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EDS 411
Entrepreneurial
Development Studies
Practical Ways of Raising Business Finance And Sustaining
Growth
Definitions of an Entrepreneur
a) Someone who organizes a business venture and
assumes the risk for it.
b) An entrepreneur is a person who has possession of a
new enterprise, venture or idea and assumes
significant accountability for the inherent risks and
the outcomes. The term is originally French and was
first defined by the Irish economist, Richard Cantillon.
c) A person who is innovative and takes the risk of
bringing the other factors of production together in a
business concern to profitably satisfy the needs and
wants of a particular segment of a market
Kehinde ADETILOYE PhD
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Within the time you have operated the account, the bank
can safely know what your business can absorb in terms
of overdraft per time.
Overdraft when approved must be used and paid back
within shortest time frame. Interest is charged on daily
basis; swings must be seen on the account.
This encourages your bank to want to invest in your
business further.
You might now look through your initial plan to ensure
that you have covered the initial targets you set for
yourself from the onset.
Kehinde ADETILOYE PhD
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Innovations in Financing
Crowdfunding: the practice of raising funds from two or
more people through the internet towards a common
Service, Project, Product, Investment, Cause, and
Experience.With the following basics:
Three actors:
the project initiator who proposes the idea and/or
project to be funded;
individuals or groups who support the idea; and
a moderating organization (the "platform") that brings
the parties together to launch the idea
Kehinde ADETILOYE PhD
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Crowdfunding .
Started around 2003, but nomenclature was given
somewhere around 2006: Raised $1.5 billion in 2013.
Could be equity or Debt.
Three Basic types and Uses:
Reward based funding: to fund a once and for all projects
in a KIA or AorN campaigns
Debt Based funding: allows non-bank finance to be
raised for specific purposes
Equity Based funding : allow collective efforts of people
to raise funds for establishment of firms for good causes
Kehinde ADETILOYE PhD
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Venture capital
Long term equity finance
Investing as opposed to banks who lend
Looking for high gains
Accepting high risks
Can be involved in management of the firm
Venture capital investment is illiquid
Venture capital is normally made available by
Development agencies, angels and multilateral
organisations
Kehinde ADETILOYE PhD
18
Financial Contracting
A web of contracts that binds a financier and the
entrepreneur with the following basic features:
Income is verified whenever reported income is
below a certain level
Payments to the lender are constant when income is
not verified
Financial contracting is seen as an incomplete
contract because a complete contract process can
hardly be established.
Kehinde ADETILOYE PhD
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