Tag - Alternative Investments

May 2012

Venture Capital / Private Equity in India

What is a Venture Capital/Private Equity : Here is one definition
It is a Short to medium term investment by specialized funds in high-growth, high-risk, firms that need equity capital to finance product development” (Black and Gilson, 1998)
Alternatively,
It is a  medium to long term equity investment in privately held unlisted companies, by specialized financing institutions with an objective of enhancing the value through sustained involvement in the management and exit with sufficient financial returns…
Some of the major players in the world are :
Accel Partners, Benchmark Capital, Draper Fisher Jurvetson, Kleiner Perkins,
Caufield & Byers, @Ventures,  Bessemer Venture Partners,  Sequoia Capital,
idealab Capital Partners, Charles Rivers Ventures, Vulcan Northwest
 
And who are the major players in India… 
Sequoia Capital India, Ventureast, Intel Capital, Helion Venture Partners,
DFJ India, Nexus India Capital, NEA IndoUS Ventures, IDG India Ventures,
Kleiner Perkins India, Norwest Venture Partners
 
How is the Indian market placed compared to the world VCPE market in general :
 
Venture Capital, private Equity, India, Growth, Investments, Hedge Funds, Alternative Investments
 
Here is a quick snapshot of the Venture Capital/Private Equity happenings in India
Venture Capital, private Equity, India, Growth, Investments, Hedge Funds, Alternative Investments
source: Venture Intelligence
Clearly the Venture Capital /Private Equity market took a dip during the years of the financial crisis before hitting a peak in 2007. It has begun to pick up again.
There is a ever growing need for risk capital & continued policy emphasis from Government of India. Of course, there is a higher average rate of return and above all there is insufficient manpower. So this is a space for growth.
You can read about Roles which VC play here.

Investing in Real Estate : How is it different from other alternative Investments?

Investments, Alternative investments, Stocks, Bonds, Gold, Real Estate, Risk, Returns, Diversification,
 
Here are some successful people talking about investing in real estate :
 
“Ninety percent of all millionaires become so through owning real estate.”
-Andrew Carnegie
“The major fortunes in America have been made in land.”
-John D. Rockefeller
“I would give a thousand furlongs of sea for an acre of barren ground.”
-Shakespeare
“Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.”
-Marshall Field
“The best investment on Earth is earth.”
-Louis Glickman, American business executive
 

So, obviously, real estate can be a good investment, provided the investment is planned properly.

How RE is different from any other form of alternative assets?

– There is Low correlation with equities in the short run only

– However, Both equities and RE are adversely affected in a recession

– RE investments produces apparent low volatility

– Location specific investments – The local factors affect the real estate prices a lot more than global factors (unlike commodities, stocks, gold etc which are impacted by global macro economic factors)

– Interdependence of land uses

– Large transactions which are typically leveraged by use of substantial amount of debt.

– RE investments typically habe long gestation period

Here are some of the reasons for Including RE in Investment Portfolio :

– RE investments can produce high absolute returns

– It is a Hedge against inflation

– Portfolio is diversified to reflect overall investment universe

– It provides tax benefits – may not be available in any other alternative investments

– Suitability to various investors

– Risk tolerant investor

– Risk-sensitive investor

– Inflation sensitive investor

But as Raplh Waldo Emerson says “Fear always springs from ignorance”…. The first thing is to obvious do a lot of planning and become aware about the purpose of investments