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We at GVFL are always open to fresh
ideas from budding entrepreneurs. If you have a smart idea but
do not know how to implement it and are looking for funds and
guidance, then we are the people for you. Anybody with a sound
business proposition can approach us and we assure you that
we will take the requisite action in as short a time as possible.
Eligibility criteria:
GVFL has primarily focused on financing companies in the SME
segment. We continue with that practice. If you have the technology
and want to implement it commercially, you meet our eligibility
criteria.
Stages of Funding:
GVFL is a true venture capital company, focusing on high-risk,
and start-up ventures. Our area of expertise is the first stage
of funding, when a venture is just taking off.
Sectors:
The technology segment is our forte – our focus is on
companies in the IT sector. We are also taking up biotechnology
as our future focus area.
How to approach:
You can submit you business plan on-line come and meet us personally.
Executive summary: Please attach a profile of your company/business
plan and explain the salient points at length.
Role
of GVFL post-investment:
GVFL believes that the role of a venture capitalist extends
far beyond just making an investment. Our job does not end with
making an investment; it really commences post-investment. We
handhold our investee companies and value-add to them by constant
monitoring and by providing them crucial inputs on how best
to manage their ventures. These could range from suggestions
on how to revise market strategies, when (and if) to change
management, develop new products, go for acquisitions and alignments
and the like.
What is Venture Capital:
Venture Capital is a form of “risk capital”. In
other words, capital that is invested in a business where there
is a substantial element of risk relating to the future creation
of profits and cash flows. Risk capital is invested as shares
(equity) rather than as a loan and the investor requires a higher
“rate of return” to compensate him for his risk.
Venture capital provides long-term, committed share capital,
to help unquoted companies grow and succeed. If an entrepreneur
is looking to start-up, expand, buy-into a business, buy-out
a business in which he works, turnaround or revitalize a company,
venture capital could help do this. Obtaining venture capital
is substantially different from raising debt or a loan from
a lender. Lenders have a legal right to interest on a loan and
repayment of the capital, irrespective of the success or failure
of a business. As a shareholder, the venture capitalist’s
return is dependent on the growth and profitability of the business.
This return is generally earned when the venture capitalist
“exits” by selling its shareholding when the business
is sold to another owner.
What kind of businesses
are attractive to venture capitalists:
Venture capitalists prefer to invest in “entrepreneurial
businesses”. This does not necessarily mean small or new
businesses. Rather, it is more about the investment’s
aspirations and potential for growth, rather by current size.
Such businesses are aiming to grow rapidly to a significant
size. As a rule of thumb, unless a business can offer the prospect
of significant turnover growth within five years, it is unlikely
to be of interest to a venture capital firm. Venture capital
investors are only interested in companies with high growth
prospects, which are managed by experienced and ambitious teams
who are capable of turning their business plan into reality.
What is involved in the investment process:
The investment process, from reviewing the business plan to
actually investing in a proposition can take a venture capitalist
anything from one month to one year but typically it takes between
3-6 months. There are always exceptions to the rule and deals
can be done in extremely short time frames. Much depends on
the quality of information provided and made available.
The key stage of the investment process is the initial evaluation
of a business plan. Most approaches to venture capitalists are
rejected at this stage. In considering the business plan, the
venture capitalist will consider several principal aspects: |
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Is the product or service commercially viable? |
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Does the company have potential for sustained growth? |
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Does management have the ability to exploit this potential
and control the company through the growth phases? |
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Does the possible reward justify the risk? |
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Does the potential financial return on the investment
meet their investment criteria? |
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Making the investment:
To support an initial positive assessment of your business
proposition, the venture capitalist will want to assess
the technical and financial feasibility in detail. External
consultants are often used to assess market prospects
and the technical feasibility of the proposition, unless
the venture capital firm has the appropriately qualified
people in-house. Chartered accountants are often called
on to do much of the due diligence, such as to report
on the financial projections and other financial aspects
of the plan. These reports often follow a detailed study,
or a one or two-day overview may be all that is required
by the venture capital firm. They will assess and review
the following points concerning the company and it management: |
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Management information systems |
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Forecasting techniques and accuracy of past forecasting |
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Assumptions on which financial assumptions are based |
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The latest available management accounts, including
the company’s cash / debtor positions |
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Bank facilities and leasing agreements |
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Pension funding |
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Employee contracts, etc |
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The due diligence review aims to support or contradict
the venture capital firm’s own initial impressions
of the business plan formed during the initial stage.
References may also be taken up on the company (eg. with
suppliers, customers and bankers).
In a nutshell Venture capital is professionally managed
investment capital targeted at new and emerging companies
in which investments have the potential to yield extraordinary
returns. It is defined as independently managed, dedicated
pool of capital that focuses on equity-linked investments
in privately held, high-growth companies.
Difference
between VC and private equity:
Private equity refers to equity or quasi-equity investments
in high-growth companies and includes buyouts, mezzanine
financing, privatization and public as well as private
deals. The private equity asset class includes venture
capital, buyouts, and mezzanine investment activity. While
venture capital focuses on investing in private, young,
fast growing companies, private equity players largely
provide mezzanine or bridge funding. |
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