Venture Capitals


Startup companies with a potential to grow, which need a certain amount of investments, usually after the Angel Investors phase. Wealthy investors like to invest their capital in such businesses with a long-term growth perspective. This capital is known as venture capital (a form of private equity) and the investors are called venture capitalists.

In other words, it is a way for companies to receive money in the short term and for investors to grow wealth in the long term.

Venture Capitals tend to focus on emerging companies and such investments are risky as they are illiquid, but also have the potential to provide impressive returns if invested in the right venture.

How Venture Capital works

In a venture capital deal, large ownership chunks of a company are created and sold to a few investors through independent limited partnerships that are established by venture capital firms. Sometimes these partnerships consist of a pool of several similar enterprises.

One important difference between venture capital and other private equity deals, however, is that venture capital tends to focus on emerging companies seeking substantial funds for the first time, while private equity tends to fund larger, more established companies that are seeking an equity infusion or a chance for company founders to transfer some of their ownership stakes.

Timing Is Everything. More than 80% of the money invested by venture capitalists goes into the adolescent phase of a company’s life cycle. In this period of accelerated growth, the financials of both the eventual winners and losers look strikingly similar.

Venture Capital Funding Process

  • The first step for any business looking for venture capital is to submit a business plan, a venture capital firm.
  • If interested in the proposal, the firm or the investor must then perform due diligence, which includes a thorough investigation of the company’s business model, products, management, and operating history, among other things. Since venture capital tends to invest larger amounts in fewer companies, this background research is very important.
  • Many venture capital professionals have had prior investment experience, often as equity research analysts; others have a Master in Business Administration (MBA) degree. 
  • Venture capital professionals also tend to concentrate on a particular industry. A venture capitalist that specializes in healthcare, for example, may have had prior experience as a healthcare industry analyst.
  • Once due diligence has been completed, the firm or the investor will pledge an investment of capital in exchange for equity in the company. These funds may be provided all at once, but more typically the capital is provided in rounds.
  • The firm or investor then takes an active role in the funded company, advising and monitoring its progress before releasing additional funds.
  • The investor exits the company after a period of time, typically four to six years after the initial investment, by initiating a merger, acquisition, or initial public offering (IPO).

Stages of Venture Capital Financing

Venture Capital financing includes the following common stages:

Pre-seed stage

  • The earliest stage of funding a new company comes so early in the process that it is not generally included among the rounds of funding at all.
  • Known as “pre-seed” funding, this stage typically refers to the period in which a company’s founders are first getting their operations off the ground.
  • In most cases, the investors in a pre-seed funding situation are the company founders themselves.
  • In this phase, funding is usually raised up to 25 Lakhs*.

Seed stage

  • It is considered as the setup stage where a person or a venture approaches an angel investor or an investor in a venture capital firm for funding for their idea/product.
  • During this stage, the person or venture has to convince the investor why the idea/product is worthwhile. The investor will investigate the technical and economic feasibility (feasibility study) of the idea.
  • In some cases, there is some sort of prototype of the idea/product that is not fully developed or tested.
  • In this phase, funding is usually raised up to 5 crores*.

Series-A stage.

  • In this round, it’s important to have a plan for developing a business model that will generate long-term profit.
  • Often times, seed startups have great ideas that generate a substantial number of enthusiastic users, but the company doesn’t know how it will monetize the business.
  • At this stage, investors are not just looking for great ideas. Rather, they are looking for companies with great ideas as well as a strong strategy for turning that idea into a successful, money-making business.
  • In this phase, funding is raised usually between ₹ 25 crore to ₹ 40 crore*.

Series-B stage.

  • Series Brounds are all about taking businesses to the next level, past the development stage.
  • Investors help startups get there by expanding market reach. Companies that have gone through seed and Series A funding rounds have already developed substantial user bases and have proven to investors that they are prepared for success on a larger scale.
  • Series B funding is used to grow the company so that it can meet these levels of demand.
  • In this phase, funding is raised usually more than ₹ 50 crore*. 

Series-C stage.

  • Businesses that make it to Series C funding sessions are already quite successful. These companies look for additional funding in order to help them develop new products, expand into new markets, or even to acquire other companies.
  • In Series C rounds, investors inject capital into the meat of successful businesses, in an effort to receive more than double that amount back.
  • Series C funding is focused on scaling the company, growing as quickly and as successfully as possible.
  • The funding raised in this phase is not specific, since it depends on every organization’s valuation and requirements.

Bridge (Seed-D) stage.

  • In general, this is the last stage of the venture capital financing process. The main goal of this stage is for the venture to go public so that investors can exit the venture with a profit commensurate with the risk they have taken.
  • At this stage, the venture achieves a certain amount of market share. This gives the venture some opportunities, for example:
  • Mergerwith other companies
  • Keeping new competitors away from the market
  • Eliminate competitors

*The data provided above is based on research and surveys, it is not specific for each and every organization.

How Finlender helps you?

We’ve been there

Having worked with many Venture Capital companies, we provide resources and solutions to support initiatives across the entire finance function. We provide objective and unbiased advice on growth capital, capital restructuring, buyouts and any other situation-specific requirements to our clients.

We’re problem solvers

We work shoulder-to-shoulder with Portfolio Company CFOs and their teams to deliver long-term, scalable solutions that improve business operations and maximize investment value. We assist the clients in raising funds or in selling their equities to a financial or strategic investor. We are one of the best Venture Capital investor in India who deliver end to end solutions that take care of all ‘pre’ to ‘post’ sanction needs of clients.

We’re flexible

We have a well-rounded perception of what’s at stake for investors and their operating partners. Finlender brainstorm with management, manage multiple investors and coordinate with service providers for Due Diligence process. We are focused on helping our clients to realize value from each transaction, and tailor our approach to their individual needs.

We’re a trusted partner

We value long-term client relationships and think of ourselves as a trusted advisor. We bring a client-first approach to each engagement and supply services that add value throughout the transaction and investment life cycle.

Investment solutions offered

FinLender India has the know-how to make and implement customized solutions for your corporate financing needs.

Do speak with our Financial Advisor to know more about Venture Capital Funding in India or Venture Capital Investment in India or Venture Capital Firms in India or Venture Capital companies in India or Venture Capital Investors in India.

Let us help you with Finance.

Share Your Requirement

Share Your Requirement

One of our executive will get in touch with you within 24 hours.

Schedule Appointment