Venture capital financing strategy for Indian micro small medium enterprise's

Venture Capital is emerging as an important source of finance for small and medium-sized firms, especially for starting the business and business expansion. An entrepreneur usually starts the business with his own funds, and those borrowed from banks. It is during expansion that they find it difficult to raise funds. SMEs have traditionally been dependent on Bank finance for expansion and working capital requirements. Venture capital is a means of equity financing for rapidly-growing MSMEs. Venture capitalists provide funds after carefully scrutinizing projects. Their main aim is to earn higher returns on their investments, but their methods are different from traditional lenders. They take active part in the management of the company as well as provide the expertise and qualities of good bankers, technologists, planners and managers. The paper highlights the benefits & future prospects of venture capital. Venture or Risk capital funding is ideal for newly emerging ventures like bio-tech, food processing, IT, pharmaceutical and other knowledge based sectors in India is creation of venture capital funds to meet the equity requirements of these units in the initial phase of their working and the knowledge sector including BPO, KPO, Life sciences, on-line business, technology-enabled design and manufacturing as well as in emerging areas of nano-technology and environmental technology.