Venture Management A Much Needed Professional Service

Professional Service S K Bhattacharyya Venture management firms could emerge as a powerful stream in the professional world in India, provided topflight chief executives and senior corporate managers are motivated to set up such firms and attract opera- tional and functional managers with excellent track records to join them in their effort. Much would depend on how the worlds of industry and finance perceive the value and criticality of such professional services and how they compensate and reward such services. As the quantum of venture capital increases, and the value of industrial development funds locked up in sick companies swells, this possibility will become increasingly real FOR many years now, in the United States venture management has been available as a service to new venture capitalists as also to commercial banks, venture capital firms, merchant banking firms, etc, for managing new high-risk (often based on high technology) ventures till they become viable and for turning around companies which have become chronically unprofitable or sick. Since many American professions allow their members to charge fees on the basis of a percentage of the gains accruing to the clients out of their professional efforts, such venture management firms often stipulate their fees as stock options at par in new venture firms (to be exercised at a later time often as late as five years) or as a percentage of the profits of the company which they have turned around. Many senior managers of venture management firms have done such an exceptionally good job of managing new ventures, particularly high technology based enterprises, whose projects are relatively new (e g, bio-technology, advanced materials, micro-chips, etc) or made the sick companies so profitable that their fees have often run into millions of dollars.