Khosla Ventures (KV) has received $15 million of
funding from Azim Premji, the Chairman of Indian technology company Wipro, according to Indias Economic Times. Khosla Ventures was founded by Vinod Khosla, who was a co-founder of Sun Microsystems and a former general partner of venture capital firm Kleiner Perkins Caufield & Byers. In 2009, KV completed fundraising for two cleantech funds, raising $1.1 billion. Those vehicles were reportedly gained notable financial backers including former British Prime Minister Tony Blair and Microsoft founder Bill Gates.

KV manages two funds, one for seed investments and a main fund. Both maintain interests in high-tech industries ranging from mobile to alternative energy to materials.

6) Wipro buys Spectramind for $93 milllion, 01 August 2002

BANGALORE: Software company Wipro said on Thursday it has completed a $93- million deal to acquire fast-growing back-office service firm Spectramind. Wipro, which aims to become a one-stop shop combining software writing with back-office services offered over high-speed telecommunication links, last month announced it would buy 66 per cent of Spectramind for $83 million, lifting its total stake to 90 per cent.With more than 2,700 employees, Spectramind offers backoffice services including payroll and bill processing to corporate clients, most of whom are boosting outsourcing to cut costs. The buying of the business process outsourcing (BPO) firm is the largest of its kind in the fast-growing Indian information technology enabled services sector. "With this strategic acquisition, Wipro Technologies, the global IT services division of Wipro, along with Spectramind will offer integrated solutions for all BPO needs of clients worldwide," New York-listed Wipro said in a statement. Wipro, with a market capitalization of around $6 billion, first paid $10 million for a 24 per cent stake in Spectramind, which expects sales to grow four times to $45 million in the year to March 2003.

Billionaire Azim Premji, who owns more than 80 per cent of Wipro, funded the purchase from the company's cash chest, which stood at $354 million on June 30.

7) Fourcee Infrastructure Raises Rs 50cr From Mayfield, SIDBI Venture march

2010 Fourcee Infrastructure Equipment Pvt Ltd has raised Ra 50cr from Mayfield India fund and SIDBI Venture Capital Ltd. The company will use the funds to expand tank terminals, add more containers and to strengthen its infrastructure. Forcee Infrastructure, incorporated in 2002, is focused on providing end-to-end logistics solutions for liquid cargo through road and railways using its own specialised designed containers. Mayfield Fund is a venture capital firm with over $2.8bn under management. Mayfield India focuses on companies in sectors like consumer, specialty retail, technology & technology enabled services, infrastructure ancillaries and agri related companies. SIDBI Venture Capital Ltd. is a wholly owned subsidiary of Small Industries Development Bank of India. The fund's latest investments are Associated Powercon Equipments India Pvt. Ltd., DigiBee Microsystems Ltd, Centaur Pharmaceuticals among others.

BIBLIOGRAPHY

http://articles.timesofindia.indiatimes.com/2011-02-15/ahmedabad/28542 102_1_herbal-dyeing-textiles-chemicals http://www.indiape.com/2007/10/25/gvfl-invests-in-sahajanand-lasertechnology http://www.theequitykicker.com/2010/07/19/raising-money-for-a-venturecapital-fund-is-a-bit-like-raising-money-for-a-startup http://www.avcj.com/avcj/news/2071716/khosla-ventures-usd15-million-wiprochairman http://venturebeat.com/2013/08/30/drivewise-ly-raises-1-3m-to-score-yourdriving-with-smartphones/ http://venturebeat.com/2013/08/30/google-acquires-wimm-labs/