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Venture Financing in India

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Submitted By jayeshpurohit
Words 7046
Pages 29
Venture Financing in India
A. Sahay*

Abstract Innovation is stated to be the initiating force for a new venture but venture finance is the life blood for entrepreneurship. Innovation is the fuel for igniting the Entrepreneurial engine, Venture capital revs up the engine fast till it attains sustainable speed to change the gears from idea to entity, eventually reaching IPO stage. The paper starts with Research and Development Cess Act, 1986 and covers the development in the field till 2003 and presents an analysis of venture investments as well as future prospects . The history of Venture capital (VC), its advent in India, Characteristics of VC, Government guidelines on VC, Classification of VC in India, Types of V and their analysis has been dealt in the C paper. . Introduction Since Independence till early1990s, the Government has been playing the role of an entrepreneur as well. This was on account of the policy direction which propounded socialistic society and mixed economy. There was dearth of capital, infrastructure facilities and entrepreneurship in the country. During this period, the Government developed infrastructural base such as roads, railways, electricity, ports, banks, financial institutions, insurance etc through the public sector enterprises which were supposed to attain commanding heights of the economy. The environment thus created resulted in the people of India becoming job seekers and the Government itself became a dominant entrepreneur and job provider. Industrialists in general became license seekers rather than wealth creators. Goods and services of poor quality were produced at higher cost and lower reach, thus India Inc. could never develop a competitive edge. It is in this context that President Kalam, on the eve of Republic Day, 2004, said that “The combination of entrepreneurship education in schools and colleges, the hassle free

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