Value Creation for Venture Capital-Backed Firms by Avoiding The Likelihood of Moral Hazards
Value Creation for Venture Capital-Backed Firms by Avoiding The Likelihood of Moral Hazards

Author(s): Vandana Panwar, Christopher Erickson, Alan Tupicoff
Subject(s): Economy, Ethics / Practical Philosophy, Marketing / Advertising
Published by: Transnational Press London
Keywords: Value Creation; Venture Capital; Backed Firms; Likelihood of Moral Hazards;
Summary/Abstract: In India, venture capital financing is a significant and growing form of financial intermediation. Under SEBI regulations, venture capital firms are categorized as “alternative investment fund” (AIF) defined as an AIF that invest primarily in unlisted securities of start-ups and early-stage venture capital undertakings (Venture Capital in India, 2021). Between 2012 and 2020, VC funding increased at annual rate of 15.7% from $3.1 billion to $10.0 billion. VC funding then jumped in one year from $10.0 billion to $38.4 billion in 2021 (Bain & Company, 2022). Venture capital firms (VC firms) engage in value creation by providing privately held “tech” firms with equity, debt, or hybrid forms of financing, typically also providing managerial expertise and advice. In the process of value creation, VC firms play a disproportionate rule in economic growth by promoting the commercialization ofnew technologies.

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