Venture Capital
You have no cows, but an idea of owning 2 cows. You approach a VC firm, they say that 2 is too small a deal-size for them and therefore, you must buy 10 cows. You agree and get money at "standard" terms & conditions. They replace you with a 'professional' CEO, create a huge marketing organisation and great MIS structures and systems. Over time, it emerges that the actual market is only for 2 cows. They wind up the company and invite you to join one of their other portfolio companies inolved in pig business as CEO.
You have no cows, but an idea of owning 2 cows. You approach a VC firm, they say that 2 is too small a deal-size for them and therefore, you must buy 10 cows. You agree and get money at "standard" terms & conditions. They replace you with a 'professional' CEO, create a huge marketing organisation and great MIS structures and systems. Over time, it emerges that the actual market is only for 2 cows. They wind up the company and invite you to join one of their other portfolio companies inolved in pig business as CEO.
Investment Banking
You have two cows. Two guys in Armani suits wearing Rolex watches appear out of nowhere and promise to multiply your networth by leveraging the cows and getting 3 more cows, then inviting a PE firm to participate in the growth of the 5 cows, then going public and getting enough money to buy 20 cows. You agree and actually see your notional money multiply in valuation. 1 of your original cow is taken away by the Ibanker as fees, the other one dies. The lenders take away the rest (being one of their fine-print conditions if a cow dies), the stock price crashes to 0, the PE firm files a civil suit against you and the public market regulator files a criminal suit against you. The Ibankers are nowhere to be found - they have joined a top-10 IB firm in New York.
You have two cows. Two guys in Armani suits wearing Rolex watches appear out of nowhere and promise to multiply your networth by leveraging the cows and getting 3 more cows, then inviting a PE firm to participate in the growth of the 5 cows, then going public and getting enough money to buy 20 cows. You agree and actually see your notional money multiply in valuation. 1 of your original cow is taken away by the Ibanker as fees, the other one dies. The lenders take away the rest (being one of their fine-print conditions if a cow dies), the stock price crashes to 0, the PE firm files a civil suit against you and the public market regulator files a criminal suit against you. The Ibankers are nowhere to be found - they have joined a top-10 IB firm in New York.
Infrastructure finance
The government invites private funding in owning and operating cows for milk. You set up a company with help of infrastructure funds and project debt, promising 100 litres of milk everyday to be sold to the government at Rs.10/litre for the next 10 years with stiff conditions in case you achieve less than 90 litres. After a long gestation period, you begin commercial operations. The government buys all the milk but defaults on payments. You look for additional funding and take more debt. Your firm goes sick due to the additional debt and you exit business. The government takes over the company and invites private participation to operate the company promising Rs.20/litre as purchase price.
The government invites private funding in owning and operating cows for milk. You set up a company with help of infrastructure funds and project debt, promising 100 litres of milk everyday to be sold to the government at Rs.10/litre for the next 10 years with stiff conditions in case you achieve less than 90 litres. After a long gestation period, you begin commercial operations. The government buys all the milk but defaults on payments. You look for additional funding and take more debt. Your firm goes sick due to the additional debt and you exit business. The government takes over the company and invites private participation to operate the company promising Rs.20/litre as purchase price.
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