• Entrepreneurship is basically the act of being an entrepreneur, which in French means “one who undertakes an endeavor.” • Entrepreneurs assemble resources including innovations, finance and business acumen in an effort to transform innovations into economic goods.
• When entrepreneurship is describing activities within a firm or large organization it is referred to as intra-preneurship and may include corporate venturing, when large entities start spin-off organizations. •
Entrepreneurship in India
• India was second among all nations. • India is ninth in the Global Entrepreneurship Monitor (GEM) survey. • Indians have entrepreneurial capacity. However the society and government are not very encouraging towards entrepreneurship. •
• There is a saying that, ‘even if you are in the right track, you will get run over if you just sit there.’ • The varied ways and methods apply differently to different types of entrepreneurs with their different innovative ideas. • some of the ways of financing entrepreneurship: •
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Personal credit Debt financing Micro-angels Banks and Credit Unions Government assisted financing Equity Financing Private Venture Capital The above can be broadly classified into just two categories as we best know them as Debt and Equity.
• Personal credit implies the usage of personal funds such as credit cards, capital from savings accounts, fixed deposits, etc. D e b t Fi a n ci g n n • • Standard types of debt include personal loans from family members and friends, bank loans, issued notes, and corporate bonds.
• Some debts, called convertible debts, can be converted to common stock later on. • Debt instruments can be secured by assets of the corporation or unsecured. • The advantages of providing debt capital to a business include a reduction in risk.
Micro angels/ Informal investors
• Usually Micro angels or Informal investors invest in new ventures started by family members, work colleagues, neighbors, and friends. • A “business angel,” also known as an “angel investor,” is an affluent individual who provides capital for a business, typically an equity investment. • The term “angel” once characterized a savior who, at the eleventh hour, rescued a venture about to be abandoned. • Angels fulfill an increasingly important financing niche.
• Banks only loan money at interest; stock exchanges deal in vast sums; and venture capitalists, too, invest relatively large sums. • Accountants or financial advisers are as good an initial source as any. •
Banks and credit unions
• Credit Unions are very similar to banks, but credit unions have some unique characteristics that make the institution different. • Credit unions have members, not customers. • Each person who deposits money in a credit union becomes a member. •
• Credit unions are part of a worldwide support network that includes credit unions,state credit union leagues, a national trade association (CUNA) and a worldwide credit union organization (WOCCU). •
• Simplify and streamline regulations and procedures in existing support programmes. o Regulations and conditions for existing and new enterprise support programmes need to be more transparent and procedures simplified. • Instigate discussion on the role of banks for local entrepreneurship development. o Local agencies should instigate discussion with regional and local management of all banks and financial institutions. o •
Scope of developing financing of entrepreneurship
• Address weaknesses in business plan preparation and business development. o As a contribution to resolving the problem, the banks might consider producing a guide. • Help firms to assess their own investment readiness. o Programmes should be designed to address a perceived lack of investment readiness in certain sectors by improving the level of knowledge in firms about their own growth and return potentials and methods of financing. o
• Increase investment readiness and firm access to finance. o Programmes that assist small and medium firms in increasing their investment readiness and facilitate access to finance should be primarily concerned to help firms to better access existing sources of funding, rather than creating new funds. o • Extend micro lending. o Develop micro-lending facilities and instruments at a lever which is attractive to private banks.
• Develop programmes to boost the numbers of business angels. o The objective of such programmes is to increase the pool of business angel investors and thus boost the supply of equity to small firms. o The attraction of “knowledge angels” to pass on relevant processional and business experience to investee companies
• We have seen several different ways of financing entrepreneurship and also how firms or institutions providing entrepreneurships function. • Financing entrepreneurship still has a lot of scope in India. Enacting laws that promote entrepreneurship and also offering new schemes from the government can help it grow.
• http://en.wikipedia.org/wiki/Venture • http://www.vcindia.com/