LECTURE-6 - FINANCIAL SERVICES IN INDIA-FUND BASED FINANCIAL SERVICES FOR B COM CA SEM 4
Module-2
Fund based financial services
Fund based financial activities
Fund based finance is a method of providing structured working capital and term loans that are secured by account receivables, inventory,machinery, equipment, and real estate. FBFS are financing method that is driven by the assets of the companies
1. Venture capital Venture capital is financing that investors provide to start up companies and small businesses that are believed to have a long term growth potential and risk. Wealthy investors like to invest their capital in such businesses with long - term growth prospective.This capital is known as venture capital and the investors are called venture capitalist.
Features of Venture Capital
1. High Degrees of Risk 2.Equity participation
3. Long term investment
4. Participation in Management.
5. Long term commitment
1. High degrees of risk
. Venture capital represents financial investment in a highly risk project with the objective of earning a high rate of return
2. Equity participation
Venture capital financing is , invariably,an actual or potential equity participation wherein the objective of venture capitalist is to make capital gain by selling the shares once the firm becomes profitable
3. Long term investment
Venture capital financing is a long term investment. It generally takes a long period to encash the investment in securities made by the venture capitalists
4. Participation in Management In addition to providing capital,venture capital funds take an active interest in the management of the assisted firms.
5. Long term commitment Venture capital funds need to be latched in a for a period of few years before disinvestment