Venture capital financing differs from traditional or conventional financing in that traditional financiers invest in proven technologies and low-risk companies, while venture capitalists invest in new technologies and high-risk companies. Some of the key differentiators of venture capital can be summarized as follows: Data from the NVCA and PitchBook shows that venture-backed companies attracted $150 billion in 2021, or more than 90% of the total in 2020 – which was already a record. Large and late investments remain the main drivers of solid performance: mega-deals of $100 million or more have already reached a new high. While many universities lament the fact that some professors enrich themselves through their research, keep in mind that most research is funded by the government. From the government`s perspective, that is exactly what its $63 billion in R&D funding is supposed to do. The concept of venture capital comes from the United States. In the meantime, it has become a global concept in the field of risk financing of industrial projects. The development of venture capital in India is still in its infancy and is about ten years old. It is a growing capital market. In fact, risk finance in India is still in a state of evolution. The funds available for the Indian venture capital industry are low. What is the need or relevance of venture capital in India when there are commercial banks and financial institutions that provide funds to small or large industrial enterprises? In developed countries, where there is a highly advanced industrial environment as well as an advanced corporate culture, it is common for entrepreneurs to set up businesses to manufacture new products by obtaining venture capital funds.
On the other hand, in India and other developing countries, this „risk financing” is still in its infancy. Of course, there are a large number of commercial banks and financial institutions in India that provide „traditional” (risk-free) financing mainly to companies that use proven or established technologies with minimal risk. This financing is focused on guarantees and assets. This is a uniform refund of the fixed rate. Depending on the stage of the company, its prospects, the amount invested and the relationship between investors and founders, venture capital firms typically take between 25 and 50% of the ownership of a new company. For the venture capitalist, most of the rest of the day is filled with meetings. These meetings have a variety of participants, including other partners and/or members of their venture capital firm, executives from an existing holding company, contacts in the specialty area, and budding entrepreneurs looking for venture capital. .