Sources of Supply of Venture Capital in India
In pre-independence period, Managing Agents
acted)8 venture capitalists. They provided risk finance to meet the working capital and fixed capital needs. They also provided funds for expansion of ventures and their modernisation. They were also providing management skills for new ventures, By investing they build goodwill for the firms and created confidence among the public to invest in firms. Due to the good image and popularity of Managing Agents, the public issues of the venture firms have been successful. Sometimes they tried to liquidate a part. of their investments The idea of venture capital gained popularity only during post-independence period. In the last five decades, after earning a considerable capital gain.
The major sources of supply of venture capital in
1. Financial Institutions-In the beginning, the all india Financial Institutions started their venture capital funds by diverting a small part of their available funds for investment in venture capital activities. Later on, these All India sidiaries to promote venture capital funds. These are IFC’s Financial Institutions created their asset management subSmall Venture Capital Limited; ICICI’s Technology DevelopRisk Capital and Technology Finance Corporation; SIDBI’s nient and Information Company of India Limited; IDBI’s Risk Capital Fund, and UTI’s Venture Capital Fund. State-level financial institutions have also contributed to venture capital financing. At present, 9 state Financial Institutions have Board of India (SEBI). got their Venture Funds registered with Securities Exchange
2. Semi-Government Institutions-The Government
of India issued Venture Capital Guidelines in November, 1988.These guidelines authorized all India Financial Institutions, Commercial Banks and their subsidiaries to launch venture capital companies. ICICI in 1988 formed Technology Development and Investment Corporation of India. This corporation managed various schemes of venture capital financing on commercial lines. Venture capital activities were also started by Can bank Financial Services Limited which is a subsidiary of Canara Bank.
3. State Governments-The State Governments have also realized the significance and role of venture capital in industrial development. There are some venture capital funds which have been promoted by State Governments. A few among them are as follows:
1. Gujrat Venture Capital Limited,
2. Andhra Pradesh Venture Capital Limited,
Other States are also setting up their own Venture Capital Funds with the assistance of All India Financial Institutions.
4. Commercial Banks-To operate on small scale, Canara Bank has sponsored Canbank Venture Capital Fund..Another, Capital Fund was sponsored by a foreign commercial bank. It is named as ‘Investment Funds of ANZ Grindlays Bank PLC. Canfina-VCF is the only bank which has registered its venture fund with SEBI.
5. Private Sector Firms-In India, around 16 private sector funds have been registered with SEBI. The venture capital guidelines issued by Government of India in November, 1988 have allowed private organisations to raise venture capital funds. A number of such funds have been set up by private sector firms. These are as follows:
1.Credit Capital Venture Fund (India) Limited
2.Twentieth Century Corporation Limited
3.Indus Venture Capital Fund
In promoting venture capital funds, several organisations such as Bank of Tokyo, Deutche Bank, FMO Holland, Mafatlal Industrial Ltd.; International Finance Corporation, TT Association Ltd., IDBI, IFCI, ICICI, UTI, LIC, GIC.