VENTURE CAPITAL FINANCING BY VCFs & FVCIs: A STUDY WITH REFERENCE TO SECTORAL FINANCING IN INDIA

Venture capital is a way of financing swift growing private companies who are in their pubescent phase and require support in the form of money and corporate guidance. Venture capital financiers (VCFs) are ready to take risks and invest money in companies which are still making efforts to establish themselves in the market but because of the novelty of their ideas and innovations in their field of business they are capable of earning high returns in near future. Therefore VCFs and FVCIs are not only a source of funds for newly established private companies but also a means of encouraging business innovations. The Government of India has made the SEBI as nodal regulator for domestic and overseas venture capital financiers in India for hassle free flow of venture capital. The present paper is divided into four parts. Firstly, the Indian scenario, policy support and the SEBI's role for the growth and development of venture capital financing activities has been covered. Secondly, the number of VCFs and FVCIs registered with SEBI and the details of cumulative investments made by them during the period of analysis has been discussed. Thirdly, the industry-wise cumulative investments made in India by VCFs and FVCIs together and alone were examined. In order to capture the trend precisely the cumulative investments made by VCFs and FVCIs in various industries have been regressed on time. With a view to analyse whether there is a significant difference between various industries respect to investments made by VCFs and FVCIs over the years of the study period, ANOVA: Two-Factor without replications has been performed. Fourthly, the problems of venture capital financing in India were examined. Lastly, few suggestions were offered for further strengthening of these activities in India.