Entrepreneurship Development and Communication Skills

7.4.3.Venture capital

Some people are endowed with good product ideas, but lack the necessary funds to translate these ideas into production. The concept of venture capital was evolved to help such persons. Venture capital is a form of equity financing of projects with high risk and high return. It is meant for financing high technology projects. Besides financing high technology, venture capital fosters the growth and development of industries. It helps to convert research and development projects into commercial production.

The concept of venture capital originated in the USA. Now it has become a world-wide concept in the field of funding technology-based industrial projects. It is of recent origin in India. IFCI started this concept in 1975 by setting up “Risk Capital Foundation” (RCF).RCF was converted into a company known as ‘Risk Capital and Technology Corporation Limited’ (RCTC) in January 1988.

IDBI also started a venture capital fund scheme in 1986. The ICICI also set up the ‘Technology Development and Infrastructure Corporation of India (TDIC) in 1988. TDICI provides technological information and finances intensive development activities including commercial research and development. It also manages the venture capital fund of Rs. 20 crores which ICICI has set up along with UTI in 1988.

Besides, public financial institutions, commercial banks have also entered venture capital business. SBI capital markets, Can Bank, Financial Services and Grindlays Bank have established venture capital funds. The India Investment Fund of Grindlays Bank provides venture finance to suitable projects of NRIs.

In the private sector, the Credit Capital Corporation launched Credit Capital Venture Fund India Ltd. with the help of Asian Development Bank and Commonwealth Fund.