AngelInvestorsForum.com

DarkStallion79


I have been amazed by the way venture capital firms attract ‘more than neccessary’ dedication of their employees by offering them stock options. I am interested to know what kind of terms and conditions generally form part of such an offer?

I own a small HRD consulting business. How can I offer a similar incentive to my employees?

m.jeya


 

China being a developing and transitioning country, its venture capital market has some special characteristics.

1. China’s venture capital practices lag behind the international norm

The high-tech enterprises in China, relying on various sources of capital, have undergone a difficult process of development. Although China has quite a few high-caliber entrepreneurs in the high-tech industry, a large number of these companies (16,000 in Beijing while 72,000 nationwide) are run by inexperienced individuals.

a) Serious information asymmetry

First, there exists an information asymmetry between the managers of high-tech companies and the outside investors.

Second, there exists an information asymmetry between high-tech companies and venture capital firms. By international practice, both parties should be honest with each other and exchange information openly. After all, the venture capital investors add value by using their management and technological expertise to improve the company’s performance.

b) Serious exclusionism

High-tech companies in China, particularly those run by the locals, have a tendency to refuse to cooperate with outside investors.

c) High cost of investment

Chinese high-tech companies, particularly those run by the locals, are mostly under the control of couples or families. These ownership structures make it difficult and costly to follow the customary practice for venture capital investments, under which venture capitalists receive a substantial portion of ownership and control in the companies

2. Company managers, rather than venture capital investors, retain majority control

It is a common practice for the managers of some high-tech companies in China to demand for majority holding in cooperation with venture capital firms. There may be many explanations for such behavior, yet the primary reason lies in the influence of traditional Chinese thinking. This thinking is based on the belief that one will lose control over the company without majority holding or a leadership role in the company.

3. China lacks an infrastructure of service professionals to support venture capital firms

The growth of venture capital involves not only high-tech companies and venture capital firms, but also intermediary agencies such as law firms, accounting firms and assessment centers. Unfortunately, China still lacks agencies that offer proper services to the venture capital community.

At present, venture capital firms in China have to shoulder the multiple tasks of seeking for investment projects, assessing the projects, avoiding legal risks, planning the finances of invested companies and helping the portfolio company to list on the stock market.

4. The legal framework for venture capital investments is inadequate

Although China has set the national strategy of “revitalizing the country through science and education,” it has yet to set up a legal framework in support of venture capital investments. The Chinese venture capital community has been growing in the absence of proper protection by law.

5. The Chinese capital markets provides inadequate exit channels for venture capital investments

The returns of a venture capital firm do not depend on yearly dividends but on the acquisition or the initial public offering of its invested companies. Such liquidity events require mature capital markets, which China lacks at present.

venture capital financing has given rise to a dynamic system of modern financial products and services by introducing a series of innovations. Please visit online http://www.dynastyresources.net in NewYork city.

Sumesh


If you are new into the world of business, then you might have heard of venture capital fundraising. But most people have little or no information about venture capitalists. There are a lot of misconceptions about the whole thing.

In simple words venture capital is the money that is invested by venture capitalists in new and upcoming companies that have the potential to grow into major giants. If you think that venture capitalists are wealthy financers who wish to finance any new venture, then you are misinformed.

Most venture capitalists are privately owned corporations with a huge pool of money that comes in from pension funds, endowment funds, corporations, foreign investors and wealthy individuals.

But most venture capitalists have high expectations when it comes to returns. You can always expect a venture capitalist looking for a 10 fold return or more within a period of 5 to 10 years.

Criteria

Most venture capitalists will only finance small start up ventures. But there are some who need companies with a proven and established base. Also the venture capitalist will have an equity ownership in the business. They take part actively in management and related decisions.

Some capitalists also help in the development of new services and products. As the risks are high, the expectations for returns are also equally high.

Financing

If you are looking for venture capital fundraising then there are many directories and associations that have memberships with several venture capitalists.

You can register with such associations to get links to individual Venture capital firms. Their guidelines and examples of the kind of companies that they have financed in the past are some of the details that you will get with such directories.

Some directories have links with as many as 1500 venture capitalists. With a nominal fee that may range from $1000 to $1500, you can submit your ideas and get exposure when it matters the most.

m.jeya


Venture capital is money provided by professionals who invest alongside management in young, rapidly growing companies that have the potential to develop into significant economic contributors. Venture capital is an important source of equity for start-up companies. Venture capitalists only invest in a small percentage of the businesses they review and have a long-term perspective.

 

Venture capitalists generally:

 

Finance new and rapidly growing companies;

Purchase equity securities;

Assist in the development of new products or services;

Add value to the company through active participation;

Take higher risks with the expectation of higher rewards;

Have a long-term orientation

 

Dynasty’s venture capital and private equity partners specialize in China investments, everything from tech startups to joint ventures with State Owned Enterprises. Dynasty matches you with experienced investors with a proven track and a common mission: to create entrepreneurial returns on capital by investing in and helping build companies that have scalable business opportunities in the global Chinese economy.

 

venture capital financing is most attractive for new companies with limited operating history that are too small to raise capital in the public markets and are too immature to secure a bank loan or complete a debt offering. Venture capital typically comes from institutional investors and high net worth individuals and is pooled together by dedicated investment firms. Venture capital (also known as VC or Venture) is a type of private equity capital typically provided to immature, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company. Venture capital investments are generally made as cash in exchange for shares in the invested company. Please visit online http://www.dynastyresources.net in NewYork city.

 

Seomul Evans


Are you a startup company that needs funds to launch? Are you an established company in need of funds for expansion? Are you running a company stricken with huge credit lines and in dire need of funds? Whatever the reason is that you need funds for; venture capital provides you the solution to all your financial needs.

How Venture Capital Works

Investors release funds to those companies that they feel have enough potential to be successful. Venture capital firms are managed by different individuals from various fields and sometimes by the venture capitalists themselves.

Now, we know that venture capitalists release funds to companies that are in need of money to develop and advertise. What do the venture capitalists get in return for this? They get a share of the equity and a part of the ownership. Sometimes they will even settle for seats on the board of directors. It all depends on how much you need and how they give you as well as how much they want in return.

Venture capitalists are not just the ones who give out money. That is not the sole reason though for companies to approach them. It is their line of contacts as well as the reputation that comes with it that are more attractive to companies. While money is important, it is not everything in business. Your contacts; who you know are just as important a factor. If you are associated with the right venture capital firm, which has a very good address book of associates and decent network then your work is done. You have got a great deal right there itself.

The venture capitalists just do not barge into any and every business that asks for their capital. They do their homework too and they do comply with their ground rules.

Broadly, there are three things that they take into consideration.

1. First is the value system of the company who seeks funds from them. This makes them ascertain how strong the morals are and would be able to assess the core strength of the company. If this is satisfactory then the company can weather any storm. So this becomes very relevant.

2. Second is the rate of return of money invested. This is for obvious reasons. No free lunches here. You got to know how much you would get if you are investing something. This will be checked out and if satisfied then there will be confidence in the minds of the venture capitalists to invest.

3. Third, they would look for an exit option. Business is a gamble at the end of the day. You got to know when to jump ship. You got to make the provisions at the start itself. They would look for one and if they know they can sneak out unharmed when the ground slips under the feet, then they will give a confident okay to the project.

There are various jargons that are used in case of venture capital investments. There is sweat equity, which as the name suggests is all about the sweat investment. The lawyers and other professional just work without getting paid and invest with their sweat. They do this only if they have faith in the firm. Later on for their sweat investment would expect to be rewarded with huge contracts and other lucrative services.

If you need funds to just do the groundwork and develop a blueprint of the business and the venture capitalists then it is called pre-used funding. If the funds are given to develop a model product and recruit a management group then it is called self-funding.

In case, the funds are given to aid with the completion of product and the starting of marketing then it is called startup funding.

There are development funding, Mezzanine funding, expansion funding, mergers and acquisitions and a lot more jargons that is associated with venture capital.

mohit yadav


Venture Capital Fund –Basic Concepts

 

 

Mohit Kumar Yadav

VTH YEAR BA.LLB

NEW LAW COLLEGE,

BHARATI VIDYAPEETH UNIVERSITY,PUNE

 

Introduction:

Venture capital is a type of private equity capital typically provided by outside investors to new businesses. Generally made as cash in exchange for shares in the investee company, venture capital investments are usually high risk, but offer the potential for above-average returns. A venture capitalist is a person who makes such investments. A venture capital fund is a pooled investment scheme that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans. Venture capital can also include managerial and technical expertise. Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. This form of raising capital is popular among new companies, or ventures, with limited operating history, who cannot raise funds through a debt issue. The drawback of this form of entrepreneurship is that the investors get a say in the management of the company apart from the equity holding. Laws relating to venture capital funds in India

SEBI (Venture capital funds) Regulations 1996.

The venture capital fund regulations by the Securities and Exchange Board of India are a comprehensive set of laws to be followed by the venture capital funds in India. From the registration of venture capital funds to the action to be taken in case of default, the regulation has been divided in VI chapters.

Registration Of Venture Capital Funds

A Venture capital fund can either be a fund established as a trust under the Indian trust act or a company as defined under companies act 1956.

The regulations provided for the registration of a company or a trust which either was functioning as a venture capital fund before the commencement of this act or proposed to do so after the commencement of this act.

A company or trust (which functioned as a venture capital fund before the commencement of these regulations) shall cease to function as a venture capital fund if it does not apply to SEBI for registration within 3 months from the commencement of the regulations.

Procedure to be followed for registration:

i) An application for grant of certificate to be made to SEBI in Form A along with a fee of Rs 25,000.The fee shall be paid through a draft.

ii) There are certain conditions which must be fulfilled before the certificate of registration is granted by SEBI:

a) In case of a company, the MOA of the company shall have the business of venture capital fund as its main object, and invitation to public shall be expressly barred by the MOA and AOA, in addition to this, any officer of the company shall be involved in any litigation connected to the security market or should not have been convicted of an economic offence.

b) In case of a trust, the trust is in form of a deed and has been duly registered under the Indian registration act. Carrying the business of venture capital fund is its primary objective. Any trustee of the trust is not involved in a litigation connected to security market and has not been convicted of any economic offence.

c) In case of a body corporate, it should be formed under the laws of central or state legislature and it is permitted to venture in the field of venture capital funds.

iii) The application for registration shall be complete in all respect. If SEBI discovers any thing in the application that renders it incomplete, it shall give the applicant a time of thirty days to remove the loophole, failing which the application can be rejected by the board.

iv) SEBI after finding the applicant to be eligible, shall inform the

applicant about it, after receiving the information the applicant shall tender to SEBI the registration fee which is Rs 5 lacs, after receiving which SEBI shall issue the Certificate of registration.

Conditions And Restrictions On Investments

The regulation has applied a lot of condition and restriction to the amount of investment to be made in and by the venture capital fund in India.

An investment in the venture capital fund can be made by any person whether Indian, Foreigner or NRI, but no investment which is less than Rs five lacs can be allowed in the venture capital fund. this however does not apply to investment made by the employees, directors or the principal officers of the company or by the trustee where the venture capital fund is a trust.

The investment strategy at the time of registration shall be disclosed by the venture capital fund. The venture capital fund shall also disclose the duration of its life cycle. Not more than 25% of the fund shall be invested in a single venture capital undertaking .Investment to be made in the following manner:

i) At least 66.67% of the fund to be invested shall be invested in unlisted equity shares or other instruments linked to equity shares of the venture capital undertaking.

ii) Not more than 33.33% of the investible fund shall be invested by the way of IPO of a venture capital undertaking whose shares are proposed to be listed, the debt instrument of the venture capital undertaking in which the venture capital fund has already invested, preferential allotment of equity shares of a listed company, equity shares or equity linked instrument of a financially weak company and SPV’s which have been created by the venture capital fund..

No venture capital fund shall get its units listed on any recognized stock exchange till the expiry of thee years from the date when they were issued to the investors by the venture capital fund. The venture capital funds shall also not invite any member of the public by way of advertisement to subscribe to its units. The venture capital fund may receive investments only through private placements of its units.

Placement Memorandum or Subscription Agreement

Every venture capital fund shall issue a placement memorandum which contains all the terms and conditions relating to the scheme through which money is proposed to be raised from the investors. The venture capital fund may also enter into a subscription agreement with the investors which would specify the terms and conditions of the scheme through which money is proposed to be raised. The venture capital fund shall submit a copy of such placement memorandum or subscription agreement with SEBI along with the report of the money actually raised through such agreement or memorandum.

The placement memorandum or the subscription agreement shall have the following essential:

It shall contain the details of the trustee and the trust as well as the details of the directors and the principal officers of the venture capital fund. It shall also stae the minimum amount of money to be raised to start the venture capital fund and the minimum share to be invested in every scheme of the venture capital funds. Tax implications which would be applied to the investors shall also be stated. The manner of subscription to the units of the fund, the period of maturity of the fund if any and the manner in which the fund would be wound up shall also be stated.

Every venture capital fund shall maintain a book of record for a period of eight years which would generate the true picture of the venture capital fund. SEBI at any time can call for information regarding the working of the venture capital fund, the information shall be submitted to SEBI in the specified time period.

Investigation

SEBI on receiving a complaint from the investors or suo motu appoint one or more person as investigating officer, who would undertake investigation in relation to the maintenance of the account books of the venture capital fund, compliance of the regulation and the affairs of venture capital funds. A notice of at least ten days shall be given before the investigation is carried on though if SEBI deems it to be in interest of the investors it may not serve a notice at all. It shall be the duty of every officer of the venture capital fund to cooperate with the investigation officers, they shall be provided with all the documents, books etc which are in the custody of the officers of the venture capital fund. The investigation officer shall also be furnished with any statement he demands for. After the completion of investigation the investigation officer shall submit his report to SEBI. The board after considering the investigation and giving the venture capital fund to be heard may direct the venture capital fund not to launch new schemes or prohibiting the concerned person from disposing off the property of the venture capital fund or to refund to any investor any amount of money or asset.

Action In Case Of Default

Any venture capital fund that fails to act in accordance with the regulations, or fails to furnish reports of the affairs of the venture capital fund to SEBI or furnishes report that is not true, does not cooperate in any enquiry instituted by SEBI or fails to act on the complaints made by the investors or does not give a satisfactory reply in this regard to SEBI, shall be dealt with in manner provided in SEBI (procedures for holding enquiry by enquiry officers and imposing penalty) regulations, 2002.

Obama Pride Day


Two News programs reported that Silicon Valley is not effected by the Bush Obama melt down.

Hard work education and Private Venture Capital is the winning Combination that makes Santa Clara County the World’s economic Powerhouse.

Why can’t Democrats and Republicans realize they have to work to get ahead in life.
Source:

Life in Garden City a tiny liberal farm town.

Low Jeremy


It’s a risky business, but still, somebody decided to do it. Venture capital is a sort of financing scheme that funds businesses that have been found to have some growth potential.

Venture capital is also called risk capital. For businesses that have very limited start-up capital, they could go find a venture capital investor. But for the venture capitalist, they still need to weigh the various risks involve.

A venture capital is an investment that is basically provided by third-party investors. This investment is usually used for enterprises that were deemed to be too risky that even the standard market investors or banks avoid putting a single cent on them.

Although this kind of investment would be very advantageous for entrepreneurs that cannot find funding through regular means, some people still avoid venture capital due to the fact that venture capital investors usually have the power to intervene and run the company itself aside from being part owners of the company.

For the venture capitalist, Arkansas might just be the place to look for businesses to invest in. Cities like Charlotte and Fox offers more than what you think. Venture capitalists’ expected high rate of return might be present in such small, sleepy towns. Likewise, for a small business in Charlotte having some venture capitalists will give them a couple of benefits like funding, management assistance and lower costs over the short term.

The local government has been grooming Charlotte to become a great city. Some even dubbed the city as the next Atlanta. The government has been building infrastructures, setting up a better environment for businesses or entrepreneurs. And just like the state of Arkansas, Charlotte is as diverse.

People of all ages and socio economic backgrounds converge in a city where they decided to call home. The city has some huge potential locked away. It’s just up to people like risk taking, business minded individuals and venture capitalist to unearth this huge potential, harness it, and develop it into a full blow and lucrative investment opportunity.

But venture capital also needs some push from local business and entrepreneurs. Venture capitalists tend to act more aggressively if sound proposals are being presented to them. It is therefore important that people in Charlotte start believing in their capabilities and potential and begin reaching out to the wealthy investors across the country. They need to come out and declare that people in Charlotte are ready to play with the big boys of business investments.

The history and development of the state of Arkansas colorful like other American states, a varying mixture of some European cultures. High-peaked settlements along the Mississippi River were intervened by the Spaniards in 1541 by the explorer Hernando de Sotto; however though, the first European settlements near the lower banks of the Mississippi River were the Frenchmen in 1686.

The Louisiana Purchase in 1803 sealed this settlement along the famous river to be part of the American soil; now, Arkansas State. A divided Arkansas after the American civil war in 1861 and its seceding from the Union has been a target subject of interest between the North and the South for its vital role being a gateway to the Southwest.

Since that settlements and the succeeding progress of the state and its future promise in economic advancement, Arkansas has proven its’ worth, owning credits in producing the twice elected Arkansas-born Bill Clinton to the U.S Presidency by the turn of the last quarter of the Millennium.

Today, Arkansas is a target of several venture capital studies in all fields of its phases of development. With the assistance of the Arkansas Economic Development one could start or expand business. The present days front the best time for several capital light ventures, when there are options to select from small or minor businesses? A team that caters to specialize on the development and growth of minority businesses gives priority to assist in marketing strategies, product development, and most especially to invite light venture capitalists.

The ADED (Arkansas Department of Economic Development) with its subsidiary body the Department’s Small and Minority Business Staff takes initiatives to look for would-be partners, and seek additional information on all aspects surrounding the Arkansas businesses.

Little Rock, Arkansas Eyed to be A Conference Center Regarding Fostering Innovation Capital

A national venture capital event that will be fostered in 2007 by the NASVF (National Association of Seed and Venture Capital Funds) is heading conference at Little Rock in Arkansas for the purpose of enlightening Venture Capitalists, profit and non-profit organization leaders, technology-based and economic development leaders, representative from venture capitals and seed funds, legal and financial firms, and many others who will take interest in looking into the natural resources of Arkansas. They will be pulled together in one conference, and taking into considerations on innovation capitals that will easily facilitate investment process to local entrepreneurs.

Also, it will open funding, and get better knowledge of the relationships and influential factors in the commercialization of innovative and venture products. The event will be sponsored by the biggest molders of the economy of Arkansas; namely, Arkansas Department of Economic Development, Arkansas Science and Technology Authority, and Arkansas Capital Corporation.

A glance into the future wealth of Arkansas’ Economy thru investments is gagged upon general criteria, from heavy or light ventures; and, or, government or private collaborated ventures.

Asa K


I’m graduating high school this year, and plan to become an attorney, but I’m also very interested in investment and hope to dabble in investments/venture capital, etc.

Would a BA in business from a liberal arts college suit me better, or a BSBA degree in finance from a large university?

Victor Mars


IT, including computer, software, internet, dot com boom etc, has made hundreds of millionaires in Silicon Valley over night since 1980s. Till now, this fairy tale still continues, but the source is drying up. Although, venture capitalists are trying digging in biologics, nano science etc, but they have to confess: it is really hard to find a real chance, which will be successful like the Apple, Microsoft, Yahoo, Ebay, Google, and Youtube again.

So, where is the next chance for Venture Capitals?

Let’s see how a Venture Capitalist picking a project firstly.

Venture capital is one kind of private equity capital typically provided by professional, outside investors to new, growth businesses. A venture capitalist (VC) is a person who makes such investments.

When a new company is built up, it always needs money to grow. For many companies (especially for those new companies based on high-technology), seeking venture capital firms is always the first option. The founders of the company generally will write a business plan that shows what they will do and what they think will happen to the company in the future (such as how fast it will grow, how much money it will make, etc.). The VCs read the plan, and if they like what they see, they will consider investing money in the company. The first round of money is called a seed round. And the VC who invests seed capital is so-called “Angel”. Normally, a company will receive 3 or 4 rounds of funding typically, before it is going public or getting acquired.

The NASDAQ crash and technology slump that started in March 2000 shook some VC funds significantly by the resulting disastrous losses from overvalued and non-performing startups. Since 2005, the revival of a dot com-driven environment has helped to revive the VC environment. Today, the VC environment is still hot, but bubble is bigger and bigger in dot com boom. For seeking new profitable and safe investing target, VCs start to withdraw from dot com boom and focus at a new industry: FOREX Automated Trading Software.

FOREX – The Foreign currency Exchange market is by far the largest financial market in the world. The average daily trade in the global FOREX markets exceeds US$1.9 trillion (Source: the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2004, and published in March 2005). For comparison, the biggest stock market on the Earth – NYSE Group (The New York Stock Exchange), has a daily trading volume of approximately $86.8 billion (Source: NYSE Group, Inc. 2006). FOREX has a 18.4% average growth rate per year since 1989. It offers trading 24 hours a day, five days a week, non-stop over Internet.

But, in this huge market, as the story goes, at least 90% of new FOREX traders lose all their money within their first 3 months of trading. Why? Most losing traders who inquire about FOREX trading are quite intelligent, they just lack the right tools, the “Secret Weapons” to win. They are not beaten by other traders, they simply are beaten by themselves, by humans’ weaknesses.

To overcome these terrible weaknesses of humans, people have developed many methods. One of them is called “Automated Trading”. Automated (or Automatic) Forex Trading means to trade Forex (Foreign Currencies) using some trading systems, programs, software or robots (on Metatrader MT4 platform it is called as Expert Advisors – EA), without needing a human to physically trade. An automated trading system is a group of specific rules and parameters, governing entry and exit points, having the ability to both generate signals and execute trades automatically. An EA is an automated trading “robot”. Robots can beat human beings’ world champion at chess games, likewise, EA robots can triumph over human traders at FOREX trading.

The practical experience shows that a high quality automated trading system always guaranties some kind of financial success for its owner working on Forex market. The latest fact is: in the Automated Trading Championship 2007, a world competition, all participants use EA robots, the champion won 1204.75% profit, the runner-up won 450.42%, and the third place won 299.45%, just within 12 weeks.

Isn’t that amazing?

For Venture Capital firms, FOREX Automated Trading Software is still an undeveloped gold mine. Look at these:

1. It combines Software, Internet Technology, and Finance together. There are three “golden elements” in one project. This concept is rare.

2. In dot com boom, many VCs just burn money and get nothing but meaningless so-called “eyeball rate”. FOREX Automated Trading Software industry is quite different. It makes money by itself!

3. Many venture projects are just a kind of “concept” or “idea”, no real products at all. Company founders just try to sell this empty “idea” to VCs, and VCs try to sell this story to stock buyers in stock market. But FOREX Automated Trading Software industry is real and ripe. VCs even can confirm these software’s results, records and performances in real time, for example, via RSS Feed, before they decide to put money in the company.

Who can invest in this area first, who will be the king of VC in next decade.