Minority and Women Entrepreneurs: Building Capital, Networks, and ...
Sources of Capital for Entrepreneurs
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Transcript of Sources of Capital for Entrepreneurs
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Sources of Capital forEntrepreneurs
Vishwajeet Dangat 140Prasad Deshpande 146Riya Deshpande 147Rohan Laghate 169Raghavendra Ganachari 170
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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
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Introduction
Need for capital
Researching on sources of funds
Finalizing on the correct source of funds
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Banks
Banks are a straightforward source of funds
Small business bank loansReferralsCredit historyBusiness planBackup plan
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GovernmentAgencies
Small Industries Development Organisation(SIDO)
National Small Industries Corporation Ltd
(NSIC)
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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.
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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
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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
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Stakeholders Supplier may invest in the venture
Customer may invest in the venture
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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
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Venture Capitalists Concept
Higher rate of returns
Fairchild Semiconductor 1959Venrock Associates
3-7 years of investments
2% proposals are chosen IVCA in INDIA
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Start-up;
Ramp up; and
Exit
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Examples
Google
Yahoo
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Credit Card Factoring Concept -a factor gives your company
cash upfront based on your future
credit card sales.
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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
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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
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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
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Mezzanine Loans Combination of debt and equity
High interest rate
Unsecured type of loan
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Bridge Loans Short term loan
High rate of interest
Mostly used in real estate markets
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Thank You