to approach a venture capital firm be prepared to answer questions on the kind of bond you share with your business partner or the rapport with your team dont balk seeing their investment going down because of a silly feud between the core team members in a startup is the last thing they want also these investors usually dont believe in oneman shows it is risky if everything depends on one person unless an entrepreneur is very experienced he wont be able to deal with the challenges posed by a startup singlehandedly adds verman you will also need to have an exit strategy the basic purpose of any venture capital investor is to sell his stake for a profit after 45 years so cover options for the next round of investment typically from a private equity player the possibility of an ipo or a potential buyer along with an approximate exit valuation in the presentation benefits this is practically the only option that gives entrepreneurs access to deep pockets at a time when they are trying to build the company private equitys fatter cheques are typically reserved for mature companies you also get expert help and access to the firms entire network drawbacks venture capital funds in india require proof of concept and decent revenue visibility before investing says muthuraman in addition each player will have sectoral preferences also a typical player expects an internal rate of return of 25 on the investment in 45 years to meet the expectation the companys compounded annual growth should be over 25 says modi a business with low scalability may not be able to provide them with the desired returns on their investment and hence will be rejected outright the safest bets are the ones where there is a business and professional connect it is a highly dilutive way of raising capital it suits companies that have very high scalability and dont need too much recurring capital advises muthuraman also be prepared to wait for 36 months to close a deal hot sectors the most soughtafter sectors by this segment are biotech mobile valueadded services education healthcare ecommerce itites and green technology venture debt this is a mediumterm loan that is exclusively provided to companies backed by venture capital firms how venture debt works the usp here is that no collateral is required to be eligible instead venture debt providers evaluate applicants on the basis of a startups fundamental enterprise value assessing how it will grow and thereby pegging its future cash flow and ability to repay the loan you can expect funding of 2520 crore depending on the growth stage of company and the nature of requirement says ajay hattangdi managing director svb india finance an experienced founding team a credible business plan and a solid venture capital investor base are some factors that we would consider in our assessment he adds that the interest rates are fixed for the tenure of the loan and