Today’s venture capitalists are more apt to invest outside of their own markets than ever before. A recent study by the National Venture Capital Association found that only 17 percent of American venture capitalists plan to increase their investments in the U.S. over the next three years. These American VCs are instead turning to Asia and India for greater returns on their investments.
With India becoming a viable playing field for venture capitalists and entrepreneurs alike, starting a business and securing venture capital - a type of private equity provided to start-up companies with high-growth potential - are becoming less tedious and frustrating processes. Through equity financing, or stock issuing, entrepreneurs don’t have to worry about making monthly debt payments to banks, and instead share part ownership of their company in exchange for capital.
Venture capitalists can invest anywhere from Rs.10,000 up to the billions, expecting a return of up to 30% over a five to ten year period. At the earliest stage of investment, this funding is called seed capital, covering initial marketing, developing and manufacturing expenses.
After several years, even if the business has not yet turned a profit, the company can seek working capital to further expand its line of products, operations, inventories and technologies. When the company or firm has matured, bridge financing allows the company to go public and investors can restructure stockholder positions and possibly exit their agreement (also known as an “exit strategy”).
Members of the India Investment Network can connect with potential angel investors and generate venture capital for their business.