sources of capital for entrepreneurs

8/7/2019 Sources of Capital for Entrepreneurs

1/21

Sources of Capital forEntrepreneurs

Vishwajeet Dangat 140Prasad Deshpande 146Riya Deshpande 147Rohan Laghate 169Raghavendra Ganachari 170


2/21

Agenda

Introduction Banks Government Agencies

Personal Sources Stakeholders IPO Angel Investors Venture Capitalists Credit Card Factoring

Corporate Investors Equipment Leasing Inventory Financing Mezzanine Loans Bridge Loans


3/21

Introduction

Need for capital

Researching on sources of funds

Finalizing on the correct source of funds


4/21

Banks

Banks are a straightforward source of funds

Small business bank loansReferralsCredit historyBusiness planBackup plan


5/21

GovernmentAgencies

Small Industries Development Organisation(SIDO)

National Small Industries Corporation Ltd

(NSIC)


6/21

Small Industries Development

Organisation (SIDO) Advising the Government on formulation of policies

and programmes for the small-scale industries.

Conducting periodical census/survey of the small scaleindustry and generating data/reports on variousimportant parameters/indicators of growth anddevelopment of the sector.

Facilitating linkage of small-scale industries as

ancillaries to large and medium scale industries.

Developing human resource base through training andskill upgradation.


7/21

National Small Industries

Corporation Ltd (NSIC) Equipment financing

Financing for procurement of raw material

Financing for marketing activities

Financing through syndication with banks

Performance and credit rating scheme forsmall industries

State controlled organizations


8/21

Personal Sources Friends and family are the least expensive way to

raise funds

There will likely be no need for a business plan

If you do borrow money from family and friends, treatit as any other loan

The document should be clear and precise

Investment from knowledgeable acquaintances


9/21

Stakeholders Supplier may invest in the venture

Customer may invest in the venture


10/21

IPO

OTCEI-incorporated in 1990

115 listings till date

Minimum paid-up capital of Rs. 30 lakhs and theminimum offer to the public should be 25% of theissued capital or Rs. 20 lakhs worth of shares in face

value, whichever is higher

Companies with operating history of 1 year can apply


11/21


12/21

Venture Capitalists Concept

Higher rate of returns

Fairchild Semiconductor 1959Venrock Associates

3-7 years of investments

2% proposals are chosen IVCA in INDIA


13/21

Start-up;

Ramp up; and

Exit


14/21

Examples

Google

Yahoo


15/21

Credit Card Factoring Concept -a factor gives your company

cash upfront based on your future

credit card sales.


16/21

Corporate Investors Institutions or a group of persons that

invest in an entrepreneurial firm

May be direct or indirect A major disadvantage is that a

market leader may dictate terms


17/21

Equipment Leasing a loan in which the lender buys and

owns equipment and then rents" it

to a business at a flat monthly rate Advantages:

Easy replacement

A

ccess to latest versions


18/21

Inventory Financing bank line of credit secured by the

company's inventory

Drawbacks: Only for tangible inventory

Credit given may vary

A proven sales record is a pre-requisite

May have to sell inventoy at a loss


19/21

Mezzanine Loans Combination of debt and equity

High interest rate

Unsecured type of loan


20/21

Bridge Loans Short term loan

High rate of interest

Mostly used in real estate markets


21/21

Thank You

sources of capital for entrepreneurs

Documents