Venture capital is funding that is typically provided by outside investors for the financing of new, growing, or struggling businesses. These are high-risk investments which offer the potential for above average returns. They are designed as a pooled investment vehicle; investing the financial capital of third-party entrepreneurs into an enterprise too risky for the standard capital markets or bank loans. The growth of venture capital in India started with the formation of the Technology Development and Investment Company of India and the further growth of regional funds. Venture capital funds in India can be classified as government funds, non-U.S.-based funds, large company funds, venture capital entrants from the U.S., and new groups raising money to invest in India. Venture capital funds in India are mainly regulated by the guidelines issued by the Reserve Bank of India (RBI) and the regulations framed by the Securities and Exchange Board of India (SEBI), which are outlined in the SEBI (Venture Capital Funds) Regulations of 1996. These guidelines allow easy remittance of funds, certain exemption from the lock in period of shares, and non-treatment of the venture capitalists as promoters. The Indian biopharmaceutical sector holds immense appeal for venture capitalists. The need for considerable investment and the long gestation period for returns make it absolutely necessary for the sector to attract venture capitalists. The growth in the sector is expected to reach annual earnings of approximately US$5 billion by 2010. To sustain this growth, the involvement of venture capitalists is imperative.
About the Authors:
J. Sagar Associates
Advocates & Solicitors
Probir Roy Chowdhury
J. Sagar Associates
Probir Roy Chowdhury is a part of the firmís Technology Practice group. He has been involved in corporate transactions focused on the high technology industry, including cross border mergers and acquisitions. Probir advises on various areas of Information Technology Law including outsourcing, data protection e-commerce issues. He also has experience of providing general advice on content, data protection and privacy and networking matters, to IT and communications companies, and their users, in both international public and private sectors. Probir has been seconded by the firm to the offices of Dr. Widmer & Partners in Berne, Switzerland, Batalla Abogados in Madrid, Spain and Lovells, Munich, Germany and worked closely on EU Data Protection regulations and the proposed Binding Corporate Rules. His transactional practice includes advise on transaction structuring, legal due diligence exercises, entry strategies and foreign exchange regulations. Probir writes on several technology related subjects, including on Data Protection in India and Indiaís accession to the Paris Convention. He has contributed to the United Nations WSIS Summit project on Technology Surveillance. He is a regular contributor to the Computer Law Review International. He also wrote a paper on Privacy Laws for a Cyber Law course at IGNOU.
Sajai Singh undertakes transactional work with a focus on representing emerging technology companies in areas of inbound investments in India, venture capital investments, joint ventures, strategic alliances, mergers and acquisitions. In venture funding and private equity transactions Sajai has represented both funds and investee companies. During his career he represented clients in a cross section of industries including media, communication, entertainment and BPO. Sajai has assisted many international businesses and funds to funnel investments in India. These clients include established and high technology companies, Internet start-ups, connectivity specialists, e-commerce ventures, conversion technology and technology based entertainment industries. He is leading the LifeSciences, BioTechnology and Pharmaceutical Practice Group, which combines the strengths of JSA and its associated IP law firm, K&S Partners. Sajai conducts two Negotiation Skills courses at the National Law School of India University in Bangalore, one on Negotiation Skills and another on Transactional Skills for lawyers. He is very active with Computer Law Association globally