Wealth consolidation is necessary, but the accrual has more significance. From the olden days, investors of the olden days did not look further than the return on their investments. The practice among the new investors is the same but with a new twist. They follow the practice of spreading out the investments to reap a good profit. It involves disbursing small amounts of capital over several companies. And then hope that one or two of them will give you big returns.
The Arrival of Speedy Interactions
This is due to the growth in technology that helps speed up matters of bank dealings and financial transactions. While you had to wait for months to get a file passed in the olden days, it gets done in a matter of minutes online. This has spurred the growth of new companies. They get funds from private and public investors. Among the recently funded companies in US, the names of Snapdeal, Flipkart, and Ola is not new to the Indians.
Founded in 2011 and based in Bangalore, Ola raised $700 million through venture capital funding. The top investors were Accel Partners, SoftBank, and Sequoia Capital among others. The most recent round in April 2015 raised $400 million for the company. Many of the Indian investors have their eyes on Indian companies such as Flipkart, the first billion-dollar company in India. Investments for this e-commerce site came from well-known financial agents. This included Tiger Global Management, DST Global, and Accel Partners.
Companies using Funding
Venture capital grew in India from 1988. The top funded companies in 2017 were Paytm, Flipkart, and Ola. In 2018, the top ones were Policybazaar, Loan Tap, and CoinTribe. The Union Cabinet approved the funding for eligible startups on June 22, 2016. Funds amounting to $92 billion got released to SIDBI for disbursement to the industries registered under the SEBI. This translates to 605.4 crore INR.
Leading the pack of these newly funded companies in US was Kae Capital Fund II with 45 crores for 20 startups. The biggest sanction amount was for Chiratae Trust for 10 startups. Spreading the investment across many startups proves beneficial for the financial company. If the companies fail to deliver, they will stop funding them. This loss is small but if they take action in time, it will remain insignificant.
Usefulness of Venture Capital Funding
The small, emerging firms take their funding from venture capitals. This private equity chooses firms that have high growth potential and have shown good growth in the past year. These startups lie within the high tech sector such as IT, biotech, e-commerce, fintech, and hospitality. The investing company chooses firms with a good working model and then supports them in the funding rounds. They support the company from several levels to help them grow and make it through.
Companies wishing to get funding must submit their business plan to the venture capital agency. They will examine this plan and then make suggestions for improving on it. Then, they will go ahead and finance it to the limit suggested. This is a good opportunity for individuals wishing to work in specific fields to start. They can pick a startup and submit their resume.
