This study investigates the venture capital activity development process in India. The discussion covers the issues of the initiation of venture capital fund, investment strategy and evaluation criteria and the value addition by venture capital firms (VCFs). The history of modern venture capital in India is not very old, which was formally introduced in 1986-87. In the initial years, VCFs in India encountered a number of problems in developing their business. From in-depth case studies of three VCFs of India, it is found that all of them went through the initial constraints of not knowing the venture capital business well and learnt through trial and error and failures and mistakes. They faced problems in raising funds and evaluating prospective ventures. All of them initially focused their investment on the high technology business. But gradually they shifted their focus towards potentially high-growth, high profitable businesses and not just high-tech businesses. It is also noticed that VCFs maintained a closer link with the assisted firms in order to ensure the success of the venture capital.