LAWS GOVERNING VENTURE CAPITAL IN INDIA

Subject title- Banking Law

Submitted to- Asst. Prof. Kamaljeet Singh
Submitted by- Shruti Kamble
Student Id: MU12BALLB001
Class- BA. LLB
Year- 4th
Semester- 8th

MATS University
MATS Law School

ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals. I would like to extend my sincere thanks to all of them.
I am highly indebted to my subject lecturer Asst Prof. Kamaljeet Singh for his guidance and
constant supervision as well as for providing necessary information regarding the project &
also for their support in completing the project.
I would like to express my gratitude towards my parents for their kind co-operation and
encouragement which help me in completion of this project.
I would like to express my special gratitude and thanks to my subject lecturer for giving me
such attention and time.
My thanks and appreciations also go to my friends in developing the project and people who
have willingly helped me out with their abilities.

Thank You
Shruti Kamble

Contents
INTRODUCTION......................................................................................................................4
WHAT IS VENTURE CAPITAL...............................................................................................5
SEBI (ALTERNATIVE INVESTMENT FUNDS) REGULATIONS, 2012.............................7
REGISTRATION.......................................................................................................................8
INVESTMENT STRATAGY.....................................................................................................8
INVETMENT IN ALTERNATE INVESTMENT FUND.........................................................8
PLACEMENT MEMORANDUM.............................................................................................9
SCHEMES...............................................................................................................................10
LISTING..................................................................................................................................10
TRANSPARENCY..................................................................................................................10
GENERAL OBLIGATION......................................................................................................11
OBLIGATION OF MANAGER.............................................................................................12
MAINTENANCE OF RECORDS...........................................................................................12
WINDING UP..........................................................................................................................12
BOARDS RIGHT TO INSPECT............................................................................................14
NOTICE BEFORE INSPECTION..........................................................................................14
OBLIGATION OF ALTERNATIVE INVESTMENT FUND ON INSPECTION..................15
SUBMISSION OF REPORT TO THE BOARD......................................................................15
LIABILITY FOR ACTION IN CASE OF DEFAULT............................................................16
RECOMMENDATION BY ALTERNATIVE INVESTMENT POLICY ADVISORY
COMMITTEE..........................................................................................................................17
CONCLUSION........................................................................................................................18
REFERENCES.........................................................................................................................19

INTRODUCTION
Evolution and development of mankind is unimaginable without Invention and Innovation.
The 21st human civilisation which we are witnessing today, comprising of lavish lifestyle and
wide range of options is the result of our ancestors willingness to take risk. And the room is
still open for the new developments and hence the risks. Conversion encephalic imaginations
and ideas into reality requires huge pool of money, which very often denied by the banks thus
these entrepreneurs requires certain source of finance which is done by the venture capital
funds. The venture capital fund managers as those that not only provide the money but also
the value added resources to entrepreneurial firms. Venture capital fund managers play a
significant role in enhancing the value of their entrepreneurial investment as they provide
financial, administrative, marketing and strategic advice to entrepreneurial firms as well as
facilitating a network of support for them.1 Among several the major advantages of the
venture capital fund are that it brings wealth and expertise to the company, large sum of
equity finance can be provided, the business does not stand the obligation to repay the money,
in addition to capital, it provides valuable information, resources, technical assistance to
make a business successful. Thus from time to time SEBI has come up with regulations to
regulate the venture capital in India.
SEBIs objectives and vision for venture capital in India state that Venture Capital funding is
different from traditional sources of financing. Venture capitalists finance innovation and
ideas which have potential for high growth but with inherent uncertainties. This makes it a
high-risk, high return investment. Apart from finance, venture capitalists provide networking,
management and marketing support as well. In the broadest sense, therefore, venture capital
connotes risk finance as well as managerial support. In the global venture capital industry,
investors and investee firms work together closely in an enabling environment that allows
entrepreneurs to focus on value creating ideas and venture capitalists to drive the industry
through ownership of the levers of control in return for the provision of capital, skills,
information and complementary resources. This very blend of risk financing and hand
holding of entrepreneurs by venture capitalists creates an environment particularly suitable
for knowledge and technology based enterprises.2 At present SEBI has listed 177 Venture
capital funds in India.3

1 DOUGLAS CUMMING, Venture capital investment stratagies structure and policies, P.4
4

WHAT IS VENTURE CAPITAL

Venture capital fund is mode of financing the startups or early stage companies having a
novel technology or risky business models. Douglas Cumming has stated venture capital as
money of invention4 as the start up companies with a potential to grow need a certain
amount of investment. Wealthy investors like to invest their capital in such businesses with a
long-term growth perspective. This capital is known as venture capital and the investors are
called venture capitalists.5
Term venture capital is defined under Section 2(z) of the SEBI (Alternative Investment
Funds) Regulations, 2012 which means an Alternative Investment Fund which invests
primarily in unlisted securities of start-ups, emerging or early-stage venture capital
undertakings mainly involved in new products, new services, technology or intellectual
property right based activities or a new business model.
Section 2 (b) of the regulation, defines Alternative Investment Fund as any fund established
or incorporated in India in the form of a trust or a company or a limited liability partnership
or a body corporate which,(i) is a privately pooled investment vehicle which collects funds from investors, whether
Indian or foreign, for investing it in accordance with a defined investment policy for the
benefit of its investors; and
(ii) is not covered under the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996, Securities and Exchange Board of India (Collective Investment Schemes)
Regulations, 1999 or any other regulations of the Board to regulate fund management
activities
And the following are excluded from the purview of his regulation

2 Objectives And Vision For Venture Capital In India

http://www.sebi.gov.in/commreport/venrep2.html
3 http://www.sebi.gov.in/investor/venturecap.html
4 DOUGLAS CUMMING, Venture Capital Investment Stratagies Structure And Policies
5 http://economictimes.indiatimes.com/definition/venture-capital
5

(i) family trusts;

(ii) ESOP Trusts
(iii) employee welfare trusts or gratuity trusts;
(iv) holding companies within the meaning of Section 2(46) of the Companies Act, 2013; (v)
other special purpose vehicles not established by fund managers, including securitization
trusts, regulated under a specific regulatory framework;
(vi) funds managed by securitisation company or reconstruction company which is registered
with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002; and
(vii) any such pool of funds which is directly regulated by any other regulator in India;
And the term venture capital undertaking is defined under Section 2(aa) as a domestic
company: (i) which is not listed on a recognised stock exchange in India at the time of
making investment; and (ii) which is engaged in the business for providing services,
production or manufacture of article or things and does not include following activities or
sectors:
(1) non-banking financial companies;
(2) gold financing;
(3) activities not permitted under industrial policy of Government of India;
(4) any other activity which may be specified by the Board in consultation with Government
of India from time to time.
The Venture Capital Fund provides the following:

Finance new and rapidly growing companies

Typically knowledge-based, sustainable, up scalable companies
Purchase equity or quasi equity securities
Assist in the development of new product or services
Add value to the company through active participation
Take higher risks with the expectation of higher rewards
Have a long term orientation

SEBI (ALTERNATIVE INVESTMENT FUNDS) REGULATIONS, 2012

SEBI had earlier framed the SEBI (Venture Capital Funds) Regulations, 1996 to encourage
investments into strat-ups and mid-size companies. Since the introduction of VCF
Regulations, it was observed by SEBI that the venture capital route was being used by several
other categories of funds such as private equity funds, real estate funds etc. Further since
registration as a venture capital fund was not mandatory under VCF Regulations, not all
private equity or other categories of funds were registering with SEBI. While these funds did
not enjoy certain exemptions that were available to VCFs, they were not subjected to any
restriction either. Currently, while investors such as mutual funds and collective investment
schemes are well regulated, SEBI noted the need for comprehensive regulations to deal with
the investments that are sourced from diverse parts of the private pool of capital.
Accordingly SEBI notified the Alternative Investment Fund (AIF) and replace the previous
SEBI (Venture Capital Funds) Regulations, 1996, to govern unregulated entities and create a
level playing ground for existing venture capital investors. The AIF regualtions aim to reulate
funds involved in the pooling or raising of private capital from institutional investors or high
net worth investors with a view to invest such funds in accordance with defined investmet
policy for benefit of the investors and the manager of such fund, irrespective of their legal
domicile. These regulations provide that an entity, seeking pool and manage such private pool
of capital for investing in securities or acting as an alternative investment fund, should be
registered with SEBI under these regualtions.
Existing VCFs will be permitted to continue and shall be governed by the VCF regualtions
till such fund or scheme managed by the fund is wound up.6 VCF will not be permitted to
raise any fresh funds after notification of these regulations except for commitments already
made by investors as on the date of the notification. These VCFs may seek re-registration
under AIF relations, subject to approval of two thirds of their investors by value. These funds
will not be allowed to float any news scheme without registration under AIF regulations.
For this purpose SEBI has classified AIF into the following three broad categories:
Category I

6 Regulation 3(2), SEBI (Alternative Investment Fund) 2012

7

Fund that invest in startup early stage ventures or social ventures or small medium enterprises
or infrastructure or other sectors which the government or regulators consider as socially or
economically desiarable which include Venture capital Fund, SME funds, Social Venture
Funds, Infra Funds and other such Alterative investment funds as may be specified in the AIF
regulations.7
Category II
Funds that do not fall in Category I and III AIF and those who do not undertake leverage or
borrowing other that to meet the permitted day to day operational requirement including
Private Equity funds or debt funds8
Category III
Funds that employ diverse or complex trading stratagies and may employ leverage including
through investment in listed and unlisted derivatives for e.g. Hedge Funds.9

REGISTRATION
All the AIF are required to e mandatorily registered under anyone of the above mentioned
categories10. AIF regulations permit launch of multiple schemes under an AIF without
separate registration from SEBI subject to filing of information memorandum with SEBI. The
certificate of registration, once granted, shall be valid till winding up of the concerned AIF.11

INVESTMENT STRATAGY
All Alternative Investment Fund shall state investment strategy, investment purpose and its
investment methodology in its placement memorandum to the investors. Any material

7 Regulation 3(4)(a), SEBI (Alternative Investment Fund) 2012

8Regulation 3(4)(b), SEBI (Alternative Investment Fund) 2012
9 Regulation 3(4)(c), SEBI (Alternative Investment Fund) 2012
10 Regulation 3(1), SEBI (Alternative Investment Fund) 2012
11Regulation 3(10), SEBI (Alternative Investment Fund) 2012
8

alteration to the fund strategy shall be made with the concent of atleast two third of unit
holders by value of their investment in the AIF.12

INVETMENT IN ALTERNATE INVESTMENT FUND

Investment in all categories of Alternative Investmet Funds shall be subject to the follosing
conditions13:

The AIF may raise fund from any investor whether Indian, Foreign or NRIs by way of

issue of units,
Each scheme of AIF shall have corpus of atleast 20 Crore Rupees
The AIF shall not accept from an investor, an investmet of value less than one crore
rupees. However, in case of investors who are employees or directors of the AIF or
employees or directors of the Manager, the minimum value of investment should be

25 lakh Rupees
The manager sponcer shall have a continuing interest in the AIF of not less two and
half percent of the corpus or five crore rupees, whichever is lower, in the form of
investment in the Alternative Investment Fund and such interest shall not be through
the waiver of management fees
However, for Category III Alternative Investment Fund, the continuing interest shall

be not less than five percent of the corpus or ten crore rupees, whichever is lower.
(e) the Manager or Sponsor shall disclose their investment in the Alternative

Investment Fund to the investors of the Alternative Investment Fund;

(f) no scheme of the Alternative Investment Fund shall have more than one thousand

investors;
(g) the fund shall not solicit or collect funds except by way of private placement.

PLACEMENT MEMORANDUM
AIF can raise fund through private pacement by issue of memorandumor placement
memorandum by whatever name called. Such information memorandum or placement
memorandum must containall material information about the AIF and the Manager, back
ground of key investment team of manager, targeted investoes , fees and all other expenses
proposed to be charged, tenure of AIF or scheme, conditions or limits on redemption,
investment strategy, risk management tools and parameters employed, key service providers,
12 Regulation 9, SEBI (Alternative Investment Fund) 2012
13Regulation 10, SEBI (Alternative Investment Fund) 2012
9

conflict of interest and procedures to identify and address them , disciplinary history, the
terms and conditions on which the Manager offers investment services, its affiliations with
other intermediaries, manner of winding up of AIF or the Scheme and such other
informations as may be necessary for the investor to take an infrmed decision on whether to
invest in AIF.14

SCHEMES
The AIF may launch schemes subject to filing of a scheme memorandum at least ten working
days prior to launch of the scheme with SEBI. Such Scheme memorandum shall contain all
material information about the investments proposed under such scheme.15

LISTING
Units of close ended Alternative Investment Fund may be listed on stock exchange subject to
a minimum tradable lot of one crore rupees. Listing of Alternative Investment Fund units
shall be permitted only after final close of the fund or scheme.

TRANSPARENCY
All Alternative Investment Funds shall ensure transparency and disclosure of information to
investors on the following16:

financial, risk management, operational, portfolio, and transactional information

regarding fund investments shall be disclosed periodically to the investors;

any fees ascribed to the Manager or Sponsor; and any fees charged to the Alternative
Investment Fund or any investee company by an associate of the Manager or Sponsor
shall be disclosed periodically to the investors;

(c)any inquiries/ legal actions by legal or regulatory bodies in any jurisdiction, as and
when occurred;

any material liability arising during the Alternative Investment Funds tenure shall be
disclosed, as and when occurred;

14 Regulation 11, SEBI (Alternative Investment Fund) 2012

15 Regulation 12, SEBI (Alternative Investment Fund) 2012
16Regulation 22, SEBI (Alternative Investment Fund) 2012
10

any breach of a provision of the placement memorandum or agreement made with the
investor or any other fund documents, if any, as and when occurred;

change in control of the Sponsor or Manager or Investee Company.

Alternative Investment Fund shall provide at least on an annual basis, within 180 days
from the year end, reports to investors including the following information, as may be
applicable to the Alternative Investment Fund:-

A. financial information of investee companies.

B. material risks and how they are managed which may include:
a) concentration risk at fund level;
b) foreign exchange risk at fund level;
c) leverage risk at fund and investee company levels;
d) realization risk (i.e. change in exit environment) at fund and investee company levels;
e) strategy risk (i.e. change in or divergence from business strategy) at investee company
level;
f) reputation risk at investee company level;
g) extra-financial risks, including environmental, social and corporate governance risks,
at fund and investee company level.

(h) Category III Alternative Investment Fund shall provide quarterly reports to
investors in respect of clause (g) within 60 days of end of the quarter;

any significant change in the key investment team shall be intimated to all investors;

(j) alternative Investment Funds shall provide, when required by the Board,
information for systemic risk purposes (including the identification, analysis and
mitigation of systemic risks).

11

GENERAL OBLIGATION
All Alternative Investment Funds shall review policies and procedures, and their
implementation, on a regular basis, or as a result of business developments, to ensure their
continued appropriateness. The Sponsor or Manager of Alternative Investment Fund shall
appoint a custodian registered with the Board for safekeeping of securities if the corpus of the
Alternative Investment Fund is more than five hundred crore rupees. All Alternative
Investment Funds shall inform the Board in case of any change in the Sponsor, Manager or
designated partners or any other material change from the information provided by the
Alternative Investment Fund at the time of application for registration. In case of change in
control of the Alternative Investment Fund, Sponsor or Manager, prior approval from the
Board shall be taken by the Alternative Investment Fund. The books of accounts of the
Alternative Investment Fund shall be audited annually by a qualified auditor.
OBLIGATION OF MANAGER.
The Manager shall be obliged to:

address all investor complaints;

provide to the Board any information sought by Board;

maintain all records as may be specified by the Board;

take all steps to address conflict of interest as specified in these regulations;

ensure transparency and disclosure as specified in the regulations.17

MAINTENANCE OF RECORDS
The Manager or Sponsor shall be required to maintain following records describing:

the assets under the scheme/fund;

valuation policies and practices;

investment strategies;

particulars of investors and their contribution;

17 Regulation SEBI (Alternative Investment Fund) 2012

12

rationale for investments made18.

WINDING UP.
An Alternative Investment Fund set up as a trust shall be wound up:
a) when the tenure of the Alternative Investment Fund or all schemes launched by the
Alternative Investment Fund, as mentioned in the placement memorandum is over; or
b) if it is the opinion of the trustees or the trustee company, as the case may be, that the
Alternative Investment Fund be wound up in the interests of investors in the units; or
c) if seventy five percent of the investors by value of their investment in the Alternative
Investment Fund pass a resolution at a meeting of unitholders that the Alternative
Investment Fund be wound up; or
d) if the Board so directs in the interests of investors.
An Alternative Investment Fund set up as a limited liability partnership shall be wound up in
accordance with the provisions of The Limited Liability Partnership Act, 2008:
a) when the tenure of the Alternative Investment Fund or all schemes launched by the
Alternative Investment Fund, as mentioned in the placement memorandum is over; or
b) if seventy five percent of the investors by value of their investment in the Alternative
Investment Fund pass a resolution at a meeting of unitholders that the Alternative
Investment Fund be wound up; or
c) if the Board so directs in the interests of investors.
(3) An Alternative Investment Fund set up as a company shall be wound up in accordance
with the provisions of the Companies Act, 1956 (1 of 1956).
(4) An Alternative Investment Fund set up as a body corporate shall be wound up in
accordance with the provisions of the statute under which it is constituted.
(5) The trustees or trustee company or the Board of Directors or designated partners of the
Alternative Investment Fund, as the case maybe, shall intimate the Board and investors of the
circumstances leading to the winding up of the Alternative Investment Fund.
18 Regulation 27, SEBI (Alternative Investment Fund) 2012
13

(6) On and from the date of intimation under sub-regulation (5) of regulation 29, no further
investments shall be made on behalf of the Alternative Investment Fund so wound up.
(7) Within one year from the date of intimation under sub-regulation (5) of regulation 29, the
assets shall be liquidated, and the proceeds accruing to investors in the Alternative Investment
Fund shall be distributed to them after satisfying all liabilities.
(8) Notwithstanding anything contained in sub-regulation (7) and subject to the conditions, if
any, contained in the placement memorandum or contribution agreement or subscription
agreement, as the case may be, in specie distribution of assets of the Alternative Investment
Fund, shall be made by the Alternative Investment Fund at any time, including on winding up
of the Alternative Investment Fund, as per the preference of investors, after obtaining
approval of at least seventy five percent of the investors by value of their investment in the
Alternative Investment Fund.
(9) Upon winding up of the Alternative Investment Fund, the certificate of registration shall
be surrendered to the Board19.

BOARDS RIGHT TO INSPECT

The Board may suo motu or upon receipt of information or complaint appoint one or more
persons as Inspecting Authority to undertake inspection of the books of account, records and
documents relating to an Alternative Investment Fund for any of the following reasons,
namely,

to ensure that the books of account, records and documents are being
maintained by the Alternative Investment Fund in the manner specified in
these regulations;

to inspect complaints received from investors, clients or any other person, on

any matter having a bearing on the activities of the Alternative Investment
Fund;

to ascertain whether the provisions of the Act and these regulations are being
complied with by the Alternative Investment Fund;

19Regulation 29, SEBI (Alternative Investment Fund) 2012

14

(d) to inspect suo motu the affairs of an Alternative Investment Fund, in the interest of the
securities market or in the interest of investors20.

NOTICE BEFORE INSPECTION

Before ordering an inspection under regulation 30, the Board shall give not less than ten days
notice to the Alternative Investment Fund. Where the Board is satisfied that in the interest of
the investors no such notice should be given, it may by an order in writing direct that the
inspection of the affairs of the Alternative Investment Fund be taken up without such notice.
During the course of an inspection, the Alternative Investment Fund against whom the
inspection is being carried out shall be bound to discharge its obligations as provided in
regulation 3221.

OBLIGATION OF ALTERNATIVE INVESTMENT FUND ON INSPECTION

(1) It shall be the duty of every officer of the Alternative Investment Fund in respect of whom
an inspection has been ordered under regulation 30 and any other associated person who is in
possession of relevant information pertaining to conduct and affairs of such Alternative
Investment Fund including Manager, if any, to produce to the Inspecting Authority such
books, accounts and other documents in his custody or control and furnish him with such
statements and information as the said Authority may require for the purposes of the
inspection.
(2) It shall be the duty of every officer of the Alternative Investment Fund and any other
associated person who is in possession of relevant information pertaining to conduct and
affairs of the Alternative Investment Fund including the manager to give to the Inspecting
Authority all such assistance and shall extend all such co-operation as may be required in
connection with the inspection and shall furnish such information as sought by the Inspecting
Authority in connection with the inspection.
(3) The Inspecting Authority shall, for the purposes of inspection, have power to examine on
oath and record the statement of any employees, directors or person responsible for or

20Regulation 30, SEBI (Alternative Investment Fund) 2012

21Regulation 31, SEBI (Alternative Investment Fund) 2012
15

connected with the activities of Alternative Investment Fund or any other associated person
having relevant information pertaining to such Alternative Investment Fund.
(4) The Inspecting Authority shall, for the purposes of inspection, have power to obtain
authenticated copies of documents, books, accounts of Alternative Investment Fund, from any
person having control or custody of such documents, books or accounts.22
SUBMISSION OF REPORT TO THE BOARD
The Inspecting Authority shall, as soon as possible, on completion of the inspection submit an
inspection report to the Board. However, if directed to do so by the Board, he may submit an
interim report.23 Communication of fi, ndings, etc. to the Alternative Investment Fund.
The Board may after consideration of the inspection report and after giving reasonable
opportunity of hearing to the Alternative Investment Fund or its trustees, directors or
manager issue such direction as it deems fit in the interest of securities market or the
investors including directions in the nature of :
(a) requiring an Alternative Investment Fund not to launch new schemes or raise money from
investors for a particular period;
(b) prohibiting the person concerned from disposing of any of the properties of the fund or
scheme acquired in violation of these regulations;
(c) requiring the person connected to dispose of the assets of the fund or scheme in a manner
as may be specified in the directions;
(d) requiring the person concerned to refund any money or the assets to the concerned
investors along with the requisite interest or otherwise, collected under the scheme;
(e) prohibiting the person concerned from operating in the capital market or from accessing
the capital market for a specified period.24

22Regulation 32, SEBI (Alternative Investment Fund) 2012

23Regulation 33, SEBI (Alternative Investment Fund) 2012
24 Regulation 34, SEBI (Alternative Investment Fund) 2012
16

LIABILITY FOR ACTION IN CASE OF DEFAULT

An Alternative Investment Fund which
(a) contravenes any of the provisions of the Act or these regulations;
(b) fails to furnish any information relating to its activity as an Alternative Investment Fund
as required by the Board;
(c) furnishes to the Board information which is false or misleading in any material particular;
(d) does not submit periodic returns or reports as required by the Board;
(e) does not co-operate in any enquiry, inspection or investigation conducted by the Board;
(f) fails to resolve the complaints of investors or fails to give a satisfactory reply to the Board
in this behalf, shall be dealt with in the manner provided under the Securities and Exchange
Board of India (Intermediaries) Regulations, 2008, shall be dealt with in the manner provided
under the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.
(2) Sub-regulation (1) shall not prejudice the powers of the Board to issue directions or
measures under regulation 34 or under sections 11, 11B, 11D, sub-section (3) of section 12 or
section 24 or Chapter VIA of the Act or under any other law for the time being in force25.

RECOMMENDATION BY ALTERNATIVE INVESTMENT POLICY ADVISORY

COMMITTEE
The Alternative Investment Policy Advisory Committee under the chairmanship of Shri N R
Narayan Murthy, proposed introduction of securities transaction tax at an appropriate rate on
all distribution of AIF investments short term gains and other income and elimination of any
with holding of tax. After STT income from AIF should be tax free to investors.26 It has also
susggested for making safe-harbour effective for managing funds from India. To attract
foreign capital by having fund managers based in India, it is important that their operations in
India are not treated as permanent establishments under Double Taxation Avoidance
Agreements (DTAAs), the committee has suggested. Currently most fund managers of
25 Regulation 35, SEBI (Alternative Investment Fund) 2012
26 Reena Zachariah, Sebi panel headed by NR Narayana Murthy proposes easier norms for VC, PE
fundshttp://articles.economictimes.indiatimes.com/2016-01-18/news/69870610_1_sebi-panel-venture-capitalalternative-investment-funds

17

offshore funds manage their investments from offshore locations rather than from India. This
is a disadvantage to both them and India. The panel said that proactive measures need to be
taken to attract fund managers to India due to the beneficial impact on the Indian economy
and the creation of a robust eco-system to boost entrepreneurship, job creation and GDP
growth.27

27 Ibid.
18

CONCLUSION
Venture Capitalists in Indian have notice of newer avenues and regions to expand. VCs have
moved beyond IT service but are cautious in exploring the right business model, for finding
opportunities that generate better returns for their investors. Between 2001-2015, venture
capital and private equity funds invested over $103 Billion in more than 3100 Indian
companies across 12 major sectors ranging from startups to mature midsized companies.28
In terms of impediments to expansion, few concerning factors to Venture capital include;
unfavorable political and regulatory environment compared to other countries, difficulty in
achieving successful exists and administrative delays in documentation and approval. In spite
of few non attracting factors, Indian opportunities are no doubt promising which is evident by
the large number of new entrants in past years as well in coming days. Nonetheless the
market is challenging for successful investment. Therefore Venture capitalists responses are
upbeat about the attractiveness of the India as a place to do the business.

28 Report Submitted By Alternative Investment Policy Advisory Committee, available at:

http://www.sebi.gov.in/cms/sebi_data/attachdocs/1453278327759.pdf

19

REFERENCES
SHASHI K GUPTA, NISHJA AGGARWAL, NEETI GUPTA, Financial Institutions
and Markets, Kalyani Publishers
DOUGLAS CUMMING, Venture Capital Investment Stratagies Structure And
Policies, Oxfrd Publications
SEBI (Alternative Investment Fund) Regulation, 2012
Objectives And Vision For Venture Capital In India, available at :
http://www.sebi.gov.in/commreport/venrep2.html
List of Venture Capitals, available at: http://www.sebi.gov.in/investor/venturecap.html
Report Submitted By Alternative Investment Policy Advisory Committee

20