Chapter Objectives

• To list the various sources of debt finance

• To understand the process of securing debt finance
• To discuss the importance of collateral security
• To tabulate the lending strategies of banks
• To discuss the characteristics of venture capital
• To understand the structure of venture funds
• To list the various roles within a venture fund
• To understand how venture capitalists get compensated for their efforts
• To describe a step by step screening process followed by venture funds
while making an investment
• To list the elements of a termsheet
• To understand the current scenario of VC funding in India

Entrepreneurship
© Oxford University
Press 2008
 ENTREPRENEURIAL FINANCE

CHAPTER 8
ENTREPRENEURSHIP

Entrepreneurship
© Oxford University
Press 2008
 Disadvantages of Equity Finance
• Dilution of shareholding
• Increased 3rd party governance
• Increased external controls
• Increased commitment to stated strategy

Entrepreneurship
© Oxford University
Press 2008
 Sources of Debt
• State Finance Corporations
• NBFC
• Banks

Entrepreneurship
© Oxford University
Press 2008
 Securing Debt
• Drawing up the business plan.
• Identifying sources of debt finance.
• Presenting the proposal to the bank.
• If the manager is considering your proposal
favourably, you will have to go for further
talks
• Once the two parties have broadly agreed,
details
Entrepreneurship
have to be worked out.
© Oxford University
Press 2008