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Key Risks under Venture Capital Framework

There are a number of sources from where risks under the venture capital framework can stem from; some of these risks are systematic like macro-economic risk and regulatory risk. But majority of the risks stem from bad management   Under the existing Alternative investment rule – 2015, it has been postulated that the eligible investors will not be able to liquid his or her position before the fund’s tenure. So it is very clear that investment in the venture capital fund [...]

September 19, 2017 By Articles, BMBA 0 Comments Read more...

Agency problem under Venture Capital Framework

There are a number of scenarios whereby agency problem can incur in the venture capital framework. Even though there are a number of stakeholders (fund manager, trustee, EI, portfolio companies etc.) in the venture capital framework, majority of the agency risks stem either from fund managers or Investee Company.   Fund manager needs to protect the interest of the eligible investors and the business should be conducted as per the due diligence. So, there should be adequate intellectual, financial and infrastructural [...]

September 11, 2017 By Articles, BMBA 0 Comments Read more...

Performance Evaluation under Venture Capital Framework

Based on the consensus collected from majority of the EIs, a fund manager can be replaced. So, it is extremely important to evaluate the Fund manager’s performance at a regular basis. There are a number of yardstick through which the performance of a fund manager can be evaluated.   PIC (paid –up capital) – Generally a ratio between the committed capital and paid-up capital is calculated after the final settlement of the fund corpus. A higher proportion of paid-up capital to [...]

September 4, 2017 By Articles, BMBA 0 Comments Read more...

Costs of Financial Disclosure

Financial disclosures definitely reduce information asymmetry that exists between managers and stockholders. Financial statements (balance sheet, owner’s equity statement, income statement and cash flow statements and notes & explanations) are required by different groups of stakeholders. This stakeholder group encompasses managers, shareholders, employees, lenders and other suppliers, customers and government/regulators. These diverse groups of stakeholders need financial statement for completely different reasons and not always their interest merge. There remains some agency problem linked up with disclosing contents in [...]

August 28, 2017 By BMBA 0 Comments Read more...

Philosophies behind CSR (Corporate Social Responsibilities)

There are four schools of thoughts that will help the reader understand why firms often get engaged into CSR activities. As per the instrumental theory of corporate social responsibility, CSR is only perceived as the instrument to achieve business’s monetary objective. So, CSR initiatives are taken only for fulfilling the long-term benefit of the business; any CSR activity that does not help the firm in achieving its long-term goal is readily dropped from the equation. CSR activities are often [...]

August 21, 2017 By Articles, BMBA 0 Comments Read more...