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035 _a.b11678148
099 9 _aAIT RSPR no.SM-97-19
100 1 _aDutta, Shantanu
245 1 0 _aDecision making practices of venture capital firms in a developing country context
260 _aBangkok :
_bAsian Institute of Technology,
_c1997
300 _a119 p. :
_bill.
490 1 _aResearch studies project report ;
_vno. SM-97-19
500 _aA research study submitted in partial fulfilment of the requirements for the degree of Master of Business Administration.
502 _aResearch Studies Project Report (M.B.A.) - Asian Institute of Technology, 1997
520 _aThe notion of Venture Capital is not very old in developing Asian Countries, viz. India. In the initial phase of venture capital activity, Venture Capital Firms (VCFs) faced various constraints. Even now they have to encounter new challenges which can be attributed to the inherent risks of venture capital activity. This study provides evidence of venture capital activity development process in some selected Indian Companies. These Venture Capital Firms (VCFs) have set their own vision, fund raising strategy, marketing strategy, risk assessment procedure and valuation methodologies. Decision making process is mainly subjective in nature, although it is supported by qualitative and quantitative analysis; and the process depends heavily on the expertise of management. To reduce investment risk, currently VCFs in India are shifting their focus from high-tech firms· to growth companies with good track record. On the other hand, for investee companies, venture capital is relatively a new source of equity capital in Indian context. Presently there are many entrepreneurs seeking venture capital fund in India. The entrepreneurs attribute the success of their business to good management team, availability of finance at right point of time, and an assured market preferably at home. As per the contribution of venture capital firm, most of the investee companies feel that, except financial help, contribution of VCF is not critfoal. However they accept that presence of VCF helps them in fund from other financial institutions, to get information about other investee companies, and to find resource persons in various specialised fields like marketing? product technology, finance etc. In the decision making process Venture Capital Firms put utmost importance to risk assessment of project. So far only 15-20% of the assisted projects have become successful although VCFs carry out rigorous assessment before investment. Hence risk assessment of project needs more attention. In this study risks involved in a project are categorised as Promoter risk, Product risk, Technological risk, Market risk, Financial risk, organisational risk, strategy risk and Environmental risk. However to carry out overall risk assessment of the project a model has been developed based on the experience of VCFs management team and their real practices. The major stages in risk assessment process are identified as Receiving project proposal, Assessment of promoter, Investigation of soundness of idea, Assessment of product I Technology, Assessment of market, Financial projection and assessment of financial risk and assessment of implementation risk. However, significance of each stage depends on the nature of project and decision making process is influenced ·· by the subjective judgment of VCF management team. For valuation process, Indian companies follow mainly PIE ratio method and Discounted Cash Flow Analysis. Figures obtained from different model act as guideline and the valuation process requires judgment of management.
650 1 0 _aVenture capital
_xDeveloping countries
700 1 _aGupta, Joyti,
_eChairperson
700 1 _aPandey, Indra M.,
_eExamination Committee
700 1 _aPaul, Himangshu,
_eExamination Committee
710 2 _aFrench Government,
_eScholarship donor
810 2 _aAsian Institute of Technology.
_tResearch studies project report ;
_vno. SM-97-19
856 _3Full-Text
_uhttp://203.159.5.9/ait-thesis/detail.php?q=B13402
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