Introduction
Venture capital plays an important role in the life cycle of
emerging industries by investing in growth oriented high-risk
ventures. It fills the void between the high quality ideas and the
sources of required funds. Where the traditional methods of
funding, such as loan from banks, subsidies from government bodies
etc., comes as a costly and cumbersome affair for the new
entrepreneurs, venture capital funds have emerged as a saviour
thereby providing necessary aid to the cash starved innovative
industries in exchange of securities.
In India, venture capital fund
("VCF") is regulated by Securities and
Exchange Board of India (Alternative Investment Funds) Regulations,
2012 ("AIF Regulations") issued by the
Securities and Exchange Board of India
("SEBI"). It is recognized as Category I
Alternative Investment Fund which acts as an intermediary in the
financial market, to provide capital to small firms and budding
start-ups having high growth potential.
