case study on venture capital financing in india

About Stanford GSB

• The Leadership
• Dean’s Updates
• School News & History
• Commencement
• Business, Government & Society
• Centers & Institutes
• Center for Entrepreneurial Studies
• Center for Social Innovation
• Stanford Seed

About the Experience

• Learning at Stanford GSB
• Experiential Learning
• Guest Speakers
• Entrepreneurship
• Social Innovation
• Communication
• Life at Stanford GSB
• Collaborative Environment
• Activities & Organizations
• Student Services
• Housing Options
• International Students

Full-Time Degree Programs

• Why Stanford MBA
• Academic Experience
• Financial Aid
• Why Stanford MSx
• Research Fellows Program
• See All Programs

Non-Degree & Certificate Programs

• Executive Education
• Stanford Executive Program
• Programs for Organizations
• The Difference
• Online Programs
• Stanford LEAD
• Stanford Innovation and Entrepreneurship Certificate
• Seed Transformation Program
• Aspire Program
• Seed Spark Program
• Faculty Profiles
• Academic Areas
• Awards & Honors
• Conferences

Faculty Research

• Publications
• Working Papers
• Case Studies

Research Hub

• Research Labs & Initiatives
• Business Library
• Data, Analytics & Research Computing
• Behavioral Lab

Research Labs

• Cities, Housing & Society Lab
• Golub Capital Social Impact Lab

Research Initiatives

• Corporate Governance Research Initiative
• Corporations and Society Initiative
• Policy and Innovation Initiative
• Rapid Decarbonization Initiative
• Stanford Latino Entrepreneurship Initiative
• Value Chain Innovation Initiative
• Venture Capital Initiative
• Career & Success
• Climate & Sustainability
• Corporate Governance
• Culture & Society
• Finance & Investing
• Government & Politics
• Leadership & Management
• Markets & Trade
• Operations & Logistics
• Opportunity & Access
• Organizational Behavior
• Political Economy
• Social Impact
• Technology & AI
• Opinion & Analysis
• Email Newsletter

Welcome, Alumni

• Communities
• Digital Communities & Tools
• Regional Chapters
• Women’s Programs
• Identity Chapters
• Find Your Reunion
• Career Resources
• Job Search Resources
• Career & Life Transitions
• Programs & Services
• Career Video Library
• Alumni Education
• Research Resources
• Volunteering
• Alumni News
• Class Notes
• Alumni Voices
• Contact Alumni Relations
• Upcoming Events

Admission Events & Information Sessions

• MBA Program
• MSx Program
• PhD Program
• Alumni Events
• All Other Events
• Operations, Information & Technology
• Classical Liberalism
• The Eddie Lunch
• Accounting Summer Camp
• Videos, Code & Data
• California Econometrics Conference
• California Quantitative Marketing PhD Conference
• California School Conference
• China India Insights Conference
• Homo economicus, Evolving
• Political Economics (2023–24)
• Scaling Geologic Storage of CO2 (2023–24)
• A Resilient Pacific: Building Connections, Envisioning Solutions
• Adaptation and Innovation
• Changing Climate
• Civil Society
• Climate Impact Summit
• Climate Science
• Corporate Carbon Disclosures
• Earth’s Seafloor
• Environmental Justice
• Operations and Information Technology
• Organizations
• Sustainability Reporting and Control
• Taking the Pulse of the Planet
• Urban Infrastructure
• Watershed Restoration
• Junior Faculty Workshop on Financial Regulation and Banking
• Ken Singleton Celebration
• Quantitative Marketing PhD Alumni Conference
• Presentations
• Theory and Inference in Accounting Research
• Stanford Closer Look Series
• Quick Guides
• Core Concepts
• Journal Articles
• Glossary of Terms
• Faculty & Staff
• Researchers & Students
• Research Approach
• Charitable Giving
• Financial Health
• Government Services
• Workers & Careers
• Short Course
• Adaptive & Iterative Experimentation
• Incentive Design
• Social Sciences & Behavioral Nudges
• Bandit Experiment Application
• Conferences & Events
• Get Involved
• Reading Materials
• Teaching & Curriculum
• Energy Entrepreneurship
• Faculty & Affiliates
• SOLE Report
• Responsible Supply Chains
• Current Study Usage
• Pre-Registration Information
• Participate in a Study

The Evolution of the Venture Capital Market in India

The case examines the early-stage venture capital industry in India, in 2004. The study is focused on technology-based early-stage venture capital, as opposed to private equity type investments. Using the past success of Draper International Fund as background, the case briefly visits the history and evolution of venture capital in India and current market opportunities. Next, it presents a basic framework for examining a venture capital ecosystem, and analyzes the promise of the Indian venture capital market in its context. The emergence of a strong Indo-US corridor is also highlighted, and comparisons are made with Silicon Valley, California, and Israel. This case can be used to illustrate the entry strategy options for foreign venture capitalists into the Indian market, evolving trends and investible opportunities in India, and for a basic framework of the ecosystem of a venture capital market.

• See the Current DEI Report
• Supporting Data
• Research & Insights
• Share Your Thoughts
• Search Fund Primer
• Affiliated Faculty
• Faculty Advisors
• Louis W. Foster Resource Center
• Defining Social Innovation
• Impact Compass
• Global Health Innovation Insights
• Faculty Affiliates
• Student Awards & Certificates
• Changemakers
• Dean Jonathan Levin
• Dean Garth Saloner
• Dean Robert Joss
• Dean Michael Spence
• Dean Robert Jaedicke
• Dean Rene McPherson
• Dean Arjay Miller
• Dean Ernest Arbuckle
• Dean Jacob Hugh Jackson
• Dean Willard Hotchkiss
• Faculty in Memoriam
• Stanford GSB Firsts
• Certificate & Award Recipients
• Dean’s Remarks
• Keynote Address
• Teaching Approach
• Analysis and Measurement of Impact
• The Corporate Entrepreneur: Startup in a Grown-Up Enterprise
• Data-Driven Impact
• Designing Experiments for Impact
• Digital Business Transformation
• The Founder’s Right Hand
• Marketing for Measurable Change
• Product Management
• Public Policy Lab: Financial Challenges Facing US Cities
• Public Policy Lab: Homelessness in California
• Lab Features
• Curricular Integration
• View From The Top
• Formation of New Ventures
• Managing Growing Enterprises
• Startup Garage
• Explore Beyond the Classroom
• Stanford Venture Studio
• Summer Program
• Workshops & Events
• The Five Lenses of Entrepreneurship
• Leadership Labs
• Executive Challenge
• Arbuckle Leadership Fellows Program
• Selection Process
• Training Schedule
• Time Commitment
• Learning Expectations
• Post-Training Opportunities
• Who Should Apply
• Introductory T-Groups
• Leadership for Society Program
• Certificate
• 2023 Awardees
• 2022 Awardees
• 2021 Awardees
• 2020 Awardees
• 2019 Awardees
• 2018 Awardees
• Social Management Immersion Fund
• Stanford Impact Founder Fellowships and Prizes
• Stanford Impact Leader Prizes
• Social Entrepreneurship
• Stanford GSB Impact Fund
• Economic Development
• Energy & Environment
• Stanford GSB Residences
• Environmental Leadership
• Stanford GSB Artwork
• A Closer Look
• California & the Bay Area
• Voices of Stanford GSB
• Business & Beneficial Technology
• Business & Sustainability
• Business & Free Markets
• Business, Government, and Society Forum
• Second Year
• Global Experiences
• JD/MBA Joint Degree
• MA Education/MBA Joint Degree
• MD/MBA Dual Degree
• MPP/MBA Joint Degree
• MS Computer Science/MBA Joint Degree
• MS Electrical Engineering/MBA Joint Degree
• MS Environment and Resources (E-IPER)/MBA Joint Degree
• Academic Calendar
• Clubs & Activities
• LGBTQ+ Students
• Military Veterans
• Minorities & People of Color
• Partners & Families
• Students with Disabilities
• Student Support
• Residential Life
• Student Voices
• MBA Alumni Voices
• A Week in the Life
• Career Support
• Employment Outcomes
• Cost of Attendance
• Knight-Hennessy Scholars Program
• Yellow Ribbon Program
• BOLD Fellows Fund
• Application Process
• Loan Forgiveness
• Contact the Financial Aid Office
• Evaluation Criteria
• GMAT & GRE
• English Language Proficiency
• Personal Information, Activities & Awards
• Professional Experience
• Letters of Recommendation
• Optional Short Answer Questions
• Application Fee
• Reapplication
• Deferred Enrollment
• Joint & Dual Degrees
• Entering Class Profile
• Event Schedule
• Ambassadors
• New & Noteworthy
• Ask a Question
• See Why Stanford MSx
• Is MSx Right for You?
• MSx Stories
• Leadership Development
• Career Advancement
• Career Change
• How You Will Learn
• Admission Events
• Personal Information
• Information for Recommenders
• GMAT, GRE & EA
• English Proficiency Tests
• After You’re Admitted
• Daycare, Schools & Camps
• U.S. Citizens and Permanent Residents
• Requirements
• Requirements: Behavioral
• Requirements: Quantitative
• Requirements: Macro
• Requirements: Micro
• Annual Evaluations
• Field Examination
• Research Activities
• Research Papers
• Dissertation
• Oral Examination
• Current Students
• Education & CV
• International Applicants
• Statement of Purpose
• Reapplicants
• Application Fee Waiver
• Deadline & Decisions
• Job Market Candidates
• Academic Placements
• Stay in Touch
• Faculty Mentors
• Current Fellows
• Standard Track
• Fellowship & Benefits
• Group Enrollment
• Program Formats
• Developing a Program
• Diversity & Inclusion
• Strategic Transformation
• Program Experience
• Contact Client Services
• Campus Experience
• Live Online Experience
• Silicon Valley & Bay Area
• Digital Credentials
• Faculty Spotlights
• Participant Spotlights
• Eligibility
• International Participants
• Stanford Ignite
• Frequently Asked Questions
• Founding Donors
• Location Information
• Participant Profile
• Network Membership
• Program Impact
• Collaborators
• Entrepreneur Profiles
• Company Spotlights
• Seed Transformation Network
• Responsibilities
• Current Coaches
• How to Apply
• Meet the Consultants
• Meet the Interns
• Intern Profiles
• Collaborate
• Research Library
• News & Insights
• Program Contacts
• Databases & Datasets
• Research Guides
• Consultations
• Research Workshops
• Career Research
• Research Data Services
• Course Reserves
• Course Research Guides
• Material Loan Periods
• Fines & Other Charges
• Document Delivery
• Interlibrary Loan
• Equipment Checkout
• Print & Scan
• MBA & MSx Students
• PhD Students
• Other Stanford Students
• Faculty Assistants
• Research Assistants
• Stanford GSB Alumni
• Telling Our Story
• Staff Directory
• Site Registration
• Alumni Directory
• Alumni Email
• Privacy Settings & My Profile
• Success Stories
• The Story of Circles
• Support Women’s Circles
• Stanford Women on Boards Initiative
• Alumnae Spotlights
• Insights & Research
• Industry & Professional
• Entrepreneurial Commitment Group
• Recent Alumni
• Half-Century Club
• Fall Reunions
• Spring Reunions
• MBA 25th Reunion
• Half-Century Club Reunion
• Faculty Lectures
• Ernest C. Arbuckle Award
• Alison Elliott Exceptional Achievement Award
• ENCORE Award
• Excellence in Leadership Award
• John W. Gardner Volunteer Leadership Award
• Robert K. Jaedicke Faculty Award
• Jack McDonald Military Service Appreciation Award
• Jerry I. Porras Latino Leadership Award
• Tapestry Award
• Student & Alumni Events
• Executive Recruiters
• Interviewing
• Land the Perfect Job with LinkedIn
• Negotiating
• Elevator Pitch
• Email Best Practices
• Resumes & Cover Letters
• Self-Assessment
• Whitney Birdwell Ball
• Margaret Brooks
• Bryn Panee Burkhart
• Margaret Chan
• Ricki Frankel
• Peter Gandolfo
• Cindy W. Greig
• Natalie Guillen
• Carly Janson
• Sloan Klein
• Sherri Appel Lassila
• Stuart Meyer
• Tanisha Parrish
• Virginia Roberson
• Philippe Taieb
• Michael Takagawa
• Terra Winston
• Johanna Wise
• Debbie Wolter
• Rebecca Zucker
• Complimentary Coaching
• Changing Careers
• Work-Life Integration
• Career Breaks
• Flexible Work
• Encore Careers
• D&B Hoovers
• Data Axle (ReferenceUSA)
• EBSCO Business Source
• Firsthand (Vault)
• Global Newsstream
• Market Share Reporter
• ProQuest One Business
• Student Clubs
• Entrepreneurial Students
• Stanford GSB Trust
• Alumni Community
• How to Volunteer
• Springboard Sessions
• Consulting Projects
• 2020 – 2029
• 2010 – 2019
• 2000 – 2009
• 1990 – 1999
• 1980 – 1989
• 1970 – 1979
• 1960 – 1969
• 1950 – 1959
• 1940 – 1949
• Service Areas
• ACT History
• ACT Awards Celebration
• ACT Governance Structure
• Building Leadership for ACT
• Individual Leadership Positions
• Leadership Role Overview
• Purpose of the ACT Management Board
• Contact ACT
• Business & Nonprofit Communities
• Reunion Volunteers
• Ways to Give
• Fiscal Year Report
• Business School Fund Leadership Council
• Planned Giving Options
• Planned Giving Benefits
• Planned Gifts and Reunions
• Legacy Partners
• Giving News & Stories
• Giving Deadlines
• Development Staff
• Submit Class Notes
• Class Secretaries
• Board of Directors
• Health Care
• Sustainability
• Class Takeaways
• All Else Equal: Making Better Decisions
• If/Then: Business, Leadership, Society
• Grit & Growth
• Think Fast, Talk Smart
• Spring 2022
• Spring 2021
• Autumn 2020
• Summer 2020
• Winter 2020
• In the Media
• For Journalists
• DCI Fellows
• Other Auditors
• Academic Calendar & Deadlines
• Course Materials
• Entrepreneurial Resources
• Campus Drive Grove
• Campus Drive Lawn
• CEMEX Auditorium
• King Community Court
• Seawell Family Boardroom
• Stanford GSB Bowl
• Stanford Investors Common
• Town Square
• Vidalakis Courtyard
• Vidalakis Dining Hall
• Catering Services
• Policies & Guidelines
• Reservations
• Contact Faculty Recruiting
• Lecturer Positions
• Postdoctoral Positions
• Accommodations
• CMC-Managed Interviews
• Recruiter-Managed Interviews
• Virtual Interviews
• Campus & Virtual
• Search for Candidates
• Think Globally
• Recruiting Calendar
• Recruiting Policies
• Full-Time Employment
• Summer Employment
• Entrepreneurial Summer Program
• Global Management Immersion Experience
• Social-Purpose Summer Internships
• Process Overview
• Project Types
• Client Eligibility Criteria
• Client Screening
• ACT Leadership
• Social Innovation & Nonprofit Management Resources
• Develop Your Organization’s Talent
• Centers & Initiatives
• Student Fellowships

Venture Capital, Islamic Finance and SMEs pp 122–147 Cite as

Venture Capital in India: Research Methodology and Findings

• Mansoor Durrani &
• Grahame Boocock  

141 Accesses

Having set out the analytical framework in Chapter 7, this chapter opens with a brief discussion of the methodology adopted for the research programme. This is followed by a summary of the data gathered from the sample as a whole. The sample is then segregated on the basis of certain factors identified in the VC literature, and the data are used to investigate the validity or otherwise of the series of propositions set out in Chapter 7. The chapter concludes with a synopsis of our research findings under the three broad headings of valuation, structuring and monitoring of VC deals, and a brief summary.

• Venture Capitalist
• Fund Manager
• Investee Company
• Prefer Stock
• Islamic Finance

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

This is a preview of subscription content, log in via an institution .

Buying options

• Available as PDF
• Read on any device
• Instant download
• Own it forever
• Compact, lightweight edition
• Dispatched in 3 to 5 business days
• Free shipping worldwide - see info
• Durable hardcover edition

Tax calculation will be finalised at checkout

Purchases are for personal use only

Unable to display preview.  Download preview PDF.

You can also search for this author in PubMed   Google Scholar

Copyright information

© 2006 Mansoor Durrani and Grahame Boocock

About this chapter

Cite this chapter.

Durrani, M., Boocock, G. (2006). Venture Capital in India: Research Methodology and Findings. In: Venture Capital, Islamic Finance and SMEs. Palgrave Macmillan, London. https://doi.org/10.1057/9780230626256_8

Download citation

DOI : https://doi.org/10.1057/9780230626256_8

Publisher Name : Palgrave Macmillan, London

Print ISBN : 978-1-349-51855-5

Online ISBN : 978-0-230-62625-6

eBook Packages : Palgrave Economics & Finance Collection Economics and Finance (R0)

Share this chapter

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Publish with us

Policies and ethics

• Find a journal
• Track your research

To read this content please select one of the options below:

Please note you do not have access to teaching notes, an analysis of timing decision in venture capital staged financing: evidence from india.

Management Research Review

ISSN : 2040-8269

Article publication date: 29 June 2020

Issue publication date: 30 November 2020

Staged financing is a prominent feature of the venture capital investment process. With staged financing, venture capitalists (VCs) may choose to either make an investment or delay it at each round. The purpose of this paper is to investigate the influence of market uncertainty, project-specific uncertainty and agency problems on these decisions.

Design/methodology/approach

The study uses data from Indian firms that received venture capital funding between 2000 and 2017. The duration between funding rounds is analysed using survival analysis. An accelerated failure time model is used to estimate the influence of market uncertainty, project-specific uncertainty and agency problems on the length of time between funding rounds.

VCs delay investment when there are high levels of uncertainty in the market; if market uncertainty increases by 1%, delay in funding increases by more than 6% (almost a month) on average. There is no statistically significant relationship found between the funding duration and project-specific uncertainty. Agency problems motivate VCs to invest sooner. An increase in agency problems results in a reduction of 55% (almost five months) in the length of time before the next funding round.

Practical implications

This study has useful business policy implications. It provides VCs with real option value drivers such as market uncertainty, agency problems, which influence the timing of decisions in staged investment processes. It will help to make the choice between investing and delaying at each round of financing more robust. Further, it is useful for VCs to differentiate between market uncertainty and agency problems against the backdrop of their different implications for staging decisions.

Originality/value

Few studies have examined staging decisions from a real options perspective in the context of a developed economy and very few from a developing economy perspective. This study increases understanding of staging decisions in the Indian context.

• Venture capital
• Uncertainty
• Real options
• Agency problems

Panda, S.N. and Gopalaswamy, A.K. (2020), "An analysis of timing decision in venture capital staged financing: evidence from India", Management Research Review , Vol. 43 No. 12. https://doi.org/10.1108/MRR-09-2019-0424

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

Related articles

We’re listening — tell us what you think, something didn’t work….

Report bugs here

All feedback is valuable

Please share your general feedback

Join us on our journey

Platform update page.

Visit emeraldpublishing.com/platformupdate to discover the latest news and updates

Questions & More Information

Answers to the most commonly asked questions here

• My Shodhganga
• Receive email updates
• Edit Profile

Shodhganga : a reservoir of Indian theses @ INFLIBNET

• Shodhganga@INFLIBNET
• Madurai Kamaraj University
• Department of Commerce

Items in Shodhganga are licensed under Creative Commons Licence Attribution-NonCommercial-ShareAlike 4.0 International (CC BY-NC-SA 4.0).

Interested in blogging for timesofindia.com? We will be happy to have you on board as a blogger, if you have the knack for writing. Just drop in a mail at [email protected] with a brief bio and we will get in touch with you.

Please note:

• TOI will have complete discretion to select bloggers
• TOI's decision in this regard will be final
• There's no remuneration for blogging
• TOI reserves the right to edit all blogs

• Times Evoke
• Entertainment
• Spirituality
• Environment
• Foreign Media

Follow us on

How venture capital financing work in india.

Mayank Mehra

Managing Partner, Sphiticap

The year 2022 has been great for Indian startups raising more than $20.82 Bn in funding in the first eight months. Despite the war in Europe and ever increasing inflation witnessed worldwide, the deal count in the first eight months increased from 948 to 1129. India traditionally has never been a venture capital market, but today, with the startup environment boom, it has become a vital part of the entire process. Venture capital financing in India is about taking on trust, capital and expertise from an investor to fund the potential growth in the hope that the financial returns will come as the business takes off. In India, VC financing is not just about the money; it’s about supporting new business, ideas and innovations that make a difference on the ground and solves a real challenge.

The name of the game has changed. India’s VCs are no longer looking at safe bets; they are now playing a game of high risk and high reward. Most VCs in India today are looking for a small player who can get them big profits and growth. However, investing in a startup is a considerable risk since startups haven’t proven themselves yet and depend more on market conditions than an established firm.

Venture Capital is a form of private institutional investment that involves investing in startups with not so long operating history but a high potential for growth and value creation. VC investments are generally high-risk high-reward investments made against equity stakes in a startup. Venture capitalists generally look for some sort of validation and/or innovative products or service by the startups they consider for investing. One of the main characteristics of Venture investing is that it is not only about investing, rather it often involves mentoring and strategizing of such startups.

Venture capital are privately pooled investment vehicles which pool their money from institutional investors, financial firms, insurance companies, pension funds, HNI’s. Such pools of fund are operated and managed by specialized investment firms. A VC firm work in accordance with their predefined investment thesis/policy which encapsulates various factors they consider before investing in a business. The investors of VC firms invest their money after considering various factors and strategies defined by the firm as a part of its thesis.

Venture Capital firms in India are regulated by SEBI (AIF) Regulations 2012 and are classified as Alternative Investment Funds.

Venture Capital Financing works like any other financing. A business having potential for growth shares its plans with a Venture Capital firms. The firm screens and evaluates various aspects of the business in accordance with its Investment Thesis. If the business fits the thesis the VC firm structures a deal and considers investing.

The stages of VC financing generally involve the following:

Pitch: The startups present their pitch or business plan to the VC firm(s). Startups should research and ensure that the goals and strategies of the VC align with their business and industry. At this stage the investors accept, reject or seek more information pertaining to the business.

Deep dive: This stage is generally arrived at if the VC finds the startups pitch favourable. The investment firm may dive deep into the businesses they find interesting or investible.

Negotiation: If and when a VC firm decides to invest in a business they would structure a deal and share the Term Sheet/memorandum with the startup. This documents outlines the Terms & Conditions along with the quantum of investment and valuation of the business.

Due diligence: Post acceptance of Term Sheet, a comprehensive due-diligence exercise is undertaken by the VC firms to ensure the accuracy and authenticity of the deal and also to ensure good governance.

Definitive documentation: Post successful and satisfactory due diligence final documentations are drafted and shared by the VC firm. This is the final step before infusion of money in the startup, subject to conditions precedent and subsequent as may be laid down during the due-diligence process.

Stages of Venture Capital investing:

During the venture capital process, startups would have to go through multiple stages or rounds of financing, starting with :

Seed Round: This is at an early stage when entrepreneurs build their business plans and need capital for research and development. Angel Investors are more entailed in this round.

Early Stage Round: Once the business model is ready and scalable, it can raise the first round of funding or Series A funding. Moving on, they can go for series B and C.

Late Stage: As the business grows and prepares for an IPO or an M&A, it can raise additional capital later to create perfect market conditions for its previous investors.

Typically, a VC firm participates in all the significant investment rounds to get more equity shares, enhancing the credibility of a startup business. For businesses, it helps lower their risk and spread of work.

Blockchain, Web 3.0, artificial intelligence (AI), robotics, and the Internet of Things (IoT), among other fields like D2C, have seen considerable funds in India in 2022. According to a recent Tracxnreport, early-stage VC investments in India (up to Series A rounds) rose over 28 per cent to $1.50 billion from $1.17 billion a year earlier.

For the past three years, Venture capitalists worldwide have been rushing to have a piece of the booming Indian startup. Therefore, it is an opportune time for the Indian startups to refine their business plans and increase their scope with speed, maturity and profitability in the current market matters, along with a broader market definition.

How do Venture Capital funds make money?

Venture Capital firms are specialized pooling Vehicles pooling in money from sophisticated investors and investing typically in early stage businesses with high growth potentials and innovation at their center.

Venture Funds pool monies from their investors or LP’s in return for share of the gains made by the firm as a part of its investment processes. Venture Capitals do not make money while investing but at the time of successful exit from the startup. A typical VC firms evaluates the growth of a startup at the time of investment to plan successful exit and thus returns. The generally define a point where they will sell for a loss or for a profit.

Ideally Venture Capitals exit a business when it is at its peak but they may improvise their exit strategies at different stages of the business they have invested in. Some of the ways in which Venture Capitals exit a business to realize their returns are as follows:

An initial public offering or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail investors. It is typically underwritten by one or more investment banks, who also arrange for the shares to be listed on one or more stock exchanges. Investors wait for the most optimal time to conduct an IPO to make sure they earn the best possible return.

Secondary market

Secondary market strategy is the one where the venture capitalist sells their share in a secondary market (where investors purchase securities or assets from other investor) to a third-party, usually other venture capitalists. The highlight here is that the third party would be getting the shares at discounted prices if the venture capitalist is in a hurry to exit or take returns.

Share buyback

This is a strategy where the founders of the business buy back the shares from the Venture Capital Firms. While it helps the investor exit a business quickly, it also helps the business by increasing the earnings per share.

Acquisition

Acquisition is when you give up your ownership to the company that buys it from you. In this case, the acquiring company makes a tender offer to all shareholders to purchase their shares, often in cash at a premium over what the investors paid.

Top Comment

{{{short}}} {{#more}} {{{long}}} ... Read More {{/more}}

Start a Conversation

Views expressed above are the author's own.

END OF ARTICLE

Do it right: Arresting, investigating a CM isn’t the issue. But graft probes must be seen to be politically impartial

Chennai Super King: That SC has to remind Ravi to follow the Constitution, underlines how much the guv’s office needs reining in

After Bonds: EBs were a small part of poll funding. And incentives for donors & recipients haven’t changed

About time you knew your real worth

Carnatic musicians are out of tune

Lights, camera, politics and, for some, cut

‘India buying Russian oil is ok, but don’t fund Putin’s war machine…we need more jets, ammo…we can work with Trump’

‘Stepping into a vast sea, unsure of the direction’

Time to slam the brakes on free rural electricity

Not working out: New report shows jobs crisis is the No 1 economic challenge; You wouldn’t know it from election rhetoric

TOI Edit Page,Voices

Bachi Karkaria

Erratica,TOI Edit Page,Tracking Indian Communities

Jug Suraiya

Juggle-Bandhi

Speaking Tree

TOI Edit Page

TOP EDITORIALS

• What a hit film can teach us about saving our hill stations
• A bridge stranger than any fiction
• Eggs Kejriwalled