Question

Explain about Factoring and Venture Capital Institutions.

Answer 1

• Factoring Institution:

1. Factoring is an arrangement whereby a financial institution accommodations on the basis of assignment/sale of account receivables.
2. The factoring institutions collect the book debts for and on behalf of their clients.
3. e.g SBI factors and commercial services limited.

• Venture Capital Institution:

1. Venture Capital financing is a form of equity financing designed especially for funding new and innovative project ideas.
2. Venture capital funds bring into force the Hi-technology projects which are converted into commercial production.
3. e.g Risk capital foundation of IFCI.