Provision of Value Added Services of Indian Venture Capital Companies to Venture Capital Undertakings: A Study

Abstract

Value added service is the important characteristic which distinguishes venture capital from traditional industry investment. More importantly, during the course of post-investment activities they are known to offer value added services to venture undertakings. Venture capital companies, as part of their business practice, scout for several start-ups and identify the markets or entrepreneurs that would respond most favourably and profitably to their domain expertise. Once the venture team or potential entrepreneur is identified, they evaluate the investee company’s business in totality, with an insightful and deep understanding of the core competence of the investee company, its business model and the market vision, and then wholeheartedly work through adding value to the entrepreneurs to take the company forward. Today the phenomenal growth of venture capital market in India is not only creating great opportunities but is also increasing the competition among venture capitalists. In order to compete and become successful the venture capital companies in India are increasingly differentiating through value added services and are realising that their competitive advantage lies in the provision of value added services that go beyond mere provision of funds. The present study focuses on venture capital companies’ value added services to their undertakings or investee companies. There has hardly been any study on venture capitalists’ provision of value added services and the importance they attach to value added services in the Indian context. Such a study is quite relevant for a developing country such as India where venture capitalists are attracting considerable attention. The study is based on both secondary and primary sources of information. The sample companies are selected from the data published by Indian Venture Capital Association (IVCA) (2008).