THE PROCESS OF DEVELOPING VENTURE CAPITAL IN INDIA

This study investigates the process of developing venture capital in a developing country - India. The discussion documents the experiences of the largest venture capital firm in India (TDICI) in initiating and developing the concept of venture capital as well as learning the ven ture capital business. The history of modem venture capital in India i s of recent origin; it only goes back to the mid-eighties. in the init ial years, venture capital firms (VCFs) in India encountered a number of problems in developing their businesses. From the in-depth case stu dy of TDICI, it is found that the firm went through the initial constr aint of not knowing the venture capital business well, and learnt thro ugh experience. It faced problems in raising funds and evaluating pros pective ventures. It initially focussed its investment in the high-tec hnology business, but gradually shifted the focus towards other potent ially high-growth, high-profitable businesses, not just high-tech busi nesses. It is also noticed that TDICI undertook a number of business d evelopment initiatives to popularise the venture capital business in I ndia. it introduced a simple organisational structure for facilitating quick decisionmaking, and developed innovative funding and financing mechanisms. (C) 1998 Elsevier Science Ltd. All rights reserved.