Ijarm: International Journal of Advanced Research in Management (Ijarm)
Ijarm: International Journal of Advanced Research in Management (Ijarm)
Ijarm: International Journal of Advanced Research in Management (Ijarm)
ABSTRACT
‘Venture Capital’ has become the key topic of debate and is attracting more
consideration at present than ever before due to fast varying technology, emergence of new
technology industries, extremely competitive global markets. In the Indian context, the
studies on ‘Venture Capital” are either macro in nature covering the entire country or micro
confined to a few areas of venture capital companies. Supplementary, research studies made
on venture capital finance confirming to State Level Venture Capital Companies are very
tiny. Nurturing future global IT leaders is its tagline. True to this core investment philosophy,
the Karnataka Information Technology Venture Funds (Kitven), and its principal promoters,
have been silently boosting technology investments in the State. Hence, we made an attempt
to study venture capital on state level with special reference to KITVEN Funds (Karnataka
Information Technology venture capital funds) in Karnataka. The major aims of the study to
know investments of Kitven funds in Karnataka.
Key words: Venture capital, venture capitalist, Small and Medium Enterprises
INTRODUCTION
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324
(Print), ISSN 0976 – 6332 (Online), Volume 4, Issue 1, January- April 2013 © IAEME
having a sound background of professional education and expertise who take initiative to
launch the business based on fast-changing technology.
The venture capital sector is the most vibrant industry in the financial market today. Venture
capital is money/finance provided by professionals who invest in young, rapidly growing
companies that have the potential to develop into significant economic contributors. Venture
capital is an important source of equity for start-up companies.
Venture capital can be visualized as “your ideas and our money” concept of
developing business. Venture capitalists are people who pool financial resources from high
net worth individuals, corporate, pension funds, insurance companies, etc. to invest in high
risk- high return ventures that are unable mobilize funds from regular channels like banks and
capital markets. The venture capital industry in India has really taken off recently. Venture
capitalists not only provide monetary resources but also help the entrepreneur with guidance
in formalizing his ideas into a viable business venture. With technology and knowledge
based ideas set to drive the global economy in the coming millennium, and given the inherent
strength by way of its human capital, technical skills, cost competitive workforce, research
and entrepreneurship, India can unleash a revolution of wealth creation and rapid economic
growth in a sustainable manner, however, this to happen, there is a need for risk finance and
venture capital environment which can leverage innovation, promote technology and harness
knowledge based ideas.
The major aims of the study to know investments of Kitven venture capital funds,
which is functioning in Karnataka under SEBI registration.
Statement of the Problem: From the various review of literature it can be observed that
studies have been carried-out by academicians, researchers, and others both in India and
abroad on venture capital financing it is also understood that studies so far made have
covered many venture capital companies lacking focus on specificity. Exclusive studies on
specific venture capital companies are very tiny. Further, research studies made on venture
capital finance confirming to State Level Venture Capital Companies are scanty. Hence, there
is a need to conduct an in-depth study on venture capital on state level, so in this direction we
done a study on investments of Kitven venture capital fund in Karnataka
The present study is confined to Kitven venture capital funds in Karnataka under the
registration of SEBI and functioning in Karnataka. Fund is managed by Karnataka Asset
Management Company Private Ltd.
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324
(Print), ISSN 0976 – 6332 (Online), Volume 4, Issue 1, January- April 2013 © IAEME
DATA COLLECTION
The data collected from1999 to Nov 2012, for analysis and interpretation.
SOURCES OF DATA
Primary data Collected through questionnaire, interview method and Secondary data from
venture intelligence, company website, company’s magazines, and other relevant documents.
KITVEN Fund I:
Karnataka Information Technology Venture Capital Fund (KITVEN Fund) is a State
& Central Government financial institutions backed Venture Capital Fund (VCF) operating in
the State of Karnataka since 1999. KITVEN Fund is contributed by premier institutions
namely Karnataka State Industrial and Infrastructure Development Corporation Limited –
KSIIDC, Karnataka State Financial Corporation – KSFC, Small Industries Development
Bank of India – SIDBI, Karnataka Bio-technology & Information Technology Services
(KBITS) etc. As a partner, KITVEN Fund invested in emerging companies with a long-term
investment approach thereby to build commercial value to our investors/ contributors. They
focused on investments in seed/ rapid growth opportunities within the State of Karnataka and
assisted in wide spectrum of companies catering to the Information Technology, Bio-
Technology and other high-end products/ solutions in the knowledge based sector.
In many of their successful investments in the past, KITVEN Fund was the founding/ first
investor and invested when the company was no more than a passionate team. They
maintained a rigorous investment process and a commitment to work closely with our
portfolio companies. They understand that promising companies need more than capital/
financial backing to succeed. On the road from seed to success we became the founding
team’s trusted advisor and professional investor. The Fund has invested in companies which
have both economic and developmental impact in the State of Karnataka.
Karnataka Information Technology Venture Capital Fund (KITVEN Fund) was an Rs.15.00
Crore, Information Technology specific, SEBI registered, Venture Capital Fund launched
during the year FY 1999-2000. The Fund received subscriptions from premier financial
institutions namely Karnataka State Industrial and Infrastructure Development Corporation
Limited – KSIIDC (Rs.3.75 Crore), Karnataka State Financial Corporation - KSFC (Rs.3.75
Crore) and Small Industries Development Bank of India – SIDBI (Rs.7.50 Crore). The Fund
has studied over 600 prospective units for likely VC assistance & invested only in 17 units
aggregating to Rs.17.56 Crore typically during the early stage with investment size of Rs.50
Lakhs to Rs.150 Lakhs.
Investment objectives
KITVEN Fund’s primary objectives are to make available long-term funds to new/unlisted
companies in the IT sector to:
• Develop competitive products and cutting-edge technology.
• Manufacture and commercialize the product development.
• Move up in the value chain.
• Expand and upgrade existing capabilities to cater to a wider clientele.
About 51% of the fund would be invested in small scale industry (SSI) in the IT sector.
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324
(Print), ISSN 0976 – 6332 (Online), Volume 4, Issue 1, January- April 2013 © IAEME
4
International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324
(Print), ISSN 0976 – 6332 (Online), Volume 4, Issue 1, January- April 2013 © IAEME
5
International Journal of Advanc nced Research in Management (IJARM), ISSN N 0976 – 6324
(Print), ISSN 0976 – 6332 (Online
ne), Volume 4, Issue 1, January- April 2013 © IAEM
EME
Figure
re 1: Investments of KITVEN Fund
4.5
4
4
3.5
3
3
2.5
2
2
1.5 1.27 1.24
1 1 1 11 1.1
1
0.52
0.5 0.1 0.22
00 00 00 00 00 00 00
0
1999 2000 2001 2002 2003
200 2004 2005 2006 2007 2008 2009 2010 2011 2012
No. of
o Companies Amount(US $ Million)
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International Journal of Advanc nced Research in Management (IJARM), ISSN N 0976 – 6324
(Print), ISSN 0976 – 6332 (Online
ne), Volume 4, Issue 1, January- April 2013 © IAEM
EME
Figure 2: Sec
ector Wise investments of KITVEN Fund
Amount(US
Amo $ Million)
1
IT and ITES
0.6
3.85 Telecom
HealthCare and
Life Science
Figure 3: Stage
Sta Wise Investment of KITVEN Fund
Amount(US
Amo $ Million)
0.82
Early
4.63 Growth
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324
(Print), ISSN 0976 – 6332 (Online), Volume 4, Issue 1, January- April 2013 © IAEME
FINDINGS
1. Kitven Fund is contributed by premier institutions namely KSIIDC, KSFC SIDBI and
KBITS.
2. Kitven Fund was an Rs.15.00 Crore, Information Technology specific, SEBI
registered, Venture Capital Fund launched during the year FY 1999-2000.
3. Kitven, about 51% of the fund would be invested in small scale industry (SSI) in the
IT sector.
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324
(Print), ISSN 0976 – 6332 (Online), Volume 4, Issue 1, January- April 2013 © IAEME
4. Kitven undertakes investment range of Rs. 25 Lakhs to 150 Lakhs per company.
5. Kitven fund preferred form of investment is equity.
6. The typical investment horizon by Kitven fund would be 3-5 years
7. The most important investment criteria are considered by Kitven fund is Management,
Market, Future Potential and Competitiveness.
8. Kitven Fund - 2 was Rs.26.25 Crore, SEBI registered, operating in Karnataka.
Contributed by KSIIDC, KSFC SIDBI, and KBITS.
9. Karven Fund is a SEBI registered Venture Capital Fund launched during the FY
2012-13 with target corpus of Rs.10 Crore. Therefore at present three funds comes
under Kitven fund.
10. KITVEN fund has invested in various companies with an investment of 5.45+NA
million US $ as on 30th Nov 2012.
11. KITVEN Fund the main focus has been IT and ITES sector, which received the lion’s
share in the total investment. Totally 70.64% of the investment has been for IT and
ITES sector.
12. Health care and Life Science sector stands next to after IT and ITES, with a total
share of 18.35%.
13. Telecom sector stands third in the list having received 11.01% of the total investment.
14. Venture capital investment is generally made during the Early Stage. Almost 85% of
the total investment is directed towards Early Stage of business.
15. KITVEN fund remaining 15% of investments is invested during the Growth Stage of
the business.
SUGGESTIONS
For balanced regional development of the state, there is need to have sustainable
growth in all the sectors of the state. So Kitven funds should finance not only to IT and ITES,
health care and life science, but also others sectors of business which are knowledge based,
so that balanced regional development is achieved in Karnataka enabling it to become
developed state in India.
CONCLUSION
REFERENCES
1. Anandan Pillai (Oct 2006), Research Associate, The ICFAI Business School Research
Center, Ahmedabad, “American Research and Development Corporation: The
Stepping Stone of US Venture Capital Industry”, Portfolio organizer, The ICFAI
University Press, pp.44-51.
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324
(Print), ISSN 0976 – 6332 (Online), Volume 4, Issue 1, January- April 2013 © IAEME
2. Chimun Kumar Nath and Ashit Saha (July-Dec 2008), Lecturer and Reader,
Department of Commerce, Dibrugarh University, “The Creation of Active Venture
Capital in Unorganized Environment: A Case Study of Assam”, Business
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Management (IJM), Volume 3, Issue 3, 2012, pp. 246 - 257, Published by IAEME
Websites:
www.kitven.com
info@indiavca.org
www.sebi.gov.org
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