What are Venture Capital Funds?
- Venture capital funds manage pooled investments in high-growth opportunities in startups and other early-stage firms.
- These investments are generally characterized as very high-risk/high-return opportunities.
- Venture capital funds are used as seed money or “venture capital” by new firms seeking accelerated growth, often in high-tech or emerging industries.
- Investors in a VC fund will earn a return when a portfolio company exits, either through an IPO, merger, or acquisition.
Why in News?
- Union Minister of Commerce & Industry Piyush Goyal has called upon the Global Venture Capital (VC) Funds to focus more on Startups from Tier 2 and 3 cities.
- He invited the VCs to explore new sectors for investing, promote and protect the intellectual property created by the young Indian entrepreneurs, provide expertise to scale-up and explore greater capital infusion including risk capital.
- He pointed out that India is home to over 61,000 recognised Startups spread across 55 industries, with 45% of them emerging from Tier 2 and 3 cities and 45% of Startups having at least one Woman Director, a testimony of diversity, spread and inclusivity of the Indian Startup ecosystem.
- The Department for Promotion of Industry and Internal Trade under the Ministry of Commerce and Industry is organizing Startup India Innovation Week from 10th to 16th January 2022.