Venture capitalists provide capital as well as counseling to the startups at the early and expansion stages, and that is how this funding alternative differs from the others. The study attempts to examine the role of Gujarat Venture Finance Limited (GVFL) in the development of the ventures supported by it till June 2009. It covers the various aspects of support extended by GVFL such as its role as a board member in the investee companies, frequency of interaction with the investee companies, the role in the pre-investment development activities, and the satisfaction level of the entrepreneurs. It specifically compares the differences between the expected contribution before the investment and the perceived actual contribution after investment by the investee companies. The findings reveal that in a majority of the cases, GVFL has played a very active role as a board member and further most of the entrepreneurs are quite satisfied with the overall contribution made by it in the development of the venture.

Venture capital, also referred to as ‘risk capital’, is an investment, in the form of equity, quasiequity and sometimes debt—straight or conditional (i.e., interest and principal payable when the venture starts generating sales)—made in a new or untried technology or high risk ventures, promoted by a technically or professionally qualified entrepreneur where the venture capitalist expects the enterprise to have a very high growth rate, provides management and business skills to enterprise, expects medium to long-term gains, and does not expect any collateral to cover the capital provided (Pandey, 1996). There are many seminal studies on the post-investment value addition by venture capitalists. The generalized findings of such studies reinforce the fact that venture capitalists involve themselves actively in arranging additional financing, supporting strategic decision making, extending networking support, monitoring operational and financial performance, and finally, recruiting key executives. This paper attempts to verify these results with special reference to Gujarat Venture Finance Limited (GVFL). In other words, it attempts to examine the role of GVFL in the development of ventures supported by it till June 2009.

Entrepreneurship Development Journal, Development of Enterprises in Gujarat, Gujarat Venture Finance Limited (GVFL), Rajasthan Venture Capital Fund (RVCF), Information Technology (IT) , Gujarat Industrial Investment Corporation (GIIC), Industrial Development Bank of India (IDBI).