Entrepreneurship Management Sources of fund and Capital formation of entrepreneurship

Fund raising in general concept The significance of fund in any job is like adding lubricant to a machine to perform better smoothly and effectively. Generally fund can be raised from two important sources: Internal source: owner’s own fund that can be invested into equity. External source: fixed capital, working capital, commercial, bills, overdrafts, leasing finance etc.

Sources of fund for entrepreneurs Internal sources of fund: owner’s own investment Deposit and loans Personal loans from provident fund, insurance etc. In case of running enterprise, by retaining the profits External sources of fund: Borrowings Term loans Leasing facilities Loan from financial institutions Credit facilities provided by various financial institutions

Capital formation Capital structure: the combination of equity and debt in overall capital of an enterprise. Capitalization: it is the determination of quantity and quality of finances available for the entrepreneurs. Venture capital: it is a form of equity financing especially designed for funding high-risk, high-technology and high-reward projects. It is equity finance based on the fact that a partnership can be formed between the entrepreneur and the venture capitalist or the investors.

Sources of venture capital Venture capital is a transitory start up financing in the form of equity capital or loans, with return linked to profits and managerial control measures. There are some sources of venture capital for entrepreneurs: Programme for advancement of commercial technology Technology development and investment corporation of India Risk capital and technology finance corporation Venture capital scheme of various banks and financial institutions

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