We spoke about DD a few times earlier in the previous blogs. But what does DD really mean in the context of venture capital? This is quite important to understand given that, in most cases, there isn’t much data on financials and other metrics available in early-stage companies compared to mature companies. So, what do […]
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Compulsorily Convertible Preference Shares (CCPS) are a type of preference shares issued by a company with a mandatory conversion feature. These shares are a hybrid financial instrument that combines elements of both preference shares and convertible debentures.
Here is a quick explainer of what an Invest Commitee is and how it is constituted. An Invest Commitee in a Venture Capital fund is a group of individuals, usually partners in the Venture Capital fund, responsible for signing off on an investment opportunity. Invest Commitee is typically composed of experienced professionals with diverse skills and backgrounds.
When a startup receives confirmation from investors on its intention to invest, the confirmation is communicated using a document detailing the terms of the investment along with quantum and valuation; this is called a term sheet.
Now that we have a broad overview of VC history, structure, and incentives, let us understand how the dealmaking works.
The monetary incentives for VCs involve two separate concepts – Management fees and Carry. We’ll take a deeper look at these in this post.
Venture capital is a type of private equity that is focused on early-stage companies called startups. And the need for this type of capital came into being because banks and conventional financial institutions are risk-averse. They hesitate to and rarely underwrite loans to businesses early in their lifecycle.
Three decades after the first Venture Capital (VC) firm mushroomed in the US, in 1975, risk capital found its way to India. Even though there were several instances of accidental VC underwriting businesses before 1975, the first formal VC scheme in India was in the form of interest-free loans through the Industrial Finance Corporation of India (IFCI).
A few years ago, around 2016, I remember stumbling onto an old lecture from Don Valentine. For the uninitiated, Don Valentine founded Sequoia Capital VC firm in 1972, before the terms “Silicon Valley” and “venture capital” had even been coined. I can go on and on about how iconic Don was, but his lecture left a […]