Venture capital fund in India

Several venture capital funds or companies have been set up in India in recent years. Some of them have been established by financial institutions while others are in the private sector. We shall discuss below the details of the leading venture capital fund in India.

1. IFCI venture capital fund limited (IFCI) : IFCI venture capital funds limited is the new name of the company risk capital and technology finance corporation limited (RCPC). It is a subsidiary of the IFCI limited while holds 76.43% of its total paid up equity. 

                In 1975 the industrial financial corporation of India has established risk capital foundation (RCF) as a society with objective to provide risk capital assistance in the form of soft loans to professionals and techo crats (setting up their own industrial ventures. In 1988 RCF was converted into a company risk capital and technology finance corporation limited. It's emphasis shifted from providing soft loans to promoters to direct equity participation in the company. It introduced technology finance and development scheme in 1998 to provide finance for improvement of technology. Later on it took out the management of a venture fund under UTI's venture capital units scheme III (VECAUS III) to provide finance for innovative profects). Subsequently,RCDC discontinued the first two schemes that risk capital scheme and technology finance and development scheme are entirely focused on management of Venture Capital fund on remunerative basis. The new name IFCI venture capital funds limited. Thus reflects the shift in the companies activities. 

2. Venture capital units scheme III:  At present the main activity of IFCIVCF is management of Venture Capital fund. Venture capital unit scheme free. The fund was floated by the unit trust of India in 1951 in participation with IFCI limited. The initial corpses of Rs 20 crores was contributed equally by UTI and IFCI limited. The total corpses was later on raised to Rs 120 crores with equal contribution by both these institutions. The world banks assistance of 4 million US forms part of IFCI subscription. IFCIVCF receive a management fee a 1.87% of the cumulative,dispersement as at the and of the previous financial year. It is also entitle to 7.5% of the surplus generated on termination of the fund in year 2006.

3. Venture capital fund of IDBI: The industrial development bank of India has constituted a venture capital fund, which provides venture assistance in the form of equity, term loans and convertible Debt. The main criteria for granting assistance are:

(a) High growth prospects

(b) Potential for capital appreciation

(c) Clear cut exit route within a period of 3-5 years

  Thus, investments are made in high growth at profitable industry sectors excluding mature industries, commodity type products and highly competitive sectors.

              There is no upper limits on the cost of the venture but IDBI's maximum assistance may go upto 80% of the project cost. IDBI exposure is restricted to Rs 20 crore in each venture. Finance is available for capital expenditure,start up working capital and selectivity for core correct asset during commercial production. Promoters contribution must be 20% of the lost of the venture.

4. National venture fund for software and IT industry (NFSIT): This fund was setup on Dec10,1999 by small industries development bank of India (SIDBI) in association with IDBI at the ministry of information technology government of India.

         This fund is intended to meet the requirements of software and IT companies in the small scale sector to enable then to achieve rapid growth and to maintain competitive edge in domestic and international markets.

          The fund is a close ended 10 years fund with a initial corpus of Rs 100crore contributed by SIDBI, IDBI (Rs 20 crore) and the government of India. It is being managed by SIDBI. Venture capital limited (SVCL), a wholly owned subsidiary of the SIDBI as asset management company for the fund. SIDBI trustee company limited another subsidiary of SIDBI acts as trustee company for the fund.

5. ICICI venture funds management company limited:

ICICI venture capital funds management company limited is the new name of ICICI limited which was setup by ICICI and UTI in July 1998 as a joint stock company and was the first venture capital finance company in India.

            ICICI venture funds management company primarily provides assistance to small and medium industries prompted by Technocrat entrepreneurs in the form of:

(a) Project loans

(b) Direct subscription to equity

(c) Conditional loans

         The companies is a public financial institutions and provides venture capital assistance to a wide spectrum of industrial sectors. It extends assistance primarily through the venture funds and private equity funds managed by it.