An empirical study of venture capital scenario in India with reference to Gujarat State

Abstract

Increase in GDP is an important objective for any government. For
the purpose it is very essential that the economic activities in form of
business and industries are increasing. To start with any economic
activity, fund is required. Without fund it is not possible to arrange
other factors of production. It will be just like a fuel without which
the machine would not operate. However, at the initial stage getting
fund is difficult for the entrepreneurs as traditional sources of
finance such as banks and financial institution would be reluctant as
at this stage return is uncertain and risk is very high. In such a case,
venture capital would be solution of the problem. Venture capitalist
would be the fund provider to new startups and will go for taking
more risk with an anticipation of making more return. However,
different sector or industry would have different risk – return profile
and as a result different degree of attractiveness to the venture
capitalist. This paper is prepared based on amount of fund invested
in various sectors by venture capitalist over last three years with
special reference to Gujarat state. The findings suggest that all
sectors are not having same attractiveness for the venture capitalist.
It is also discussing some of the reasons for such behavior.