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Where should a VC put his money: A new startup or a company which is already in their portfolio??

Created by : Anamika Roy , Freelancer, IT Services  | 09 08 2010 05:45:06 +0000
Industry : Hedge Funds/VCs/Private EquityFunctional Area : VC funding(Entrepreneurship)
Keywords : venture capital startup vc raising capital startup funding company portfolio
Activity:  279 views;  last activity : 09 19 2010 09:26:45 +0000

In this economy, it's much tougher for even promising small companies to attract interest from VCs. Raising capital has indeed today become a tedious process and VC's are playing safe by investing in the companies which are already in their portflolio.

And with this VC's hesitant in making investment in New companies?  But, according to you where should they invest their money A startup or a company which is already in their portfolio?

  
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I think fresh ideas needs to get a  new lease of life by funding them, if we are not funding new startups at all and playing safe by investing into the same companies which are there in the portfolio, even the Venture captitalists will not grow, they need to take that risk and fund these startups and see how it goes, anyways the initial amount of funding will be very less, if one startup clicks they can make and recover all the money which they have invested and stay in profits, So they should go for startup funding along with the existing companies in their portfolio.
By Veena Gupta, Analyst, Blackstone Group  09 08 2010 07:25:09 +0000
 
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I think VC's are totally playing safe, only taking Indian context is difficult here, and if we take account all over the world and the VC scenario, there are 3 main reasons why they are not investing in a new startup than they are investing it in the companies which are already there in their portfolios,  1) less support from their limited partners. 2) less money coming into the venture firms. 3) And portfolio companies needing additional capital and not being able to get it elsewhere.
By Anamika Roy , Freelancer, IT Services  09 08 2010 05:45:06 +0000
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Any existing company was a new startup when they started. their existance is due to the support/investment they recieved.VC should put his investments after thorough scrutiny of the new startup.
By Rajsekaran chetty, Sr.Manager (operation), autoprint machinery mfrs pvt ltd  | 09 19 2010 09:26:45 +0000
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I support this side views posted. Thanks Ms.Veena for referring.

 
By NATTERAJA R. ARIKRISHNAN, GM-Projects, Bentec Electricals & Electronics Pvt. Ltd  | 09 19 2010 08:34:56 +0000
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I will partly agree with you since for VC's the name of the game is to play safe. Yes incase the start up operation has been granted loan from bank/s then they should fund the additional requirement of funding.

This is unfortunate but true in those cases where in a VC has already burnt their hands and there is also VC's who they have good experience of such funding I think those VC's will come forward for funding a start up company.
By Rathin Deb, Freelance Retail Consultant  | 09 09 2010 04:26:06 +0000
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I would prefer to go for start-up where I find the risk is minimal & scope for appreciation is high. Risk alone should not deter . Using various risk-analysis (potential threat by political, natural, local competitors) one need to encourage start-ups.
By KALIYAMOORTHY , Oil & Gas Area Coordinator, Undisclosed  | 09 08 2010 15:05:50 +0000
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It is always desirable to encourage budding entreneurs as that way their confidence aspiration level enhances and obviously that provides desirable surge in growth and prosperity to the economy and the country
By souren , DIRECTOR NICCO FINANCIAL SERVICES LTD.,, Microfinance Focus Magazine  | 09 08 2010 14:23:30 +0000
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i agree with Veena ,fresh ideas must be supported.
By Mohammad Bakhsh, Project Leader/Managing Consultant, Freelancer  | 09 08 2010 07:54:01 +0000
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ACCORDING TO MY KNOWLEDGE & UNDERSTANDING...

VENTURE CAPITALISTS are there to Back Up NEW IDEAS & NOVEL PROJECTS. For other Investment... there are regular Investors.

When ENTREPRENUERS come up with WINNING IDEAS, there are VC's to Back & Finance them, If these VC's start plying safe, what will happen to New Ventures.

VC's should always back NEW & FEASIBLE BUSINESS VENTURES... ! 
By Naushad H.L., Creative Director, MAD COMMUNICATION  | 09 08 2010 07:18:34 +0000
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Every one wants to invest money to get a better,quicker and safer  return.Very few will come forward to risk based on their right or wrong calculation and foresights would like to invest in a start up company.
By s.baalu , Consultant, XYZ LTD  | 09 10 2010 11:51:02 +0000
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I am total agreement with you Anamika. The VC's will safe gaurd their interest first and then they will invest. So incase of a start up company the chances are very less for them to fund unless the company is a sister company of some known company or one of their directors is involved.
By Rathin Deb, Freelance Retail Consultant  | 09 09 2010 04:08:59 +0000
Argue for "A new startup"
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