This ppt describes the sources of Capital for entrepreneurial venture. In this topic we explained the entrepreneurial search for capital, debt vs equity the venture capital market, informal risk capital angel financing. The next heading provides assessment of entrepreneurial plan in which we explain challenges of new venture startups, pitfalls in selecting new ventures, critical factors for new venture development, why new venture fail, the evaluation process. In the end we find out that what cost is spent when a new venture is start. And which people help in providing financial assistance to the entrepreneur.

1. Entrepreneurship Presentation
Group-3
Section (A)
Submitted to: Mam Maria Shahid
Group Members:
Zunaira Arif Khan BBA-19-11
Sheeza Tabassum BBA-19-23
Bisma Amjad BBA-19-27
Farwa Nadeem BBA-19-29
Nigah-e-Batool BBA-19-31
Sharmeen Ali BBA-19-33
Arooj Fatima BBA-19-35
Rabiya Rasheed BBA-19-49
Mishal Saleem BBA-19-57

2. Presentation Topics:
Sources of Capital for Entrepreneurial ventures
• The Entrepreneurs Search for Capital
• Debt Versus Equity
• The Venture Capital Market
• Informal Risk Capital Angel Financing
Assessment of Entrepreneurial Plan
• The challenges of New-Venture Start-up
• Pitfalls in Selecting New Ventures
• Critical Factors for New-Venture Development
• Why New Ventures Fail
• The Evaluation Process

3. The Search for Entrepreneurial Capital
 The term entrepreneurial capital refers to the money raised by a new
company in order to meet its initial costs.
 Entrepreneurs who want to raise startup capital have to create a solid
business plan or build a prototype in order to sell the idea.
Sources of Capital
Startup capital may be provided by:
 Venture capitalists
 Angel investors
 Banks
 Government Grant
 Crowd Funding

4. Capital ventures of Pakistan
• Sarmayacar:
Founded in 2018, the largest venture capital fund investing in Pakistani start-
ups.
• Fatima Gobi Ventures:
Founded in 2019, The firm focuses on digitizing traditional industries such as
logistics, mobility, consumer, retail, and travel, or promoting inclusion via the
fintech, education, and healthcare sectors.
• i2iVentures:
Supports startup communities in growth markets, and has been working in
Pakistan since 2011.

5. Debt v/s Equity
Equity Financing:
Equity financing means someone is putting money or assets into the business
in exchange for some percentage of ownership.
Examples:
Debt Financing:
The financing that an entrepreneur borrows and must repay with interest.
Examples:

6. Equity Financing Vs Debt Financing
• Both equity and debt financing come with their favorable and unfavorable
terms that may suit or not suit the company.
Equity Financing Debt Financing
Process Speed Takes considerable time as the company is
required to comply with all the regulations
and it’s not easy to negotiate with the
investors.
It’s faster when compared to
financing through equity.
Ownership
Dilution
Requires the founders to dilute their
ownership rights and share it with the
investors.
Doesn’t involve dilution of
ownership.
Creditworthiness Team’s past performance and ability matters
more than the creditworthiness of the
business.
It depends fully on the
creditworthiness of the
company or the individual who
takes the loan.
Effect on Cash
flow
It doesn’t require the startup to pay periodic
interests on investment so it doesn’t affect
cash flow.
Debt financing requires the
business to pay periodic
interests on investment and
affects cash flow.

7. Sources of Debt Financing
 Commercial banks
 Debt Financing Over the Short-Term
 Debt Financing Over the Long-Term
Nonbank Sources of Debt Capital
Although they usually are the first stop for entrepreneurs in search of debt
capital, banks are not the only lending game in town. We now turn our
attention to other sources of debt capital that entrepreneurs can tap to
feed their cash-hungry companies.
 Trade credit
 Equipment suppliers
 Commercial finance companies
 Savings-and-loan associations
 Stock brokerage
 Small Business Investment Companies
Sources of Equity Financing
 Personal Savings
 Individual private investors
 Crowd-funding
 The stock markets
 Venture capital

8. Venture Capital Market
Venture Capital Market
• Venture Capital companies
• Corporate venture capital
Venture capital companies :
Venture capital companies are private, for profit organizations that pooled
investment funds from various sources to invest in start-up companies and
small business.
Features of Venture capital investments
• High risk
• Lack of liquidity
• Long term horizon

9. Features of Venture Capital Investments
• Large sum of equity finance
• Equity participation
• Suppliers of venture capital participate in the management of the
company.
• Bring expertise to the company. It provides valuable information,
resources, technical and managerial expertise.
• Venture capital investments are made in innovative SMEs / projects with
rapid growth rates.
• Venture capital funds may specialize in certain sectors of activity
(technology companies in hot fields such as software, medical devices and
so on).
• Venture capital firms invest in companies that are in either the early
stages of development (called early- stage investing) or in the rapid phase
( called expansion – stage investing).

10. Stages of investment:
• Seed funding
• Start up funding
• Growth funding
• Expansion funding
• Working capital funding
• Bridge funding
Corporate venture capital :
Corporate venture capital defines the practice of large businesses
investing in innovative start ups (small companies) for both strategic and
financial reasons.
Features of corporate venture capital
• Invest in small companies usually that are in layer stage of growth.
• The right corporate partner may share technical expertise, distribution
channels and marketing know-how.
• Large corporate partner gives a small company is credibility, often
referred to as “ market validation ”.

11. Informal Risk Capital
• It consists of a virtually invisible group of wealthy investors, often called
business angels, who are looking for equity-type investment opportunities
in a wide variety of entrepreneurial ventures.
• Informal venture capital-equity investments and non-collateral forms of
lending made by private individuals (termed business angels) using their
own money, directly to the companies have no family connection, plays a
key role in the financing of emergent businesses.
• Informal risk capital is an investment by private individuals directly
(informally) in an entrepreneurial business without formal intermediation.

12. Angel Financing
• Private investors (angels) are wealthy individuals, often entrepreneurs
themselves, who choose to invest their own money in business start-ups in
exchange for equity stakes in the companies.
• Angels invest in businesses for more than purely economic reasons—for
example, because they have a personal interest or experience in a particular
industry—and they are willing to put money into companies in the earliest
stages.
• Angel financing is vital to the nation’s small business sector because it fills this
capital gap in which small companies need investments
• Angels are a primary source of start-up capital for companies in the start-up
stage through the growth stage, and their role in financing small businesses is
significant.

13. Angel Investors & Venture Capitalist
Angel Investors
• Angel investors are affluent
individuals who invest their own
money into startup ventures.
• Angel investors are generally more
eager to place a big bet on a
startup with an interesting idea.
• Angel investors prefer to be passive
investors.
• Ratan Tata, Chairman- Tata
Industries is an angel investor and
Sarmayacaar, firstly known as the
angel investors of Pakistan but then
shifted their business nature to
Venture capital market.
Venture Capitalist
• Venture capital (VC) is a form of
investment for early-stage,
innovative businesses with
strong growth potential.
• A VC firm will want to see
growth potential.
• VC firms usually demand that
they have some level of
operational control.
• Shark tank is an example of
Venture Capital and
Sarmayacaar, firstly known as
the angel investors of Pakistan
but then shifted their business
nature to Venture capital
market.

14. The Challenges of New-Venture Start-up
There are 150 million startups in the world today with 50 million new startups
launching every year. On average, there 137,000 startups emerging every day.
These are huge numbers by any standards.
But the question remains, how many startups tend to survive the violent
waves of change that have completely transformed the very nature of today’s
startups?
Yes, there is a huge paradigm shift. And that shift has challenged the overall
functionality of startups.
Challenges are everywhere. And businesses – in general and startups in
particular – are no exception to myriad of challenges that we face today.

15. Some of the challenges are listed below
1. Unrealistic Expectations
2. Hiring suitable candidates
3. Financial Managements
4. Cyber security
5. Winning Trust of customer
6. Ineffective marketing
7. Lack of skills and gaps
8. Leadership
9. Time management and productivity
10. Impact on the health
Examples of some common startups in Pakistan
• Tajir
• Grocer App
• Finja
• Salesflo
• Byka

16. Pitfalls in Selecting New Ventures
• Lack of Objective Evaluation:
 You think it’s a good idea but you only evaluate the idea on your
own terms. Need to look at it objectively.
• No Real Insight into the Market:
 Didn't do market research
 Don’t understand market
• Inadequate Understanding of technical Requirement
 You don't need to be a tech person in every business, but there are
technical requirements that need to be understood and if your
team doesn't know them, that's a problem.

17. Pitfalls in Selecting New Ventures
• Poor Financial Understanding:
 You need to understand how much money you need before/during getting
started and you need to know how to get financing.
• Lack of Venture Uniqueness:
 You need to come up with something that has a competitive advantage -
not just the same as something else.
• Ignorance of Legal Issues:
 You need to know about patent infringement or copyright infringement,
because if you don't, that can get you in trouble.

18. Critical Factors for New-Venture Development
Uniqueness _A new ventures range of uniqueness can be considerable,
depending on the amount of innovation required during prestart-up.
Investment _The capital investment required to start a new venture can vary
considerable.
Growth of sales _The growth of sales through the start-up phase is another
critical factor.
Product Availability _Product availability refers to the availability of a salable
good or service, at the time the venture opens its doors.
Customer Availability _Venture risk is affected by customer for start-up.
Founder & Leader_ Founders they should have right set of qualification who
starts the business he is call founder/owner of the business.
A person who leads a group of people is called leader.
Management Team_ Managers are the employees of the company they are
not be the owners. Every organization has need set of people with skill and
knowledge.

19. Why New Ventures Fail?
Entrepreneurs starting new businesses is what drives the economy,
innovation and job creation. But many businesses fail in starting first three
years. There are some reasons of businesses fail.

20. Failing to hire and retain the right people:
One of the biggest challenges that small business owners face is hiring,
managing and retaining staff. Establishing a diverse team with
complementary skill sets, the right attitude and values aligned with your
business from the start will help you in the long run.
Not Enough Marketing:
You can have the best product or service in the world, but if nobody
knows about it, you won’t succeed. One of the most effective forms of
marketing is word-of-mouth marketing. It’s a form of advertising that
comes directly from satisfied customers. Most consumers will believe a
recommendation from a good friend or family member much faster than
any ad or marketing strategy.
Incorrect Price:
Many companies base their prices on their costs, not their customers’
perceptions of value. Companies hold prices at the same level for too
long, ignoring changes in costs, competitive environment and in
customers’ preferences.

21. The Evaluation Process
• Profile Analysis
Involves identifying and investigating the financial, marketing, organizational,
and human resource variables that influence the business potential before
the new idea is put into practice.
• The Feasibility Criteria Approach
Involves the use of a criteria selection list from which entrepreneurs can gain
insights into the viability of their venture.
• Comprehensive Feasibility Approach
Incorporates external factors in addition to those included in the criteria
questions.