Entrepreneurship Development and Communication Skills

7.4.3.1.Guidelines for Venture Capital

On November 25, 1989, the Government of India issued certain guidelines regarding establishment and functioning of venture capital funds. These guidelines are as follows;

i. Establishment. All India public financial institutions, scheduled commercial banks including foreign banks operating in India and their subsidiaries would be eligible to start venture capital funds/companies subject to approval from the Reserve Bank of India/Government of India.

ii. Size. The minimum size of a venture capital fund/company would be Rs. 10 crore. If it desires to raise funds from the public, the promoters’ share shall not be less than 40 per cent. The minimum debt equity ratio would be 1:15.

iii. Assistance. Assistance would be provided mainly to enterprises with comparatively high risk due to technology/entrepreneur being relatively new. The total investment in the enterprise should not exceed Rs. 10 crores.