5. PERCEPTIONAL ANALYSIS

Transcription

1 5. PERCEPTIONAL ANALYSIS 5.1 INVESTEES UNDERSTANDING ABOUT VENTURE CAPITAL Venture Capital is not an old concept it is quite different to traditional financing, because the venture capitalist interferes in the investee s business as partner unlike in traditional type of financing system. So the entrepreneurs need a complete awareness on venture capital. The data collected in this regard is analyzed and shown in table 5.1 explains about the understanding of undertaking firms on venture capital concept. Table 5.1 APIDC-VCL s Investees Understanding about Venture Capital No. Of Understanding Respondents % Risk Capital 2 20 Capital Investment for only high tech projects 2 20 Capital Investment for unexploited ideas Capital Investment for innovative projects TOTAL Table 5.1 presents the understanding of respondents about venture capital. Near about 20 per cent of the respondents asserted that the venture capital is risk capital; equally about 20 per cent felt that it is capital investment for only high-tech projects, another 50 per cent of respondents opined that it is capital investment for innovative projects. Finally the rest of the respondents opined that venture capital is capital investment for unexploited ideas. 157

2 5.2 SOURCES OF INVESTORS AWARENESS ON VENTURE CAPITAL There are many ways of sources to aware about venture capital such as corporate news, venture capital fund organizations, experience of beneficiaries etc. In table No.5.2, the source of Investors Awareness on Venture Capital is shown. Table 5.2 Investors Awareness on Sources Venture Capital Awareness through No. of Respondents % Corporate News and Journals - - Venture Capital Fund (VCF) Organizations Beneficiaries of VCFs - - Financial Analysts, Advisors and Consultants 5 50 Developmental Financial Institutions. - - Personal Awareness TOTAL Table 5.2 reveals that the sources of awareness of the investees on venture capital. Most of the respondents aware about venture capital finance through financial analysts, advisors, consultants and the rest aware through Venture Capital Fund (VCF) Organizations and personal awareness respectively. 5.3 INVESTEES AWARENESS ON APIDC-VCL For any venture capital fund the entrepreneurs may go with a proposal to get money for their venture. They aware about the existence of a venture capital fund in 158

3 different ways, generally the potential entrepreneurs may realize the same through either by the beneficiaries or Financial Advisors/Analysts. The data collected in this regard is analyzed and shown in Table 5.3. Table 5. 3 Investees Awareness on APIDC-VCL Awareness Through No. of Respondents % Corporate News and Journals - - Venture Capital Fund (VCF) Organizations. - - Beneficiaries of APIDC-VCL 5 50 Financial Analysts, Advisors and Consultants Developmental Financial Institutions. - - Personal Awareness Table 5.3 revels the awareness of Investees of APIDC-VCL about APIDC-VCL s venture capital which is through Financial Analysts(30%), Beneficiaries of APIDC-VCL(50%) and Personal Awareness(20%). 5.4 INNOVATIVE IDEAS AND THEIR GENERATION Generally Venture Capitalists look for new innovative and unexploited ideas for financing, since the success of a venture depends on the idea. The new ideas generates from the changing needs or limitations existing one. APIDC-VCL is also financing only the ventures having new and innovative ideas. The data collected in this regard is analyzed and shown in table 5.4. Table 5.4 Innovative Ideas and their generation Idea generation Frequency % Business Strategy and Research 2 20 Out of R&D 2 20 General Bottleneck 5 50 More field exposure with live interaction with end consumers

4 From the table 5.4 it is very clear that most of the undertakings moved for venture capital due to very innovative business ideals emerged because of general bottlenecks. Besides, the general business strategy and research and continuous development process also helped the entrepreneurs to get the so called new and innovative ideas which made them to woo for venture capital. 5.5 INVESTEES APPROACH TO APIDC-VCL The entrepreneurs when they want to get venture finance they approach the Venture capital organizations personally, through financial advisers or in any other way. Table No 5.5 shows how the investees approached for getting venture finance from APIDC-VCL Table 5.5 Investees Approach to APIDC-VCL Approach No. Respondents % Personal 8 80 Through Financial Advisers / Analysts/ Consultants 2 20 Other Venture Capital Firms - - TOTAL Table 5.5 shows that 80 per cent of the entrepreneurs approached APIDC-VCL for venture capital personally and the remaining 20 per cent of them approached through financial advisers/analysts/consultants. 5.6 ABOUT PROTO-TYPE DEVELOPMENT Most of the entrepreneurs approach the Venture Capital Funds/Firms with proto-type i.e. a complete project report that includes the idea and its generation, feasibility and profitability. APIDC is also giving some importance 160

5 to proto-type development. The data collected in this regard is analyzed and shown in table 5.6. Table 5.6 About Proto-type development Proto-type development No of Respondents % Yes 5 50 No 3 30 Not Applicable 2 20 Total Table 5.6 shows that 50 per cent of the respondents approached by developing a proto-type and near about 30 of the respondents approached without proto-type and about 20 per cent of the respondents felt that there is no need for proto-type for their ventures. 5.7 REACTION OF APIDC-VCL The venture capitalists always look for the innovative proposals from entrepreneurs and when such entrepreneurs consult them, they give positive response. The data collected in this regard on APIDC-VCL is shown in Table 5.7 Table 5.7 Response of APIDC-VCL Response No Respondents % Positively Encouraging Discouraging - - Bad - - Table 5.7 shows that the opinion of the entrepreneurs on the response of the APIDC-VCL after receiving the idea from them. It is evident from the analysis that the company positively encouraged all of them. 161

6 5.8 DIFFICULTY IN GETTING FINANCE While getting the venture capital finance, the investees generally face some difficulties and the success of venture capitalist depends on how best he is at understanding those difficulties. Table No.5.8 shows the opinion of respondents regarding the difficulty in getting finance. Table 5.8 Difficulty in getting finance Difficulty No of Respondents % Yes No TOTAL All most all the respondents opined that none of them experienced any problem in getting finance from APIDC-VCL. 5.9 STATUS OF FINANCIAL STAGES OF UNDERTAKINGS Unlike traditional finance, there are different stages of financing in venture capital financing; generally the main stages are namely, Early Stage, Expansion stage and Acquisition stage. The data collected in this regard is analyzed and shown in table 5.9 Table 5.9 Status of Financial Stages of undertakings Stage No. of Undertakings % Early Stage 4 40 Expansion 5 50 Acquisition

7 Table 5.9 shows that the financial stage of the investees selected for the study. 50 per cent of total undertakings are at expansion stage, 40 per cent are at early stage and the rest are at Acquisition stage STAGE WISE FINANCE EXTENDED BY APIDC-VCL Early stage finance means the amount of finance provided at the development of the project. Finance that can be provided at the extension of the business is known as finance at Expansion stage and finally finance at Acquisition stage is meant for buy-back of the firm. Venture capitalist should estimate the required funds at stages on account of requirement and sanction as well as disburse the same to the venture capital undertakings. In table 5.10 the stage wise finance extended by APIDC-VCL is shown. Table 5.10 Stage wise finance extended by APIDC-VCL (Rs. In Crores) Stage wise finance provided by APIDC-VCL Early Stage Expansion Acquisition 75,00,000 1,00,00,000 50,00,000 Table 5.10 shows that the finance extended by APIDC-VCL for the respondents at stages. Averagely the company has extended the finance Rs. 75,00,000 for ventures at early stage; Rs.1,00,00,000 for ventures at expansion stage and Rs.50,00,000 for ventures at acquisition stage WHETHER IT IS FLOATED IN STOCK EXCHANGE Generally the stocks of the ventures promoted by any venture capital fund in India can be floated at Over The Counter Exchange of India (OTCEI) or at any recognized stock exchange. So far there is no company floating at any 163

8 stock exchange promoted by APIDC-VCL. The data collected in this regard is analyzed and shown in table Table 5.11 Whether it is floated in Stock Exchange Whether floated No of Respondents % Yes - - No TOTAL exchange. Table 5.11 shows that there is no firm floating its stocks at any stock 5.12 TIME TAKEN TO PROVE THE IDEA After getting the finance at early stage, all the investees take some time to prove their idea before commercialization of the same. In APIDC-VCL the time taken by investees to prove their ideas is analyzed and shown based on the data collected in table Table 5.12 Time taken to prove Idea Time taken No of Respondents % Minimum 1-2 years 3 30 Maximum 2-5 years 2 20 Continuous Development > 5yrs 2 20 Not Applicable 3 30 Table 5.12 shows that 30 per cent of the investees have taken 1-2 years time period, 20 per cent have taken moderate time 2-5 years and the other 20 per cent have taken more than 5 years to prove their innovative ideas. In the case of rost of 30 per cent sample respondents the concept itself is not relevant and not applicable. 164

9 5.13 TIME TAKEN TO COMMERCIALIZE THE PRODUCT/SERVICE When the idea is proved then it is the time for investees/undertakings to commercialize the product/service. To commercialize the product/ service they also need some time for planning and organizing the marketisation of the same. Data collected in this regard is analyzed and shown in table Table 5.13 Time taken to commercialize the product/service Time Taken No of Respondents % Immediately after proving 5 50 After one Year 5 50 Above one year - - TOTAL Table 5.13 reveals that 50 per cent of the undertakings has commercialized their product/service immediately after proving without time gap and rest of them have taken one year time period ROLE OF APIDC-VCL IN COMMERCIALIZATION OF THE PRODUCT/SERVICE In venture capital finance there will be a continuous help from capitalist to the entrepreneur in all the functions, in fact participating in management is one of the responsibilities of the venture capitalists. Since Venture Capital is quite different to conventional finance, in venture capital besides the finance activity assistance will be also be given in managerial services by the venture capitalist APIDC-VCL also gives good support in different managerial decisions to its undertakings. Among them help in 165

10 commercialization of product/service is one. In this regard the data collected is shown in table Table 5.14 Role APIDC-VCL in commercialization of the Product/Service Role No of the Respondents % Direct 2 20 Indirect 3 30 None of the above 5 50 Table 5.14 shows that 20 per cent of respondents have got direct and 30 per cent of them got indirect support in commercializing the product/services. In the case of remaining, there is no help rendered by APIDC-VCL INVESTEES OPINION ON THEIR PRODUCT S MARKET RESPONSE With an innovative idea when a new product/ service is offered market response might be very encouraging but all times we cannot say that it is favorable. The ultimate success of a venture that is promoted by venture capital funds like APIDC-VCL depends on the market response towards the product/ services. The data collected from the respondents in this regard is analyzed and shown in table Table 5.15 Investees opinion on their product s market response Opinion No of Respondents % Extremely good 5 50 Moderate 3 30 Average Poor - - From the table 5.15 it is very clear that the undertaking has experienced mixed response from market for their products. Most of them 166

11 has opined that they got extremely good response and remaining of them opined that they have got Moderate and Average response in the market place. However there is no poor response at all PROBLEMS WITH VENTURE CAPITAL FIRMS There are some problems associated with the venture capital finance like traditional finance such as delays in disbursement, time lag in extending managerial services etc. In table 5.16 the problems with which investees suffered in connection with APIDC-VCL s venture financing are shown. Table 5.16 Problems with Venture Capital Firms Type of the Problems No. of Respondents % Delay in Disbursement - - In extending managerial services - - Other problems - - No problems Table 5.16 reveals that all the respondents did not face any problems with APIDC-VCL while they get the venture capital finance 5.17 INVESTEE OPINION ON THE ROLE OF APIDC-VCL The value of any venture capital organization depends on its role-play in undertakings. APIDC-VCL s role is adjudged and shown in table 5.17 on the basis of the data collected from the selected respondents. Table 5.17 Investees opinion on the role of APIDC-VCL Opinion No of Respondents % Good 9 90 Satisfy 1 10 Poor - - Can t say - - TOTAL

12 Table 5.17 shows that the opinion of the Investees on the role of APIDC-VCL. 90 per cent of the investees have opined that the role of the firm is good and the rest of them opined that just they are satisfied with the role played by the firm MANAGEMENT STYLE OF APIDC-VCL For every organization there will be a management style. They do depend on that particular strategy in managing the things of their undertakings. APIDC-VCL is also following a different type of management style mixed with different aspects. The data collected in this regard is shown in table Table 5.18 Management Style of APIDC-VCL Style No of Respondents % To Live with 5 50 Good Business Partners 3 30 Co-Operative, Constructive, Participative and Supportive 2 20 TOTAL Table 5.18 shows that the opinions of Investees on management styles of APIDC-VCL. 50 per cent of them opined that the company follows TO LIVE WITH STYLE, 30 per cent of them felt that the company s style is GOOD BSUINESS PARTNERS and the rest opined that their style is Co- Operative, Constructive, participative and Supportive OPINION ON ADDITIONAL SERVICES Venture Capital is not similar to traditional capital because it can provide some additional services besides the main activity that is investing. In fact it is an essential characteristic of venture capital. Table 5.19 shows the opinion of respondents on whether the APIDC-VCL is providing additional services or not. 168

13 Table 5.19 Opinion on Additional Services Opinion No of respondents % Yes 2 20 No 8 80 Table 5.19 shows the additional services provided by APIDC-VCL to its investees. 80 per cent of the investees felt that the company do not provide any additional services and the rest of them agreed that the got some additional services from the company ADDITIONAL SERVICES PROVIDED BY APIDC-VCL Besides investing money, venture capital firms/funds do extend their helping hand in providing some required services for the success of the ventures. APIDC- VCL is extending some services besides its investing activity such as monitoring, value-addition, providing market information etc. The data collected in this regard is shown in table 20. Table 5.20 Additional Services provided by APIDC-VCL Type of Service No. of Respondents % Monitoring 2 20 Value-addition 2 20 Market information (on changing trends) 4 40 Providing Approaches to various commercial 2 transactions including equity placement. 20 TOTAL Table 5.20 shows the services provided by APIDC-VCL besides its money investment. They include Monitoring, Value-addition and Market Information particularly on changing trends and Providing Approaches to 169

14 various commercial transactions including equity placement. Most of the respondents opined that they got from the company the perfect market information on changing trends that helps them in managing their business very well OPINION OF RESPONDENTS ON THE RELATIONSHIP WITH APIDC-VCL Once if terms are settled and a strong relationship establishes in between venture capitalist and entrepreneur. The entrepreneurs would try to continue relationship for a long-term even for their new projects also. Table 5.21 shows opinion of respondents on the relationship continuation with APIDC-VCL. Table 5.21 Opinion of Respondents on the relationship with APIDC-VCL Opinion No of respondents % Yes No - Table 5.21 shows that all the investees opined to do their new ventures with APIDC-VCL ASSOCIATION WITH APIDC-VCL On the basis of the management style and the given encouragement, the association takes place between the venture capitalist and entrepreneur, which decides the time period of association of investee firms with the venture capitalist. Table 5.22 shows the opinions of the respondents with regard to association with APIDC-VCL. 170

15 Table 5.22 Association with APIDC-VCL Years No of respondents % 1-5 years years - - Above 10 years - - Forever 1 10 Table 5.22 shows the investees desire to be associated with APIDC-VCL. Most of them opined that they would like to be with APIDC-VCL up to five years and the rest of them felt that they want to be forever with the company RANKING THE APIDC-VCL When respondents were asked to rank the APIDC-VCL, they have given positive responses based on the services they got in comparison with other venture capital firms. Table 5.23 shows that the opinions of the respondents for ranking the APIDC-VCL. Table 5.23 Ranking the APIDC-VCL Opinion No of Respondents % Excellent 2 50 Good 2 50 Satisfactory - - Poor - - Total In Table 5.23, APIDC-VCL is adjudged as an excellent venture capital firm by 50 per cent of the respondents and as Good by the rest of them ROLE OF APIDC-VCL The role of the venture capitalist is most important in deciding the fate of the undertakings since he gets involved in every decision of the 171

16 undertakings. In table 5.24 the role of APIDC-VCL is shown in making the undertakings as successful one. Table 5.24 Role of APIDC-VCL Role No of Respondents % Proactive 9 90 Interfering 1 10 Table 5.24 shows that in most of the undertakings APIDC-VCL has played a proactive role and it has just played an Interfering role in the rest of the firms RESPONDENTS OPINION ON THE ACTING OF APIDC-VCL LTD In general the investor of any venture plays a dominant role as an owner but in some cases it may be as partners which depend on the environment. Table 5.25 explains as to how the APIDC-VCL is playing its role as a partner or owner. Table 5.25 Respondents opinion on the acting of APIDC- VCL LTD Type No of respondents % Partner 9 90 Owner 1 10 From table 5.25 it is evident that 90 per cent of the investees opined that APIDC-VCL has acted as a partner and rest of them felt that it acted as owner OPINIONS ON EXIT ROUTE Exit route is one of the crucial decisions of the venture capital finance which depends on the circumstances at the time of venture capitalists 172

17 withdrawal of the investment. Table 5.26 shows the opinions of the respondents on exit route. Exit Route Table 5.26 Opinions on Exit Route No of respondents Listing of the shares, Reward for Association and support during critical years I.P.Os - - Buy-Back 5 50 Depends on circumstances 2 20 None of the above - - Table 5.26 shows the Exit-Routes stated by the investees. 50 per cent of the investees stated that they would like APIDC-VCL to exit-through Buy-Back, 30 per cent of investees are interested in the exit strategy as Listing of the shares, reward for association and support during critical years. However the rest of them have not yet decided a particular exit-route. % 173