Fuel for Start-ups: Perspectives on the Indian Venture Capital Industry

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Thillai Rajan A.
2018, 256pp
Hardcover, 9789385883569
Rs. 1795.00

“An excellent commentary on the trends in the Indian venture industry. The contours of the industry have been analyzed and presented to become a valuable resource for everybody who wants an understanding of the Indian venture industry – entrepreneurs, fund managers, policy makers, and researchers.” – Kris Gopalakrishnan, Chairman, Axilor Ventures and Cofounder, Infosys Technologies
“India has emerged as one of the leading start-up ecosystems globally in recent years. This book presents an extremely insightful analysis of the forces that is shaping the industry landscape. Each and every chapter focuses on different segments of the industry. Each complements the other and together they provide a more holistic perspective of this dynamic industry. The whole is more than the sum of the parts.” – Anup Bagchi, Executive Director, ICICI Bank
“The Indian Venture Industry has contributed majorly to building new businesses rapidly over the last ten years. Today India is one of the largest three Venture markets in the world after USA and China. Prof Thillai Rajan has filled a gap much felt of analyzing very thoughtfully the Industry from all aspects including policy. This work I expect will influence many investors from India and globally to increase allocation to the Indian Venture industry especially with exits on the rise.” – Sudhir Sethi, Founder and Chairman, IDG Ventures India
“It is the trees that make up the forest. By highlighting the key trends in different aspects of the Indian venture industry, Prof. Thillai Rajan has immensely contributed in enhancing our overall understanding of the venture industry.” – R. Ramaraj, Advisor, Elevar Equity, and Former Co-founder and CEO, Sify
“There is a shortage of analysis on the Indian VC and PE industry based on rigorously assembled data. This book compilation on the Indian Venture industry from the annual reports published by IIT Madras fill this important gap by presenting a well-researched set of views on an emerging facet of the industry that is equally accessible for academics and practitioners.” – G. Sabarinathan, Associate Professor, IIM Bangalore and Founding Member of ICICI Venture
“I am amazed at how this book brings together disparate sources of information, and slices and dices it in a myriad ways. There is something in this for everyone – from policy maker to investor, and entrepreneur.” – Dr. Rajan Srikanth, Managing Director, Smart Kapital and President, Keiretsu Forum, Chennai Chapter
“This encapsulation of several years of research into a key emerging financing class is timely and a good primer for those seeking insights into the same in the Indian market. It will help further the cause of entrepreneurship in this rapidly evolving economy by explaining the expectations and drivers of this capital.” – Sandeep Reddy, Co-founder and Managing Director, Peepul Capital

Dr. Thillai Rajan, Professor, Department of Management Studies, Indian Institute of Technology (IIT) Madras, Chennai, India and currently Associate at the Mossavar Rahmani Centre for Business and Government, Harvard University.

Part A: The Start-up Ecosystem
1. Policy Framework for Start-Ups

Overview
Policies of the National Government
Schemes of the National Government
Enabling Measures by the Government
Policies of the State Governments
Comparison of Start-Up Policies of State Governments
Components Comprising the Start-Up Policies of State Governments
Summary
Endnotes

2. Incubators
Overview
Presence of Incubators
Incubatees Supported by the Incubators
Accelerators
Growth of Incubators
Summary
Endnotes

3. Angel Investments
Overview
Characteristics of Angel Investments
The Funding Process
Sector and Regional Trends in Angel and Venture Funding
Age of Venture at the Time of Angel Funding
Growth in Angel Investments
Angel Networks
Summary

4. The Start-Up Arena
Overview
The Start-Up Landscape
A Comparison of Funded and Non-Funded Start-Ups
Effect of Incubators and Accelerators
Landscape of Angel Investors
Odds of Success for the Entrepreneur
Comparison of the Global and Indian Start-Up Landscape
Summary
Endnotes

Part B: Venture Funding
5. VCPE Investments in India: An Outline

Overview
Unravelling the Growth Trajectory
The Dominant and Marginal Sectors
The Seasonal Momentums
Investment Patterns by Investor Category
The Stage and the Age of the Investee Company
The Valuation Trajectory
Summary
Endnotes

6. Early Stage VC Funding
Overview
Average Investment and Shareholding Acquired
Age of the Company
Investment Structure
Average Stake Acquired
Enterprise Value, Investment, and Stake Acquired
Summary
Endnotes

7. Growth and Late Stage VC Funding
Overview
Average Investment and Shareholding Acquired
Investment Structure
Stake Acquired
Summary
Endnotes

8. Revenue Multiple
Overview
Revenue Multiples Over the Years
Revenue Multiple by Stages
Investment Structure and Revenue Multiple
Stake Acquired
Revenue Multiple by Investor Category
Age of the Investee Company
Summary
Endnotes

9. Valuation and Venture Lifecycle
Overview
Investment Rounds, Valuation and Structuring
High Performers, Steady Performers and Others
Inflection Points in Valuation
Summary
Endnotes

10. Returns to Venture Investors
Overview
Trends in Realised Returns
Returns by Investment Structure and Staging
Does Shareholding Acquired Affect Returns?
Stage and Duration of Investment
Year of VCPE Investment
Returns and Investor Type
Summary
Endnotes

Part C: Capital Providers to Venture Firms
11. The Landscape of Institutional LPs

Overview
The LP Universe
Classification of the Institutional LPs
Commitment Patterns of Institutional LPs
LP Commitments and Lifecycle of the Investee Company
Patterns in the LP-VCPE Fund Combination
Patterns in the LP-GP Combination
Summary

12. Family Offices and High Net-Worth Individuals as LPs
Overview
Domestic Family Offices and High Net-Worth Individuals as LPs
Funds that Have Raised Domestic Capital
Regulatory Regime
Summary
Endnotes

Part D: Venture Funding of Social Enterprises
13. Trends in Impact Investments

Overview
Social Venture Funding in India
Investments by Industry
Geographical Distribution of Investments
Year Wise Analysis of Investments
Investments by Type of Business
Timing of Investments
Syndication Patterns
Summary
Endnotes

14. Impact of Social Venture Funding
Overview
Benefits of Social Venture Funding
Impact Investors as Investment Catalyst
Comparison of Social Enterprises With and Without Venture Funding: The Case of Micro Finance Industry
Some Concerns
Summary
Endnotes

About the Author
Index