A Study on Business Tycoon Perspective and Awareness on Venture Capital Financing

As off that Venture Capital is an enormous concept, Venture capital financing is a kind of endowment by venture capital. While this study will explore you the Business magnate perspective and awareness in choosing venture capital as a main stream for their investment and financing among various alternatives. Venture capital in all-inclusive wisdom is not entirely an insertion of finances into a new firm, it is in addition of a contribution of proficiency looked-for to set up the firm and intend its promotion tactic, systematize and administer it. The fundamental motive of this research seeks to scrutinize the venture capital financing by the Business Man. This exploration assists us to realize ideology and views of Business magnate with respect to venture capital financing.


INTRODUCTION
Venture capital's considered the financing of high and new technology-based enterprises. It is said that Venture-capital involves investment in new or relatively untried technology, initiated by relatively new and professionally or technically qualified entrepreneurs with inadequate funds. The conventional financiers, unlike Venture capitals, mainly finance proven technologies and established markets. However, high technology need not be pre-requisite for venture-capital. Venture capital has also been described as "unsecured risk financing". The relatively high risk of venture capital's compensated by the possibility of high returns usually through substantial capital gains in the medium term. Venture-capital in the broader sense is not solely an injection of funds into a new firm, it is also an input of skills needed to set up the firm, design its marketing strategy, organize and manage it. Thus it is a long term association with successive stages of the company's development under high-risk investment conditions, with a distinctive type of financing appropriate to each stage of development. Investors join the entrepreneurs as co-partners and support the project with finance and business skills to exploit the market opportunities. Venture capital is not passive finance. It may be at any stage of the business/production cycle, that is, start-up, expansion or to improve a product or process, which are associated with both risk and reward. The Venture-capital makes higher capital gains through appreciation in the value of such investments when the new technology succeeds. Thus the primary return sought by the investor is essentially capital gain rather than steady interest income or dividend yield.In a venture capital deal, large ownership chunks of a company are created and sold to a few investors through independent limited partnerships that are established by venture capital firms. Sometimes these partnerships consist of a pool of several similar enterprises. Venture capitalists comprise of professionals of various fields. They provide funds (known as venture capital fund) to these firms after carefully scrutinizing the projects. Their main aim is to earn huge returns on their investments, but their concepts are totally different from the traditional moneylenders. They know very well that if they may suffer losses in some project, the others will compensate the same due to high returns. They take active participation in the management of the company as well as provide the expertise and qualities of a good banker, technologist planner and managers. Thus, the venture capitalist and the entrepreneur literally act as partners.

History of Venture capital:
One of the first steps towards a professionallymanaged venture capital industry was the passage of the small business investment act of 1958. The 1958 act officially allowed the U.S. small business administration (SBA) to license private "small business investment companies" (SBICs) to help the financing and management of the small entrepreneurial businesses in the United States. It is commonly noted that the first venturebacked startup is Fairchild Semiconductor (which produced the first commercially practical integrated circuit), funded in 1959 by what would later become venrock associates. It is commonly noted that the first venturebacked startup is Fairchild Semiconductor (which produced the first commercially practical integrated circuit), funded in 1959 by what would later become venrock associates. During the 1960s and 1970s, venture capital firms focused their investment activity primarily on starting and expanding companies. More often than not, these companies were exploiting breakthroughs in electronic, medical, or dataprocessing technology. As a result, venture capital came to be almost synonymous with technology finance. The public successes of the venture capital industry in the 1970s and early 1980s (e.g., Digital Equipment Corporation, Apple Inc, Genentech) gave rise to a major proliferation of venture capital investment firms. The number of firms multiplied, and the capital managed by these firms increased ten folds over the course of the decade. Growth in the venture capital industry remained limited throughout the 1980s and the first half of the 1990s. The late 1990s were a boom time for venture capital. Initial public offerings of stock for technology and other growth companies were in abundance, and venture firms were reaping large returns. The NASDAQ crash and technology slump that started in March 2000 shook virtually the entire venture capital industry as valuations for startup technology companies collapsed. Over the next two years, many venture firms had been forced to writeoff large proportions of their investments, and many funds were significantly "under water" (the values of the fund's investments were below the amount of capital invested). The revival of an internetdriven environment in 2004 through 2007 helped to revive the venture capital environment. American Research and Development Corporation: formed in 1946, whose biggest success was digital equipment? The founder of ARD was General Georges Dariot, a French born military man who is considered "the father of venture capital". In the 1950s, he taught at the Harvard Business School. His lectures on the importance of risk capital were considered quirky by the rest of the faculty, who concentrated on conventional corporate management. Currently, venture capital environment is at all time high leading to emergence of all together new businesses. Innovations are sprouting at fast speed and VC investments are helping them for realizing full potential of entrepreneurs. The Rockefeller family: L S Rockefeller, one of those earliest investments was in Eastern Airlines, which is now defunct but was one of the earliest commercial airlines. The Indian private Equity and venture capital association was established in 1993 and is based in New Delhi, the capital of India. IVCA is a member based national organization that represents venture capital and private equity firms, promotes the industry within India and throughout the world and encourages investment in high growth companies. It enables the development of venture capital and private equity industry in India and to support entrepreneurial activity and innovation. The IVCA also serves as a powerful platform for investment funds to interact with each other, in 2006, the total amount of private equity and venture capital in India reached US$ 7.5 billion across 299 deals. IVCA members comprise venture capital firms, institutional investors, banks, business incubators, angel investor groups, financial advisers, accountants, lawyers, government bodies, academic institutions and other service providers to the venture capital and private equity firms in India. These firms provide capital for seed ventures; early stage companies, later stage expansion, and growth finance for management buy/ buyouts of established companies. So far, the biggest member firm of IVCA is ICICI ventures which currently has a $750 million fund, and has $450 million under management. If we look at entrepreneurs view point one needs to do thorough homework on the profile of funds before approaching venture capitalist. One must also identify projects in which venture capitalist has already invested. It is a matter of concern that entrepreneur must know what are the aspects venture capitalist is looking forward. Going to a venture capitalist is like taking a final exam. Entrepreneurs should be fully prepared. Entrepreneurs should look at the proposition of scaling the business from day one. If entrepreneur need to scale business from day one and require large money they should head for venture fund but if they need to structure idea into viable financial and marketing plan, than they should look for an angel to help. Expectations of Venture Capitalist from entrepreneurs-Passion, commitment, multifunctional team, vision, transparency, well researched business plan, energy to turn idea into business. All this is true but focus is more on entrepreneur whereas market product and returns are equally important. It is also not unusual for venture capital funds to set up an investment screen. The screen is a set of qualitative (sometimes quantitative criterion) criteria that helps venture capital funds companies to quickly decide on whether an investment opportunity warrants further diligence. Venture capitalist tries to maximize the upside potential of any project. He tries to structure his investment in such manner that he can get benefits of upside potential and he would like to exit at the time when he can get maximum returns on his investment in the project. index also increased significantly from 130 in 2016 to 63 in 2019, improving investor confidence in the regulatory ecosystem. India's start-up and VC ecosystems continue to thrive as investors take a long-term view based on the country's growth potential.They see the current slowdown as more cyclical than structural. We go into 2020 with record-high levels of dry powder, counterbalanced with caution and an underlying optimism in the long-term potential for the ecosystem.

GROWTH OF VENTURE CAPITAL IN INDIA
The development of the organized venture capital industry in India, as is in existence today, wasSlow and be labored, circumscribed by resource constraints resulting from the overall framework of the socialistic economic paradigms.Although funding for new businesses was available from banks and government-owned development financial institutions, it was provided as a collateral-based money on project-financing basis, which made it difficult for the most new entrepreneurs, especially those who were technology and services based, to raise money for their ideas and businesses. Most entrepreneurs had to rely on their own financial resources, and those of their families and well-wishers or private financiers to realize their entrepreneurial dreams.
In 1972, a committee on Development of Small and Medium Enterprises highlighted the need to foster venture capital as a source of funding new entrepreneurs and technology. This resulted in a few incremental steps being taken over the next decade-and-a-half to facilitate venture capital funds into needy technologically oriented small and medium Enterprises (SMEs), namely: underwriting securities and direct subscription. Some of them engage in preparation of feasibility reports, conducting surveys, and in developing industrial estates. The financial investment process has evolved a lot with time in India. Earlier there were only commercial banks and some financial institution but now with venture capital investment institution in India has grown a lot. Business forms now focus on expansion because they can get financial support with venture capital. The scale and quality of the business enterprises have increased in India now with international competition, there have been a number of growth Oriented business firms that have invested in venture capital. Volume 5, Issue 4, July-August 2023 8 The venture capital finance in India can be categorized in to following three groups Venture capital promoted by

Private sector companies:
The power and authority is vested in the hands of private sector companies, some of the examples of venture capital finance promoted by the private sector controlled are as follows IL&FS Trust Company Limited and Infinity Venture India Fund.

THE POST -COVID VENTURE CAPITAL INVESTMENT SCENARIO IN INDIA
COVID-19 is having an adverse effect on private equity and venture capital investments in India. As per industry reports and experts' views, PE and VC investments in India may decline up to 60% in 2020 due to the pandemic. In 2019, PE and VC investment activities reached a record high at US $48 billion in India. However, EY has projected PE and VC investment at US $19-26 billion in 2020, which shows a decline of 45-60% compared to 2019.

Sectors in prominence
Nevertheless, every crisis throws up some opportunities, and the sectors listed below have shot in prominence with PE and VC investors looking to invest in companies in these sectors. o Technology, including education technology, online gaming and select e-commerce; o Consumer goods, including packaged essentials and personal products; o Ready foods processing; o Pharmaceutical, including diagnostic, medical supply, biotech and services; o Agricultural products and services; and o Specialty chemicals. Indian education start-ups have already raised 96% of the amount they raised in 2019. Reliance Jio, the mega telecom and technology conglomerate owned by billionaire, Mukesh Ambani, has raised over US $20 billion from marquee PE and strategic investors in the middle of the lockdown, showing that money never sleeps.

Emerging trends
According to a press release dated July 14, 2020 of the National Venture Capital Association (NVCA) of the US, both, VC fundraising and investment activity have slowed down considerably in the US due to the pandemic. Moreover, exit activity of VCs has also been the lowest since 2011. The result is that investors have started demanding deal terms designed to limit their risk. Rachel Proffitt, a partner at the US law firm, Cooley, commented in a Pitch Book article that, "some venture capitalists have sought to further protect their investments by securing veto powers for the board members, strengthening operational controls, and in rare cases instituting pay-to-play incentives to prod other investors to participate in current or future funding rounds."Similarly, in India too, VC and PE investors are seeking provisions to protect their investments. Investors are giving more attention to:  anti-dilution,  liquidation preference, and  dividend rights clauses In addition, they are also imposing Pool of capital, raised in the specified manner and invested in VCUs in accordance with the tighter restrictions on the use of funds, Overall the emphasis is on profitability than on unbridled growth with a high cash burn.
The growth of the VC industry in India has followed a sequence of distinct phases: o Pre 1986: The venture capital industry was in its infancy and adoption of the asset class was done by the central government and governmentsponsored institutions only. o 1986 -1995: There were a few activities happening within the venture capital space, but it was still restricted to governmentsponsored institutions.   Data Analysis and Interpretation: Total venture capital investment in India from 2012 to 2020 (in billion U.S. dollars) Venture capital investment stands for a sub-set of private equity wherein venture capitalists invest in startups for the expansion of the business. These capitalists also provide network access, technical and managerial expertise, and other support services for the enhancement of business startups. Venture capitalists are given the ownership stake in exchange for capital investments and become an essential part of the company's decision-making process. Venture capital investment facilitates financial stability, along with reducing the liquidation risks of the startup businesses. The growing number of startups, along with increasing investments from mutual funds and the banking sector in venture capital, are primarily propelling the venture capital investment market growth.

Table showing total VC investment in India
Year Value in billion U.S. dollars

INTERPRETATION:
By analyzing the above graph shows that in 2020, Indian companies attracted around ten billion U.S. dollars in venture capital investments. This was a slight decrease compared to the record-breaking year 2019. As the number of deals increased, it is still the second highest value of VC-investments in the country. As the value of VC investments is still on a high level despite the implications of the corona

Number of Venture Capital deals in India.
In a venture capital deal, large ownership chunks of a company are created and sold to a few investors through independent limited partnerships that are established by venture capital firms. Sometimes these partnerships consist of a pool of several similar enterprises.

Analysis:
Above table indicates that in 2020, investors maintained a diversified approach despite facing many challenges due to the pandemic, Indian startups continued to battle hard with resilience empathy. Indian startups raised 809 deals from around 1,476 active investors in the ecosystem. There is a significant growth in number of mall value deals in 2020. There is a decline in deal value in the between 2017 and 2018 compared to rest of the year.

INTERPRETATION:
By analyzing the above graph it shows that VC deals continue to be positive. Deal activity in 2020 shows that it has not changed the longterm view on the investment activity. Outlook for VC investments looks strong and going forward with investment activity recovering to precovid levels in the year 2020. Comparatively VC deals decline after 2015, despite there was a fluctuation in VC deals from the year 2016 -2019. 2020 gave back the hit in VC deals though there was a pandemic.

Venture capital deal volumes have shown continuous increase, while average deal size declined
Since 2017, the dry powder with VCs in India has remained at $6 billion or above except in 2019 when it dropped marginally to $5.5 billion. In 2020, VCs were left with a $6-billion reserve, according to India This table shows that venture capital average deal size from the year 2012 to 2020. By analyzing nine years data of VC's average deal, came to know that much fluctuation in deal size. Since from last three years i.e., from 2018 to 2020 there is an increasing trend in deal size when compare to rest of the years. 2019 came out of best, where as 14.7 million dollars of average deal size took place. In 2020 the deal amount saw a slight decline to $12.4million from $14.7 million.

INTERPRETATION:
By analyzing the above chart shows that from 2012 to 2015 it is in growth stage, VC focus on doing more deals and building initial portfolio. In 2016 and 2017 it was in maturing and moderation stage where VC focuses on fewer investment but high quality. Renewed optimism in the year 2018 and 2019 where Marquee exits renew investor confidence. In 2020 due to covid impact smaller deals, but accelerated momentum.

Most top funds' portfolios did not reach maturity in 2020; Average holding period and portfolio age of top VC funds
India-focused venture capital funds raised $3 billion in 2020, the highest in the last five years and around 40% more than in 2019, a report by Bain & Co. showed.Marquee investors, including Sequoia Capital, Elevation Capital, Falcon Edge and Light speed Venture Partners closed funds for India investments last year, with Sequoia itself accounting for about 40% of the quantum raised, the' India Venture Capital Report 2021 showed.

INTERPRETATION:
By analysing the above chart shows that Average calculated using simple average exit portfolio based on select major deals. Top VC's are most active in terms of deal volume/value over the last 5 years. "2021 will mark the dawn of the IPO era for our ecosystem, providing more exits, as growth accelerates across segments and an increasing number of companies start to hit scale. This trend will accelerate significantly as the ecosystem matures and some of the large companies move towards profitability".

Number of venture capital investments deals across India in 2020 by sector wise
The year gone by continued to be a record-breaking one for Indian startups, even as it became a story of two parts. In the first half of the year, startups raised nearly $4 billion in venture capital, across sectors and from a relatively diverse set of investors. Post-September, however, the narrative shifted almost overnight, with the meltdown in We Work's proposed initial public offering (IPO) and other tech listings, such as Uber and Lyft, performing poorly. Mint takes a look at the defining venture capital trends through the year. Industrial products 21 Source: Pitch Book, NVCA Venture Monitor Analysis: By analyzing the above table it shows that financial service sector received highest investment deal i.e., 145 when compared to other service sector. Technology and Ecommerce sectors also received more deals. Industrial products sector received least deal in the year 2020. The three service sector received highest deal in the year 2020.

INTERPRETATION:
By analyzing the above chart shows that in a continuation from 2014, the renowned home grown E-Commerce subsectors Flipkart and Snap deal captured a total of $1.45 billion between them, followed by taxi aggregator Ola Cabs that procured $900 million. Flipkart collected $700 million at a reported $15.2 billion valuation in a round that witnessed participation from existing investors Tiger Global and Stead view Capital and taking the total funding raised by the company to $3.2 billion. In 2020 financial service sector grow higher when compare to other sector.
Global venture financing in business/productivity software Venture financing is provided by venture capital firms or funds to startups, early-stage and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth. VC firms or funds invest in these earlystage companies in exchange for equity, or ownership stake. Source: Pitch Book-NVCA Venture Monitor Analysis: By analyzing the above table it shows that business/productivity software took very less global financing in the year 2012. Their after the trend get tremendous increase in its deal value and deal count, but during 2018 -2019 it was given uppermost hit, in 2020 due to pandemic business/productivity software global financing trend get decline gradually.

INTERPRETATION:
More directly relevant than ever before, business and productivity software enjoyed a peak in venture activity in the year 2019, as well as a massive near-$30 billion in dollars invested. Granted, although this space is broad-ranging, as multiple corporations worldwide put their remote tools to the test in the largest remote working experiment ever unintentionally devised, startups and existing businesses such as Slack are looking to see how they can seize a rare and hopefully never-to-be-repeated opportunity to gain market share and prove the true value of their offerings.

Highest Venture Capital Investment in 2020
To understand the scenario of venture capital investments in India, let's analyze the highest venture capital investment .Just three sectors took home 75% of venture capital funding in2020. While the overall number of deals fell 40% average size of deals increased across all segments, implying a maturing ecosystem. These sectors have evolved from few upstarts in the 2020s to a multibillion dollar industry today.

INTERPRETATION:
By analyzing the above chart it clearly shows that during the Covid -19 pandemic Consumer technology and, software as a service fintech were the red hot sectors in India's startup ecosystem cornering almost three-fourths of venture capital funding of the $10 billion invested by venture capital and private equity in 2020, $7.6 billion was directed towards deals in these three sectors. In 2020, Just Three Sectors Took Home 75% of Venture Capital Funding.

TOP START-UPs THAT RECEIVED MORE THAN $100M FUNDING IN 2020
Now we look at the different industry that received more than $100M investments of SEBI registered venture capital funds.

Key Investors
Top start -ups that received more than $100M funding in 2020

INTERPRETATION:
By analyzing the above graph it clearly shows that during the Covid -19 pandemic Consumer technology and software as a service fintech were the red hot sectors in India's startup ecosystem cornering almost more than $100 million of venture capital funding. Edtech saw multiple high-valued deals such as Byju's, Unacademy, Eruditus, and Vedantu. Zomato's $660 million deal drove up average deal size in foodtech as compared to 2019, while large investments into Dream11 and MPL led to the surge seen in gaming.

TOTAL VENTURE CAPITAL DEAL VALUE PER INVESTOR IN 2020 ($M)
Top 10 investors participated in 20% of the VC deals in 2020, tiger global leads in deal value and sequoia leads in deal volume.

INTERPRETATION:
By analyzing the above graph it clearly shows that the high level of fundraising was also fuelled by two major funds closed by Sequoia Capital: India Venture Fund VII ($525 million) and India Growth Fund III ($825 million), accounting for 40% of all funds raised in 2020 for India-focused VC investments. Sequoia Capital also invested in the highest number of start-ups in 2020, whereas Tiger Global was the most prominent investor in terms of deal value, participating in several deals of more than $100 million each.

VENTURE CAPITAL INVESTMENTS IN DIFFERENT SECTORS
Venture capital seeks to generate big returns on small initial investments and mostly in sectors with low capital requirements, such as in ict or life sciences. Sectors with typically higher capital requirements such as real estate and mining attract a comparatively smaller amount of venture capital investments. This table shows that VC investments in pharmaceutical companies have grown by more than 3.5 times in 2020 and for the first time crossed $1 billion to touch $1.69 billion during January to September 2020. During January to September 2020, the sector attracted $1.69 billion (in 19 deals) as compared to $368 million, a year ago. Last year, as a whole, the sector attracted $825 million across 18 deals, according to Venture Intelligence data. It may be noted, 2020 is a year in which healthcare & life sciences have taken centre stage due to the corona virus (Covid-19) pandemic.

INTERPRETATION:
By analyzing the above graph it clearly shows that during January to September 2020, the sector attracted $1.69 billion (in 19 deals) as compared to $368 million, a year ago. Last year, as a whole, the sector attracted $825 million across 18 deals, according to Venture Intelligence data. It may be noted, 2020 is a year in which healthcare & life sciences have taken centre stage due to the corona virus (Covid-19) pandemic.

VENTURE CAPITAL INVESTMENT IN REAL ESTATE SECTOR
The real estate industry has undergone significant structural changes in the last decade as advancements in tech have created a host of new digitized products and services that are changing how people buy, sell, rent, and invest. Real estate tech is still growing, and companies in the space are drawing more attention and funding from some of the most successful VC firms

Analysis:
This table shows that VC investments in education sector start-ups have almost tripled during January to July 2020 to $998 million, from $310 million, a year ago. Edtech is the most funded sector in 2020.Investors says most of the edtech companies are seeing 3-5X raise in free audiences and anywhere 50-100% growth in monthly revenues due to Covid. Venture Intelligence data shows that during January to July 2020, investors infused $998 million in 31 deals. The total number of deals reported in 2019 was 42 worth $404 million.

INTERPRETATION:
By analyzing the above graph it clearly shows that Byjus Classes topped the chart as the company raised $500 million in 2020 in two tranches. Tiger Global and General Atlantic invested $300 million and $200 million in January and February 2020, respectively. The other top VC investments in the sector include Steadview Capital, Blume Ventures, Nexus Venture Partners, Sequoia Capital India, General Atlantic, Others investment of $110 million in Unacademy.

VENTURE CAPITAL INVESTMENT IN E -COMMERCE SECTOR
Investment in ecommerce firms dropped to 4year low even as online shopping picked up .Screening on Chinese investments, consolidation of players may be reasons, say investor's. E-commerce space in all verticals is more than 10 years old and is thus seeing consolidation behind the winners. strengthen infrastructure logistics and capacity building. It also paves the path for increased private sector participation across the farm-to-fork chain.

Table showing VC investments in Agricultural sector
Year Total investment (in $B) No. of deals for food and the convergence of technologies that is paving the way for new and more efficient operations.

Number of Venture Capital deals in India.
In a venture capital deal, large ownership chunks of a company are created and sold to a few investors through independent limited partnerships that are established by venture capital firms. Sometimes these partnerships consist of a pool of several similar enterprises.  6. Presently high net worth individuals and corporate are not provided with any incentives for investment in VCFs. In absence of any incentive, it is extremely difficult for domestic VCFs to raise money from this investor group that has a good potential. 7. So far VCFs are concentrated in few big cities and are mainly benefitting entrepreneurs located in those big cities. Venture Capital Fund should also be established in semi-urban and rural areas, to use the potential of budding new entrepreneurs. 8. Compliance of local SEBI regulations, FDI rules, FEMA and adherence to CBDT rules for claiming tax exemptions by VCs are great hurdles in growth of venture capital industry. 9. Venture Capital Financing is still not regarded as commercial activity. 10. Restricted Scope of venture capital in India to hitech project.

SUGGESTIONS
 The government should offer attractive opportunity to foreign investor to invest in Indian venture capital firms.  The government of India should allow or encourage pension fund and insurance companies to invest in the venture capital as in United States of America where corporate contributions to venture funds are enormous.  Create more transparency in Venture Capital firms.

Conclusion:
This study is commenced to recognize perspective and awareness of Business tycoons on venture capital and it's financing. The venture capital sector is experiencing its own paradigm shifts, reflecting an increasingly globalized world. Financing new enterprises offering innovative products/services, technology ventures and small and medium enterprises has been and continues to be a challenge in every economy. In the era of globalization, technological self reliance is crucial for the development of the economy and for building competitive advantage. As per their analysis venture capital financing stands at the first place in returns when compare to other avenues, often examination get differ from one individual to another. In vision of the fact that financier is slight conscious due to risk factor is sky-scraping in the financing. Consequently, it can be concluded that financier who are aware of investment in startups are ready to bear risk on their investments. Other than knowledge, various factors like finance, capital also affect their decisions. Venture capitalists in India have notice of newer avenues and regions to expand. VCs have moved beyond IT service but are cautions in exploring the right business model, for finding opportunities that generate better returns for their investors. In terms of impediments to expansion, few concerning factors to VC include; unfavorable political and regulatory environment compared to other countries, difficulty in achieving successful exists and administrative delays in documentation and approval.