Venture Capital Financing in India

In this era of investment when innovation and technology based business ideas thrive Venture Capital, a relatively new financial service, has emerged primarily to help first generation entrepreneurs translate their business ideas into realities. It has played key role in establishing many successful business enterprises around the globe, especially in US. Besides providing capital for idea based enterprises, who may not be able to get required assistance from traditional financial institutions, venture capitalists also reinforce their presence as value creators through their long term association with investee firms. As far as India is concerned, venture capitalists might not have been as established as their western counterparts are, but in the last ten years they have become of age and worked hard in setting up an alternate investment universe to evolve and boost the entrepreneurial startup ecosystem in the country. The present paper is an endeavor which examines theoretical framework of venture capital financing, and also analyses the Indian scenario in terms of evolution, trends, regulations and challenges faced by venture capital funds in the country. It is concluded that if thriving ecosystem for venture capital financing is created by concerted efforts undertaken by regulatory bodies, GOI and VCFs themselves, this alternate investment vehicle can become a pillar to reckon with in economic development of the country.