Covenant prioritisation in Indian venture capital partnership agreement with entrepreneur

Sarita Mishra

International Journal of Business Innovation and Research, 2025, vol. 37, issue 4, 526-539

Abstract: The study examines 77 Indian venture capital partnership agreement of venture capital fund. Though the objectives of these contracts are similar but their structures are quite heterogeneous in nature. Major covenants included in Indian venture capital contract are highlighted in this study as per the potential and requirement of the partnership contract. Indian venture capital agreement includes 21 types' of contractual covenant belongs to three broad category. The items include cash flow, restrictive and exit covenant. These three types of covenant are more common in Indian VC deal to reduce discrepancy and conflict among various partners. All the 21-covenant listed in this study is prioritised by RIDIT analysis. The response of VC investor towards importance of each covenant in VC contract is the reference data set in this study. This study finds covenants under cash flow right category s.a. participating preferred, sum of cash flow contingencies are most important according to investor's point of view in Indian VC contract. The result of this study is in support of previous eminent literature (Bengtsson, 2011). The finding of the study contributes towards importance of cash flow right for conflict resolution in entrepreneurial finance literature.

Keywords: venture capital partnership contract; covenant; cash flow right. (search for similar items in EconPapers)
Date: 2025
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