Venture Capital Fund

 

Context:

 

  • Bengaluru-based venture capitalist, Ankita Vashishta, will launch a $1 billion venture capital fund to assist 1,000 women-led or women-focused start-ups in India and overseas in the next five years.

 

What is Venture Capital?

  • Venture capital (VC) is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long term growth
  • Venture capital generally comes from well-off investors, investment banks, and any other financial institutions.
  • However, it does not always take a monetary form; it can also be provided in the form of technical or managerial expertise.
  • Venture capital is typically allocated to small companies with exceptional growth potential, or to companies that have grown quickly and appear poised to continue to expand.

 

Other Aspects:

  • Though it can be risky for investors who put up funds, the potential for above-average returns is an attractive payoff.
  • For new companies or ventures that have a limited operating history (under two years), venture capital is increasingly becoming a popular—even essential—source for raising money, especially if they lack access to capital markets, bank loans, or other debt instruments.
  • The main downside is that the investors usually get equity in the company, and, thus, a say in company decisions.

 

Way Forward:
  • It was a few years ago that Ms. Vashistha launched her maiden venture capital fund ‘SAHA Fund’, raising $10 million from individuals, family offices, corporates, institutions and foundations and also from SIDBI, Kiran Mazumdar Shaw, Ranjan Pai of Manipal Group, etc to promote and invest in women entrepreneurship and technology.

India needs more such initiatives to empower our women.

Source: THE HINDU

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