process of raising capital

by selling shares of the

Company to the public,
institutional investors or
financial institutions.
individuals who offer promising startup companies funding
in exchange for a piece of the business, usually in the form
of equity or royalties.

• Typically the first investors

• Usually wealthy individuals and friends/family
• Usually don’t get involved in the management
• •
• •
• •
•
a group of investors who invest in businesses they think will
grow at a rapid pace and will appear on stock exchanges in
the future.

Selective in their investments

look at various aspects of the business,

management, and market
huge amount

take board seats and active management

Their role is to increase the Companies business

aspects and finally list them on stock exchanges
Business expertise
Additional resources
Loss of control
Connections
Minority ownership status
Takes place when a company that has decided to "go
public" offers up initial shares on a publicly-traded market
such

• Expand the business

WHY
• Fund research and development
• Pay off debt
• Other channels to raise funds are expensive
• Publicity
A way to raise money from a group of people

Advantages Disadvantages

• Can set a targeted • Risk damage and

amount reputation
• Publicity • Takes time
• Receive feedbacks and
new ideas
Large companies that invest in private companies to provide
them with the necessary funding
Less Risk
Credit problems Cost

Cash flow Loss of Control

Long-term planning Potential for Conflict

Investor or venture capital firm basically lends money
to the entrepreneur, against a rate of interest, for a
given period, with company assets as securities.
Retain control

Tax advantage Qualification requirements

Easier planning Discipline

Collateral
Risk

Cost

Control

Long Term vs Short Term

Risk
•Will happen if we are unable to meet the
financial commitments
•Strive to minimise the overall risk.
•Overall aim is to find the mix of finance that
minimizes overall capital structure
Cost
•To minimise the cost of finance
•To maximise owners wealth
•Cost of borrowing
Control
•How we choose to finance our company will
have an impact on our independence as
management
Long term versus short term
borrowing
•Nature of the assets
•Duration
•Flexibility
• 1.

Agency under Ministry

of Entrepreneur
Development and
Cooperatives

• Pawn Broking AR RAHNU TEKUN

• TEMAN TEKUN Financing Scheme
• TEMANNITA FINANCING Scheme
• KONTRAK-i FINANCING Scheme
• Indian Community Entrepreneur Development
Scheme
• Ex-Army Personnel Entrepreneur Financing Scheme
• Graduate Entrepreneur Development Progamme
• 1.