SHORT QUESTION ANSWER
2 MARKS
1. Mention two Organizations That Provide Support for Entrepreneurs ?
Ans:-1.Entrepreneurs'Organization:Entrepreneurs' Organization, or EO, was established in 1987. Benefits of membership include a forum for sharing and discussing your challenges, help from a personal mentor, access to large-scale networking events, healthcare options, resources to help you build your leadership and more.
2. Founders Card: More than 20,000 entrepreneurs, innovators and business professionals are part of Founders Card, an organization that offers exclusive discounts on hotel, travel, business and lifestyle products and services, as well as access to invitation-only networking events.
2. Define Sustainability Entrepreneurship?
Ans: Sustainability entrepreneurship contributes to solving social and environmental problems, particularly in emerging and developing countries. adelphi supports the development of sustainable business models.
Green & Inclusive Business, Social & Environmental Entrepreneurship, Social Business, Low Carbon Business Models are key words for new approaches in international development cooperation. They have in common that entrepreneurial approaches are used to solve social and environmental problems and that a positive contribution is made to sustainable development.
3. Mention the Keys to Successful Sustainability Entrepreneurship?
Ans: 1. Understand the role of entrepreneurship in sustainable business.
2. Discuss what is meant by providing value to customers and how this concept applies to sustainability practices.
4. Define Social Entrepreneurship?
Ans: Many of the for-profit entrepreneurs engaged in sustainable businesses might be characterized as social entrepreneurs / enterprising individuals who apply business practices to addressing societal problems, such as pollution, poor nutrition, and poverty, and are interested in social change. Social change involves social processes whereby the values, attitudes, or institutions of society, including businesses, become modified. It includes both the natural process and action programs initiated by members of society. Entrepreneurship can be a process that contributes to social change.
5. Define Financial Requirement?
Ans: Financing requirement is an actual or estimated sum of cash needed to perform a plan, venture, or program.
6. Give two types of Financial Requirements?
Ans: 1. Working Capital: Cash which is spending in short term assets is known as working capital. It includes the purchasing of raw materials, payment of salaries and incomes, rent, energy, power and water, servicing and upkeep of Motilium, marketing, etc. Besides, the sale of goods on credit brings to the borrower's balance and bills receivable, which may also be regarded as present resources.
2. Fixed Capital: The funds needed to buy a set or resilient resources are known as the set investment or long-term investment. The set or resilient resources include land, structures, instrument, instrument, and Viagra etc. The nature and size of the business generally determine the amount of set investment needed.
7. Define availability to fund?
Ans: The state of funds deposited into an account that a customer is able to withdraw. This especially applies to check deposits, because funds deposited by check often do not become available for a certain number of days while the bank ensures that the check is valid.
8. Define access to finance?
Ans: Access to finance refers to public loans or government subsidised loans for firms. Such loans are intended to support and stimulate economic growth by providing financing to firms where the market is failing to do so.
Access to finance policies are intended to impact on firm growth, productivity and employment. Ideally, any evaluation of access to finance would seek to understand these affects, as well as evaluating the effect on firm financing.
9. Give two reason why government support access to finance ?
Ans: 1. Enabling start-up, micro and small and medium sized schemes.
firms to grow. 2. Supporting the growth and development of innovative business when social returns exceed private returns (e.g. because of wider impacts on innovation and knowledge, or other societal benefits).
10. Give two importance of access to finance?
Ans: 1. Access to financial services enables the poorest and most vulnerable in society to step out of poverty and reduces the inequality in society 2. Financial inclusion not only helps individuals and families, but collectively it develops entire communities and can help drive economic growth.
Entrepreneurship Notes For B. COM 3rd Semester Guwahati University
11. Define Marketing assistant?
Ans: Marketing Assistant is an entry-level job. It is the role responsible for helping the implementation of marketing strategies and campaigns. It also includes tasks like researching and maintaining databases. It is a stepping stone if you are looking to make a career in the Marketing field.
12. Mention the responsibility of marketing assistant?
Ans: 1. compiling and distributing financial and statistical information such as budget spreadsheets. 2. analysing questionnaires.
13.Define accommodation?
Ans: An accommodation is a change in how an assessment or instruction is given, but does not indicate a change in what is being measured or a change in the material. The accommodation should be to allow a student to participate that would otherwise not be able to. The accommodations allow the student the capability to demonstrate what they know or can do.
14. Define industrial Estate?
Ans: An industrial estate is a place where the required facilities and factory accommodation are provided by the government to the entrepreneurs to establish their industries there. In India, industrial estates have been utilised as an effective tool for the promotion and growth of small-scale industries. They have also been used as an effective tool to decentralise industrial activity to rural and backward areas. Industrial estates are also known by different names, e.g. industrial region, industrial park, industrial area, industrial zone, etc.
According to P.C. Alexander, "An industrial estate is a group of factories, constructed on an economic scale in suitable sites with facilities of water, transport, electricity, steam, bank, post office, canteen, watch and ward and first-aid, and provided with special arrangements for technical guidance and common service facilities".
In the opinion of Bredo, "An industrial estate is a tract of land which is sub-divided and developed according to a comprehensive plan for the use of a community of industrial enterprises." The United Nations (1963) has defined an industrial estate as "a planned clustering of enterprises, offering standard factory buildings erected in advance of demand and variety of services and facilities to the occupants."
15. Give two types of Industrial estate?
Ans: 1. General Type Industrial Estate: These are also called as conventional or composite industrial estates. These provide accommodation to a wide variety and range of industrial concerns. 2. Special Type Industrial Estate : of This type industrial estates is constructed for specific industrial units, which are vertically or horizontally independent.
16. Give two objectives of Industrial Estate?
Ans: Objectives of Industrial Estates
1. Provide infrastructure and accommodation facilities to the entrepreneurs;
2. Encourage the development of small-scale industries in the country.
17. Define Self-help group?
Ans: Self-help group is basically group of individual members who by free alliance come together for a common communal purpose."All women in India are encouraged to join any one of SHGs for training and development, so as to become potential entrepreneur and skilled worker."
18. Give two role of Entrepreneur in Economic Development?
Ans: 1. Capital Formation: Entrepreneurs mobilize the idle savings of the public through the issues of industrial securities. Investment of public savings in industry results in productive utilization of national resources. Rate of capital formation increases which is essential for rapid economic growth. Thus, an entrepreneur is the creator of wealth.
2. Improvement in Per Capita Income: Entrepreneurs locate and exploit opportunities. They convert the latent and idle resources like land, labour and capital into national income and wealth in the form of goods and services. They help to increase net national product and per capita income in the country, which are important yardsticks for measuring economic growth.
19.Give two elements of Self help group?
Ans: i. Provide a cost approach to formal institutions for expanding and reaching out to poor;
ii. Offer an effective alternative to pursue the objective of growth by facilitating the empowerment of rural poor women..
20.Define Business incubator?
Ans: A business incubator is a company that helps new and startup companies to develop by providing services such as management training or office space. The National Business Incubation Association (NBIA) defines business incubators as a catalyst tool for either regional or national economic development.
Entrepreneurship Notes For B. COM 3rd Semester Guwahati University
21. Give some most common incubator services.
Ans: (i) They help with business basics.(ii) They provide Networking activities (iii) They provide Marketing assistance
(iv) Incubators help in Market Research.(v) They provide High-speed Internet access
22. Give two types of Business Incubator?
Ans: 1. Medical Incubator: This is a business incubator focused on medical devices & biomaterials. For encouraging innovation and entrepreneurship in medical technologies, through technology, busi-ness incubation support is given to innovators, start-ups and industry.
2. Public/Social Incubator: This is a business incubator focused on the public good. Social incubators aim to provide social entrepreneurs with the tools to expand their business. The challenging economic environment is changing the landscape of how we do business. At one end, some businesses avoid their social responsibility and, at the other, charities have to find ways to be more business savvy to survive. India has embraced the concept, with a twist, creating the idea of "social business".
23. Define Angel Investor?
Ans: An angel investor is a person who invests in a new or small business venture, providing capital for start-up or expansion. Angel investors are typically individuals who have spare cash available and are looking for a higher rate of return than would be given by more traditional investments.
24. Give two Sources of Angel Investors?
Ans: 1. Family and friends: This is by far the most common source of funding for business startups that are interested in finding business start-up money and is the only option for many. Given the high rate of failure with new businesses, it is also risky in terms of the possible impact on relationships if the business is not successful. It is important to be upfront about the risk of failure 1. Groups: Angels are increasingly operating as part of an angel
investment level accordingly. Investors contribute funds to the syndicate and a professional syndicate management team chooses the investments.
25. Give two Advantages of business angel financing.
Ans: 1. BAs are free to make investment decisions quickly. 2 No need for collateral-i.e. personal assets.
26.Give two Disadvantages of business angel financing.
Ans: 1. Takes longer to find a suitable angel investor.
2. Giving up a share of your business.
27. Define venture Capital?
Ans: Venture capital is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks and any other financial institutions. However, it does not always take a monetary form; it can also be provided in the form of technical or managerial expertise. Venture capital is typically allocated to small companies with exceptional growth potential, or to companies that have grown quickly and appear poised to continue to expand.
28. Give two Features of Venture Capital?
Ans: 1. High Risk 2. Lack of Liquidity.
29. Mention the Methods of Venture capital financing?
Ans: 1. Equity 2. participating debentures 3. conditional loan.
30. Give two example of venture capital Funding?
Ans: 1. Kohlberg Kravis & Roberts (KKR), one of the top-tier alternative investment asset managers in the world, has entered into a definitive agreement to invest USD150 million (Rs 962crore) in Mumbai based listed polyester maker JBF Industries Ltd. The firm will acquire 20% stake in JBF Industries and will also invest in zero-coupon compulsorily convertible preference shares with 14.5% voting rights in its Singapore-based wholly owned subsidiary JBF Global Pte Ltd. The fundingprovided by KKR will help JBF complete the ongoing projects.
2. Pepperfry.com, India's largest furniture e-marketplace, has raised USD100 million in a fresh round of funding led by Goldman Sachs and Zodius Technology Fund. Pepperfry will use the fundsto expand its footprint in Tier III and Tier IV cities by adding to its growing fleet of delivery vehicles. It will also open new distribution centres and expand its carpenter and assembly service network. This is the largest quantum of investmentraised by a sector focused e-commerce player in India.
LONG QUESTION ANSWER
5 MARKS
1. Explain five Measures used to Stimulate Private Investment?
Ans: 1. Tax Concession: It is argued that tax concessions allowed
on company and corporation profits would stimulate investment during depression period and will work as a great incentive for new entrepreneurs. Many economists like Hansen, Lerner and Klein have supported this view. Doubts have, however, been expressed as to the of efficacy of tax reductions to stimulate investment.
Tax reductions on incomes lead to a loss in government revenues which may be made up by indirect taxation on commodities thereby depressing the marginal propensity to consume and hence effective de mand. Thus whatever is gained on the one hand is lost on the other. Despite this, it cannot be denied that heavy taxation docs act as a great disincentive on new investment.
2. Government Spending: The level of investment can also be stimulated by Government investment. There are many socially useful investments like construction of dams, low cost housing, slum clear ance, and recreation houses etc. which are essential from the point of view of the community but which are not undertaken by private busi nessmen because they do not ensure quick profits. Direct investment by Government in the United States is these socially desirable projects ensured full employment and led to favourable multiplier effects.
3. Pump Priming: Tax reductions alone may not encourage private investment. In order to cope with the deficiency of private investment, a programme of Pump Priming is necessary. Under it, public investment is under-taken not only to meet the deficiency of private spending but also to take the economy out of the depths of depression. The idea is to 'prime' the 'pump' of private spending.
Once the economy starts working towards fall employment, public investment is supposed to be given up. Pump priming is a helpful policy not only as a method of financing but also as a method of spending. As a method of financing, it not only facilitates investment but also stimulates credit expansion. Pump priming stimulates private investment through its magnifying effects on income via the multiplier.
4. Reduction of the Rate of Interest: Keynes favoured for a long time in his earlier books a low rate of interest to stimulate private investment. Such a policy was based on the assumption that investment is sensitive to change in the rate of interest Monetary authorities, by increasing the quantity of money (other things remaining the same) can lower the rate, interest to give encouragement to investment activity.
Low interest-rates especially give stimulus to investment in some sectors of the economy. For example, provision of low-interest government loans has raised the activity in the construction of residential houses establishment of co-operatives and transport facilities, etc. But in his General Theory, Keynes did not have much faith in the ability of the interest rate to stimulate investment. According to him, recent studies have shown that interest rate is more or less an insignificant factor affecting investment activity.
5. Stability of Wage Level: Sometimes, reduction in the wage level is suggested to increase the level of investment activity on the ground that reduction in wages will reduce the total wage bill and hence the cost of production. But this policy ignores the dual nature of wage. Wages are not only costs to employers but also incomes to workers, and if reduced considerably, may adversely affect the purchasing power of the workers and hence effective demand. Thus, the stimulating effects of wage reductions on investment are of doubtful validity.
2. Explain five Ways to Finance Your Business?
Ans: 1. Consider Factoring: Factoring is a finance method where a company sells its receivables at a discount to get cash up-front. It's often used by companies with poor credit or by businesses such as apparel manufacturers, which have to fill orders long before they get paid. However, it's an expensive way to raise funds. Companies selling receivables generally pay a fee that's a percentage of the total amount. If you pay a 2 percent fee to get funds 30 days in advance, it's equivalent to an annual interest rate of about 24 percent. For that reason, the business has gotten a bad reputation over the years. That said, the economic downturn has forced companies to look to alternative financing methods and companies like The Receivables Exchange are trying to make factoring more competitive. The exchange allows companies to offer their receivables to dozens of factoring companies at once, along with hedge funds, banks, and other finance companies. These lenders will bid on the invoices, which can be sold in a bundle or one at a time.
2. Use a Credit Card : Using a credit card to fund your business is some serious risky business. Fall behind on your payment and your credit score gets whacked. Pay just the minimum each month and you could create a hole you'll never get out of. However, used responsibly, a credit card can get you out of the occasional jam and even extend your accounts payable period to shore up your cash flow.
3. Try Crowdfunding: A crowdfunding site like Kickstarter.com can be a fun and effective way to raise money for a relatively low cost, creative project. You'll set a goal for how money you'd like to raise over a period of time, say, $1,500 over 40 days. Your friends, family, and strangers then use the site to pledge money. Kickstarter has funded roughly 1,000 projects, from rock albums to documentary films since its launch last year. But keep in mind, this isn't about long-term funding. Rather, it's supposed to facilitate the asking for and giving of support for single, one-off ideas. Usually, project-creators offer incentives for pledging, such as if you give a writer $15, you'll get a book in return. There's no long-term return on investment for supporters and not even the ability to write off donations for tax purposes. Still, that hasn't stopped close to 100,000 people from pledging to Kickstarter projects.
4. Attract an Angel Investor: When pitching an angel investor, all the old rules still apply: be succinct, avoid jargon, have an exit strategy. But the economic turmoil of the last few years has made a complicated game even trickier. Here are some tips to win over angel interest.
Add experience : Seeing some gray hair on your management team will help ease investors' fears about your company's ability to deal with a tough economy. Even an unpaid, but highly experienced adviser could add to your credibility.
Don't be a fad-follower: Did you start your company because you are truly passionate about your idea or because you want to cash in on the latest trend? Angels can spot the difference and won't give much attention to those whose companies are essentially get-rich-quick schemes.
5. Secure an SBA Loan: With banks reluctant to take any chances with their own money in the wake of the credit crisis, loans guaranteed by the U.S. Small Business Administration have become a hot commodity. Indeed, funds to support special breaks on fees and guarantees on SBA backed loans have run out a number of times. And while SBA-backed loans are open to any small business, there are a number of qualifications, including:
- • Under law, the SBA can't guarantee loans to businesses that can obtain the money they need on their own. So you have to applyfor a loan on your own from a bank or other financial institution and be turned down.
- • In order to quality as a small business, your firm needs to meet the government's definition of a small business for yourindustry.
- • Your business may need to meet other criteria depending on the type of loan
Entrepreneurship Notes For B. COM 3rd Semester Guwahati University
3.Explain various types of Finance?
Ans: 1. Debt Finance : Basically, the cash which you acquire to maintain or run your business is known as debt finance. Debt finance does not provide ownership control to the moneylender, the borrower must repay the principal amount along with the agreed upon interest rate. Mostly, the interest rate is determined based on the loan amount, duration,the purpose for borrowing the specific type of finance and inflation rate.
2. Equity Finance: Equity finance is a classic way of raising capital for businesses by issues or offering shares of the company. This is one of the major differences in equity finance from debt finance. This finance is generally applied for seed funding for start-ups and new businesses. Well-known companies apply this finance to raise additional capital for the expansion of their business.
Equity finance is generally raised by issues or offering equity shares of the business. Basically, each share is an owner's unit for that specific company. For instance, if the company has offered 10,000 equity shares to public investors. An investor buys 1000 equity shares of that company, means s/he holds 10% of ownership in the company.
3. Personal Finance: Personal finance denotes the application of finance's principles to the monetary decisions of a family or an individual. It includes the ways in which families or individuals get, budget, spend and save monetary resources over a period, considering different future life events and financial risks. Financial position is focused on understanding the available personal resources by examining the household cash flows and net worth. Net worth is an individual's balance sheet, derived by summing up all assets under that individual's control, minus the household's all liabilities at a time.
4. Corporate Finance: Corporate finance includes financial activities pertaining to running a corporation. It is a department or division which oversees the financial functions of a company. The primary concern of corporate finance is the maximization of shareholder value through short-term and long-term financial planning and different strategies' implementation.
5. Private Finance: Private finance denotes an alternative method of corporate finance helping a company raise fund to avoid monetary problems with a limited time frame. Basically, this method helps a company which is not listed on a securities exchange or is incapable to obtain finance on such markets. A private financial plan can also be suitable fora nonprofit organization.
4. Explain the Advantages of equity finance?
Ans: Raising money for your business through equity finance can have many benefits, including
The funding is committed to your business and your intended projects. Investors only realise their investment if the business is doing well, eg through stock market flotation or a sale to new investors.
You will not have to keep up with costs of servicing bank loans or debt finance, allowing you to use the capital for business activities.Outside investors expect the business to deliver value, helping you explore and execute growth ideas.Some business angels and venture capitalists can bring valuableskills, contacts and experience to your business. They can also assist with strategy and key decision making. Like you, investors have a vested interest in the business'success, ie its growth, profitability and increase in value.Investors are often prepared to provide follow-up funding as the business grows.
5. Explain the Disadvantages of equity finance?
Ans: However, there are drawbacks of equity finance too. It's worth considering that
- Raising equity finance is demanding, costly and time consuming, and may take management focus away from the core business activities.
- Potential investors will seek comprehensive background information on you and your business. They will look carefully at past results and forecasts and will probe the management team. However, many businesses find this process useful, regardless of whether or not any fundraising is successful.
- .Depending on the investor, you will lose a certain amount of your power to make management decisions.
- .You will have to invest management time to provide regular information for the investor to monitor.
- .At first you will have a smaller share in the business - both as a percentage and in absolute monetary terms. However, your reduced share may become worth a lot more in absolute monetary terms if the investment leads to your business becoming more successful.
- .There can be legal and regulatory issues to comply with when raising finance, eg when promoting investments.
6. Reasons why Finance is important in today's business?
Ans: 1. Generate Money: To start a business, you would need money. It is obvious that to make the first step and launch your business, capital investment is required. Further, as you move up the timeline, getting materials, hiring professionals, marketing and testing, every single step would need financial management.
2. Organize Operations: Businesses generate enormous amounts of money every day. This money has to be used further to pay bills, delegate funds, invest in multiple engagements and monitor all. Managing the inflow and outflow of money within your organizations is important. Failing the above, it becomes tough to allocate funds efficiently and effectively. Not to forget that irregular flow of money can turn a business insolvent.
3. Manage Cash Flow : Having excessive funds is at fatal as having lesser ones. For an organization to be carried on with their day to day processing, it becomes imperative to manage the cash flow. In case you have higher funds and you aren't using it as needed, it signifies wastage of resources. For an enterprise that has surplus cash, putting them to use and investing in significant engagements would yield better returns and help them expand their business.
4. Strategize Funding: Of course, you would want to allocate funds and use it to map the expenses that take place on a regular basis. However, spending any or every cash without proper planning is not wise. You need to keep track of the expenses, monitor the frequency and then decide how to spend and how much to spend. At times, it is important to cut down extra costs and reduce expenses. And this can only be done when you manage your financial undertakings effectively. It is advocated that companies must have sufficient funds to deal with situations of monetary crisis.
5. Outline Long Term Goals: Organizations work to grow and scale their business high. To do so, it is important to have significant future goals that the organization aims to accomplish in a span of five or ten years. Financial Management helps an organization achieve its goals without fail. Consider that you have planned to expand your organization to three new cities. While actually implementing the plan, you run out of money. This wouldn't have happened had you managed your organization's finance and then executed. Pre-planning and working on the available cash of the organization helps you eliminate the future possibilities of crisis while moving ahead to attain your goal.
6. To Sustain Economic Downturn: If you look at the growth graph of an organization, you will never find one that rises straight or is without any bends. The growth of the cycle of business organization is a mix and merge of highs and lows which of course could be due to various reasons. Recession, depression, boom or failure, all add up to the fall of a business. With sufficient finance and significant financial management, it becomes easier for the organization to walk down the business cycle. No matter how bad the situation is, they are always ready to face the problem and bear the consequences without being under the threat of shutting down. Failure-proof financial management plans help the organization thrive even know adverse economic conditions.
Entrepreneurship Notes For B. COM 3rd Semester Guwahati University
7. Explain the Benefits of Hiring a Virtual Marketing Assistant?
Ans: 1. Increased efficiency: If you are not caught up in daily marketing operations, you will have more time to concentrate your attention on fields that most needed it. This implies you can spend more time working out business strategies, concentrating on development, linking with customers, etc. To experience higher efficiency every day, hire a virtual marketing assistant.
2.24x7 support: You get 24x7 knowledge at your disposal when you employ a virtual marketing assistant from a distinct time zone. Your virtual assistant on demand does not need official holidays or holiday leaves. You can experience productivity gains at work once you have 24 x7 support for your business.
3. Improve quality of life : Entrepreneurship comes with its fair share of challenges, leading a busy life among them. And if you don't have specialist assistance from a virtual marketing assistant, you spend every day worrying about every little detail. Don't let your undertaking make mental health havoc. Hire a Virtual Marketing Assistant to take care of recurring marketing tasks and let go of some of that stress Increased productivity in your professional life comes with enhanced mental well-being. Go out, have fun and come back to the feeling of rejuvenating your company.
4. Save time : Saving you a lot of time by hiring a virtual marketing assistant. They don't have to be educated and you're free to perform routine marketing operations once they're on board. Just brief them about what you're expecting and they're going to start right away.
5. Affordable services: You do not need to pay a set wage to hire a virtual marketing assistant. You get outstanding services from a skilled specialist at a supremely inexpensive cost because you only pay by the hour.
6.Pay per us: Unlike a full-time worker, the hours they put in pay a virtual marketing assistant. So you don't need to shell extra cash on advantages and leaves when you employ a virtual marketing assistant. Hire a virtual marketing assistant and reduce the costs of your business.
8. Explain the Qualities of a Marketing Assistant ?
Ans: 1. Organized : Marketing assistants must be organized because of their variety of responsibilities. For example, some marketing assistants may need to arrange department meetings. During the process, the marketing assistant may need to coordinate the schedules of a dozen or more people for the meeting. Additionally, marketing assistants often prepare memos, write letters for executives and even work on reports. Marketing assistants may also be asked to take the minutes during meetings, then write summaries of the meetings afterward.
2. Computer Literate: Marketing assistants must be computer literate, because they may be required to centralize documents for the department. Therefore, marketing assistants will likely need to be well versed with the company's email system. Additionally, marketing assistants need to type their memos and reports with word processing software. Marketing assistants who work on department budgets also need experience using spreadsheets like Excel or Lotus 123. Additionally,marketing assistants may be required to use presentation software like PowerPoint or Keystone to prepare their bosses' presentations. Marketing assistants who work for direct mail or advertising firms may need database management skills, where they use computers to maintain lists and addresses of people.
3. Strong Communication Skills: Marketing assistants also need strong writing and oral communications skills, Marketing assistants might write sales visuals that help salespeople sell their products. Also, some marketing assistants help write advertising pieces that need to convince customers to buy their company's products. Marketing assistants need strong oral communication skills to work with various levels of people, including high-level executives, lower-level employees and outside agencies. Marketing assistants also need strong oral communication skills if they work on the phone a lot.
4. Self-Directed: Marketing assistants must be self-directed. In other words, marketing assistants need to perform their jobs without constant guidance. A marketing director or manager cannot constantly be telling a marketing assistant what needs to be done. The marketing assistant must be aware of her projects and due dates. Hence, she can quickly move from task to task with little intervention. An effective marketing assistant is always aware of what needs to be done. She also knows how to prioritize daily responsibilities, making sure high-priority projects take precedence over others.
9. Explain the Types of Industrial Estates?
Ans: I. On The Basis of Functions: On the basis of functions,industrial estates are broadly classified into two types (i) General type industrial estates: These are also called as conventional or composite industrial estates. These provide accommodation to a wide variety and range of industrial concerns.
(ii) Special type industrial estates: This type of industrial estates is constructed for specific industrial units, which are vertically or horizontally independent.
II. On the basis of Organizational set-up
(i) Government Industrial Estates,
(ii) Private Industrial Estates,
(iii) Co-operative Industrial Estates.
(iv) Municipal Industrial Estates.
III. On the Basis of the Other Variants
(a) Ancillary Industrial Estates: In such industrial estates, only those small-scale units are housed which are ancillary to a particular large industry. Examples of such units are like one attached to the HMT, Bangalore.
(b) Functional Industrial Estates: Industrial units manufacturing the same product are usually housed in these industrial estates. These Industrial estates also serve as a base for expansion of small units into large units.
(c) The Workshop-bay: Such types of industrial estates are constructed mainly for very small firms engaged in repair work.
10. Explain the Features of Industrial Estates?
Ans: 1. Separate plots and sheds: The entire land area allocated to the estate is divided into different plots and sheds. These plots and sheds are then allocated to the entrepreneurs at, economical costs.
2. Cluster: An industrial estate is a planned cluster of units. For e.g. Tirupur is a planned cluster of knitwear and hosiery, Ludhiana is a planned cluster for machine tools, Surat for diamonds etc.
3. Regional development Industrial estates promote regional development. They have been instrumental in developing backward areas in the country. They provide employment opportunities to many of the unemployed youth in the regions in which they are located. For e.g. Ambattur Industrial Estate in sub-urban Chennai has ensured development of areas in and around Ambattur.
4. Common infrastructure : Infrastructure such as roads, electricity, water, telecommunications, postal facilities, banks etc. are provided in the industrial estate. All enterprises located in the industrial estate can access the infrastructural facilities located in the area.
5. Promote industrialization: Industrial estates promote industrialization and economic development. They provide the necessary facilities for setting up of industries. Since the required infrastructure is made available, entrepreneurs feel encouraged to set up industrial enterprises.
6. Different sizes: Industrial estates can be promoted in different. sizes based on the land availability, requirements and potential for development.
7. Developed in all areas: Industrial estates can be developed in all areas such as urban, suburban and rural areas. They can be developed in developed as well as in under developed areas.
8. Promotion through any agency: Industrial estates can be set up by the government, co-operatives or by the private agencies. It can also be set up by public-private partnership.
11.Explain the Objectives of Industrial Estates?
Ans: The following are the objectives of setting up industrial estates
1. Ensuring well planned and structured industrial development.
2. To provide the necessary infrastructure.
3/To provide common facilities to a number of industries,
4.To promote development of clusters.
5. To enable small units to source products from one another. 6. To enable dispersal of industries.
6. To promote balanced regional development.
7. To ensure development of backward areas.
8. To provide a climate for smooth functioning of industrial
enterprises.
12. Explain the Role of Entrepreneurs in Economic Development?
Ans: 1. Capital Formation: Entrepreneurs mobilize the idle savings of the public through the issues of industrial securities. Investment of public savings in industry results in productive utilization of national resources. Rate of capital formation increases which is essential for rapid economic growth. Thus, an entrepreneur is the creator of wealth.
2. Improvement in Per Capita Income: Entrepreneurs locate and exploit opportunities. They convert the latent and idle resources like land, labour and capital into national income and wealth in the form of goods and services. They help to increase net national product and per capita income in the country, which are important yardsticks for measuring economic growth.
3. Generation of Employment Entrepreneurs generate employment both directly and indirectly. Directly, self-employment as an entrepreneur offers the best way for independent and honorable life. Indirectly, by setting up large and small scale business units they offer jobs to millions. Thus, entrepreneurship helps to reduce the unemployment problem in the country,
4. Balanced Regional Development: Entrepreneurs in the public and private sectors help to remove regional disparities in economic development. They set up industries in backward areas to avall various concessions and subsidies offered by the central and state governments. Public sector steel plants and private sector industries by Modis,Tatas, Birlas and others have put the hitherto unknown places on the international map.
5. Improvement in Living Standards: Entrepreneurs set up industries which remove scarcity of essential commodities and introduce new products. Production of goods on mass scale and manufacture of handicrafts, etc., in the small scale sector help to improve the standards of life of a common man. These offer goods at lower costs and increase variety in consumption Entrepreneurs generate employment both directly and indirectly. Directly, self-employment as an entrepreneur offers the best way for independent and honorable life. Indirectly, by setting up large and small scale business units they offer jobs to millions. Thus, entrepreneurship helps to reduce the unemployment problem in the country.
13. Explain the Objectives of SHG?
Ans: Objectives of SHG
1. To inculcate the savings and banking habits among members. 2. To secure them from financial, technical and moral strengths.
3. To enable availing of loan for productive purposes. 4. To gain economic prosperity through loan/credit.
5. To gain from collective wisdom in organising and managing their own finance and distributing the benefits among themselves.
6. To sensitize women of target area for the need of SHG and its relevance in their empowerment.
14. Explain the Need of Self-Help Group (SHG)?
Ans: The very existence of SHGs is highly relevant to make the people of below poverty line hopeful and self-reliant. SHGS enable them to Increase their income, improve their standard of living and status in society. It acts as a catalyst for bringing this section of society to the main stream.
Ultimately, the nation reaps the advantages of socialism. The Government of India and various state Governments have been implementing various programmes for rural upliftment. However, rural poverty and unemployment still persist in the country. This problem is becoming severe and acute. The available latest statistics relating to the Indian Economy indicates that about 26% of the total population in the country belongs to the rural poor.
Considering the gravity and intensity of the problem, many Voluntary Development Organisations (VDOs) have come forward with different programmes for the rural poor in the country. These agencies undertake various innovative programmes and schemes to address the issues of poverty and unemployment prevailing in our country. Among the various programmes "Swarna Jayanti Grama Swarojgar Yojana" (SGSY) is an important one. This programme was launched on 1st April, 1999, at 75:25 costs sharing between Central and State Governments.
The main objective of this programme is to bring the beneficiaries above the poverty line by providing income generating assets to them through bank credit and government subsidy. The Self-Help Groups (SHPS) are the major component of this scheme.
Women are a vital part of the Indian Economy, both at the national and the household levels. They make one-third of the national labour force. Compared with their menfolk, Indian women contribute a much larger share of their earnings to basic family maintenance with the result that women's earnings positively and immediately affect the incidence and the security of poverty.
Despite all this, social conventions and gender ideology deprive them of the access to, and control over, the resources which would enable them to increase their productivity. Women form the backbone of agricultural operations and majority of agricultural labourers are woman. Seventy to eighty percent of the field work is done by women.
15. Explain the service offered by business incubator?
Ans:Help a start-up to start basic operations and financial management.
- They offer marketing and PR assistance to new companies to set up a brand name.
- Business incubators have a strong network of influential people, and therefore, they can connect the business with the same to grow.
- Incubators also provide assistance and resources for conducting market research.
- They also help the start-ups in sorting their accounting books.
- Incubators bring credibility to the company. This helps the company to get loans and credit facilities from financial institutions.
- Often the start-ups do not know how to create an effective.
presentation to impress angel investors, venture capital and other investors. Business incubators, with plenty of experience behind them, help these companies with the Business incubators also act as mentors and advisors and assist the start-ups in all sorts of business-related issues.
16. Explain the types of Business Incubator?
Ans:Corporate Incubators Objective to enhance the entrepreneurial spirit and help the start up to keep up with others in the industry Targets-usually target internal and external projects activity of the company. related to the Challenges conflicts between the management regarding the objectives and management-related decisions.
Private Investors' Incubators
Objective assist the potential business model and then reap benefits by selling the shares.no Targets-technology-intensive start-ups.
Challenges-quality and durability of the project. Academic Incubators Objective offering new sources of finance, supporting the entrepreneurial spirit and civic responsibility.
Targets external projects and the projects internal to the institution before the creation of a company. Local Economic Development Incubators Objective-economic development, supporting SMEs and specific groups for the overall upliftment of the society. Targets - small, handicraft, locally sourced business companies. Challenges - conflicts, governance risk, management quality, red tapism, long hours of negotiation.
VERY LONG QUESTION ANSWER
1. Explain the Measures used to Stimulate Private Investment?
Ans: The following points highlight the top seven measures used to stimulate private investment. The measures are _
1. Tax Concession: It is argued that tax concessions allowed on company and corporation profits would stimulate investment during depression period and will work as a great incentive for new entrepreneurs.
Many economists like Hansen, Lerner and Klein have supported this view. Doubts have, however, been expressed as to the of efficacy of tax reductions to stimulate investment. Tax reductions on incomes lead to a loss in government revenues which may be made up by indirect taxation on commodities thereby depressing the marginal propensity to consume and hence effective demand. Thus whatever is gained on the one hand is lost on the other. Despite this, it cannot be denied that heavy taxation docs act as a great disincentive on new investment.
2. Government Spending: The level of investment can also be stimulated by Government investment. There are many socially useful investments like construction of dams, low cost housing, slum clearance, and recreation houses etc. which are essential from the point of view of the community but which are not undertaken by private businessmen because they do not ensure quick profits. Direct investment by Government in the United States is these socially desirable projects ensured full employment and led to favourable multiplier effects.
This type of government spending may assume the nature of compensatory public spending which is incurred on the assumption that private investment, left to it, is no longer capable of maintaining full employment either in the short run or in the long run. Keynes, therefore, stressed the need of public investment as a balancing factor when the economy happens to pass through a period of depression.
3. Pump Priming: Tax reductions alone may not encourage private investment. In order to cope with the deficiency of private investment, a programme of Pump Priming is necessary. Under it, public investment is under-taken not only to meet the deficiency of private spending but also to take the economy out of the depths of depression. The idea is to 'prime' the 'pump' of private spending.
Once the economy starts working towards fall employment, public investment is supposed to be given up. Pump priming is a helpful policy not only as a method of financing but also as a method of spending. As a method of financing, it not only facilitates investment but also stimulates credit expansion. Pump priming stimulates private investment through its magnifying effects on income via the multiplier.
4. Reduction of the Rate of Interest: Keynes favoured for a long time in his earlier books a low rate of interest to stimulate private investment. Such a policy was based on the assumption that investment is sensitive to change in the rate of interest Monetary authorities, by increasing the quantity of money (other things remaining the same) can lower the rate, interest to give encouragement to investment activity.
Low interest-rates especially give stimulus to investment in some sectors of the economy. For example, provision of low-interest government loans has raised the activity in the construction of residential houses establishment of co-operatives and transport facilities, etc. But in his General Theory, Keynes did not have much faith in the ability of the interest rate to stimulate investment. According to him, recent studies have shown that interest rate is more or less an insignificant factor affecting investment activity.
5. Stability of Wage Level: Sometimes, reduction in the wage level is suggested to increase the level of investment activity on the ground that reduction in wages will reduce the total wage bill and hence the cost of production. But this policy ignores the dual nature of wage. Wages are not only costs to employers but also incomes to workers, and if reduced considerably, may adversely affect the purchasing power of the workers and hence effective demand. Thus, the stimulating effects of wage reductions on investment are of doubtful validity.
6. Price Policy: Frequent fluctuations in prices have been found to be one of the important causes of the instability of private investment. Certain amount of stability in the price level, it is felt; will surely stimulate private investment. To achieve the objective of stability in prices, a price support policy has been suggested. Such a policy implies open market operations in commodities, that is, Government purchases and sales of certain storable commodities with a view to adjusting their supply to demand.
When prices decline and the symptoms of overproduction appear, the Government would make bulk purchases to prevent further fall in prices. Similarly, when prices rise, the Government would release stocks to prevent a farther rise in prices. In this way, the Government attempts to secure some stability in prices, which, is supposed to promote private investment. In India, such a policy is being pursued in respect of agricultural commodities like wheat, rice and other food-grains.
It would be better if such a policy is extended to other durable consumer goods as well. This will promote price stability to a certain degree, removing a good deal of uncertainty and preventing speculation in commodities thereby encouraging private investment. Such a price support policy is also known as 'The Reservoir Plan' because under it, a reservoir (buffer stock) is created to eliminate fluctuations in prices.
7. Abolition of Monopoly Privileges: "Another reform..... which is advocated as a stimulus to investment is the abolition of certain monopoly privileges. For example it is said that the patent system which grants at least 17-year monopolies on new inventions which would otherwise call for increased investment. The innovations are suppressed because they conflict with certain vested interests." There is a great need of abolishing monopoly privileges in India in certain industries in order to encourage new investors to enter the field.
It has been the experience of capitalist economies of the west that despite these measures, private investment cannot be induced except by profit incentives of a direct nature. It will continue to be highly uncertain and sticky in the absence of such an incentive.
It was because of this fundamental nature of private investment that Keynes wanted it to be supplemented by public investment "There is fairly wide agreement now among econo mists that as business activity is determined by decisions of business alone, the economic system will remain liable to periodic fluctuations". It is, therefore, clear that public investment must come forward as a balancing factor.
2. Explain the Ten Government schemes every entrepreneur should be aware off ?
Ans: 1. Multiplier Grants Scheme (MGS) for IT Research and Development: Launched by Department of Electronics and Information Technology (DeitY), MGS has been launched to 'encourage collaborative R&D between industry and academics/ R&D institutions for development of products and packages.'
This startup scheme is valid till March 31st, 2020, and have a corpus of Rs 36 crore for Startups, incubator/academia/accelerators engaged in electronics and information technology domain. Applicable Industries: Artificial Intelligence, Technology, Hardware, Internet of Things, IT Services, Enterprise Software, Analytics.
2. Modified Special Incentive Package Scheme (M-SIPS) : Launched by Department of Electronics and Information Technology (Deity) and supported by Center for Development of Advanced Computing or CDAC, M-SIPS aims to promote large-scale manufacturing in the Electronic System Design and Manufacturing (ESDM) sector.
Besides infusing the startups with funds for expansion, M-SIPS will also provide subsidy up to 25% in establishing offices, research centers in SEZs, all over the nation.
Applicable Industries: IT Hardware, Medical-tech, Solar Power, Automobiles, Healthcare, Semiconductors, Processors/Electronica, LEDs, LCDs, Avionics, Industrial Electronics, Nano-Electronics, Biotech, Strategic Electronics, Telecom and more.
3. The Venture Capital Assistance Scheme: Launched in 2012 by Small Farmers' Agri-Business Consortium (SFAC), this special scheme aims to assist agriculture based entrepreneurs to kickstart their agri-business. SFAC has tied up with 42 banks, which help them to disperse interest-free loans to farmers (individuals/groups), partnership firms, self-help groups, agriculture pass out/graduates, agri-preneurs, producer groups, and companies.
4. Credit Guarantee : Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) has launched this unique Government scheme to help assist retailers, educational institutes, self-help groups, farmers and SMEs.Basically, the Credit Guarantee scheme has been launched to smoothen credit delivery system, as guarantee cover up to 85% is provided to the SMEs for loans up to Rs 5 lakh.
5. Raw Material Assistance: National Small Industries Corporation or NSIC has launched Raw Material Assistance scheme, which aims to assist manufacturers and MSMEs with procuring raw materials, both indigenous & imported.
As per the Government Schemes helps the manufacturer's to focus on the quality of their products, as they can avail low-interest loans and financial help to get raw materials..
6. Infrastructure Development Scheme : National Small Industries Corporation (NSIC) has launched this unique scheme to help startups establish their own offices and infrastructure.
However, only those companies which fall under the official definition of startups, as highlighted by the Ministry Micro, Small and Medium Enterprises can avail this grant. Startups which are not registered with Software Technology Parks Of India Scheme can now get office space ranging from 467 sq.ft. to 8,657 sq.ft. There is no lock-in period, and it is applicable to all industries.
7. MSME Market Development Assistance: Office of the Development Commissioner (MSME) has launched this scheme to help SMEs and small retailers get more attention at international trade fairs and exhibitions.Companies registered with Directorate of Industries/District Industries Centre can get up to 100% reimbursement on air-fares and cost of placing their stalls in such fairs/exhibitions, all over the world. This scheme is not specific to any industry and applicable to SMEs,retailers, and startups.
8. Credit Linked Capital Subsidy for Technology Upgradation : Office of the Development Commissioner (MSME) has launched this Government scheme to help manufacturers, SMEs, and agri-startups to upgrade their existing machines and technologies. In case any SMEs registered with State Directorate of Industries have upgraded their machines, plants with state of the art technology, then they can apply for this grant, and receive funds to compensate their expenses. Applicable Industries: Khadi, Village or Coir industry, Manufacturing, Small Scale Industry, SMEs.
9. Atal Incubation Centres (AIC): Headed by Atal Innovation Mission, AIC aims to promote innovation and entrepreneurship in India. Approved startups can get funding up toRs 10 crore for a maximum period of 5 years, to cover capital and operational expenses.Industries Applicable: AI, AR/VR, Automobiles, Telecom,
Healthcare,Aeronautics, Aviation, Chemicals, Nano-Tech, Pets, Animals, IT, Computers, Design, Non-Renewable Energy, Social Impact, Food and more.
10. Bridge Loan Against MNRE Capital Subsidy : Launched by Indian Renewable Energy Development Agency (IREDA), Bridge Loan Against MNRE Capital Subsidy aims to promote startups engaged in renewable energy ideas such as biomass power and small hydropower projects. Up to 80% of the project cost will be funded by IREDA, and the minimum funding allocated shall be Rs 20 lakh.Applicable Industries: Renewable Energy startups and .
Entrepreneurship Notes For B. COM 3rd Semester Guwahati University
11. Explain the Role of Industrial Development in Economic companies Growth?
Ans: The following points explain the role of industrial development in economic growth
1. Modernisation of Industry: Industrial development is necessary for modernisation of agriculture. In India, agriculture is traditional and backward. The cost of production is high and productivity is low. We need tractors, threshers, pump sets and harvesters to modernise agriculture. To increase productivity, we need chemical fertilizers, pesticides and weedicides etc. These are all industrial products. Without industrial development, these goods cannot be produced. Agricultural products like jute, cotton, sugarcane etc. are raw materials. To prepare finished products like flex, textiles and sugar etc. we need industrialisation. So industrial development is necessary for modernisation of agriculture.
2. Development of Science and Technology: Industrial development encourages the development of science and technology. The industrial enterprises conduct research and develop new products. Ethanol in the form of biofuel is an example of industrial development. Industry conducts research on its wastes and develops byproducts like biodiesel from Jatropha seeds. Due to industrialisation, we have made progress in atomic science, satellite communication and missiles etc.
3. Capital Formation : Acute deficiency of capital is the main problem of Indian economy. In agricultural sector, the surplus is small. Its mobilisation is also very difficult. In large scale industries, the surplus is very high. By using external and internal economies, industry can get higher profit. These profits can be reinvested for expansion and development. So industrialisation helps in capital formation.
4. Industrialisation and Urbanisation : Urbanisation succeeds industrialisation. Industrialisation in a particular region brings growth of transport and communication. Schools, colleges, technical institutions, banking and health facilities are established near industrial base. Rourkela was dense forest but now is ultra modern town in Orissa. Many ancillary units have been established after setting up of big industry.
5. Self-reliance in Defence Production: To achieve self-reliance in defence production, industrialisation is necessary. During war and emergency dependence on foreign countries for war weapons may prove fatal. Self-reliance in capital goods and industrial infra-structure is also necessary. Atomic explosion at Pokhran (Rajasthan) and Agni Missile are examples of industrial growth.
6. Importance in International Trade Industrialisation plays an important role in the promotion of trade. The advanced nations gain in trade than countries who are industrially backward. The underdeveloped countries export primary products and import industrial products. Agricultural products command lower prices and their demand is generally elastic. While industrial products command higher values & their demand is inelastic. This causes trade gap. To meet the deficit in balance of payments we have to produce import substitute products or go for export promotion through industrial development.
7. Use of Natural Resources: It is a common saying that India is a rich country inhabited by the poor. It implies that India is rich in natural resources but due to lack of capital and technology, these resources have not been tapped. Resources should be properly utilized to transform them into finished industrial products. The British people took India's cheap raw-materials for producing industrial goods in their country. India was used as a market for their industrial products. So India fought with poverty and England gained during industrial revolution. Hence industrialisation plays important role for proper utilisation of resources.
8. Alleviation of Poverty and Unemployment : Poverty and unemployment can be eradicated quickly through rapid industrialisation. It has occurred in industrially advanced countries like Japan. The slow growth of industrial sector is responsible for widespread poverty and mass unemployment. So with fast growth of industrial sector, surplus labour from villages can be put into use in industry.
9. Main Sector of Economic Development: Industry is viewed as leading sector to economic development. We can have economies of scale by applying advanced technology and division of labour and scientific management. So production and employment will increase rapidly. This will bring economic growth and capital formation.
10. Fast Growth of National and Per Capita Income: Industrial development helps in the rapid growth of national and per capita income. The history of economic development of advanced countries shows that there is a close relation between the level of industrial development and the level of national and per capita income. For instance, the share of industrial sector to national income was 26% and the per capita income in year 2000 was 36,240 dollar in USA.
The share of agriculture in the same year was only 2%. In Japan, the share of industrial sector in her GDP was 36% and her per capita income was 36210 dollar. In India due to industrialisation, the contribution of industrial sector to GDP has gone upto 28.5% in 2000-01 and per capita income has risen to Rs. 16,486 in 2000.
11. Sign of Higher Standard of Living and Social Change: A country cannot produce goods and services of high quality in order to attain decent living standard without the progress of industrial sector.
12. 4. Explain Business Incubator? Explain the various types of Incubator?
13. Ans: A business incubator is a company that helps new and startup companies to develop by providing services such as management training or office space. This is also Facility established to nurture young (startup) firms during their early months or years. It usually provides affordable space, shared offices and services, hand-on management training, marketing support and, often, access to some form of financing. Business incubators differ from research and technology parks in their dedication to startup and early-stage companies. According to Allen and Rahman, "The universal purpose of a business incubator is to increase the chances of a firm surviving its formative years, but the business incubator also adds value by maximizing the firms' growth potential."
14. (i) Virtual Business Incubators: These are also known as online business incubators.
15. Business incubators began in the 1950s and took off in the late 1990s as support for startup companies who need advice and venture capital to get their ideas off the ground. As the dot-com bubble burst, many high-tech business incubators did so too. Now the model of a business incubator is changing.
16. Several of the incubator companies who survived the dot-com bubble switched to a virtual model. The old incubator model required a startup venture to set up shop at the incubator's site. The virtual model, on the other hand, allows a company to garner the advice of an incubator without actually being located at the incubator site.This new model suits those entrepreneurs who need the advice an incubator offers but still want to maintain their own offices,warehouses, etc.
(ii) Medical Incubator: This is a business incubator focused on medical devices & biomaterials. For encouraging innovation and entrepreneurship in medical technologies, through technology, busi-ness incubation support is given to innovators, start-ups and industry.
(iii) Kitchen Incubator: It is a business incubator focused on the food industry. Specialty foods are typically high-value and, at least in the beginning, low production. Starting a commercial kitchen from scratch can cost a huge amount of investment. The average food entrepreneur has to spend plenty before even making their first batch of food item.This need for low-cost kitchen space has led to the development of shared commercial kitchens that can be rented for hourly or monthly rates. But finding a place to make specialty food products is only the first step. Entrepreneurs who want to make a profit have to successfully package, market, and sell their products, too and the food incubators provide help with all this.
(iv) Public/Social Incubator: This is a business incubator focused on the public good. Social incubators aim to provide social entrepreneurs with the tools to expand their business. The challenging economic environment is changing the landscape of how we do business. At one end, some businesses avoid their social responsibility and, at the other, charities have to find ways to be more business savvy to survive. India has embraced the concept, with a twist, creating the idea of "social business".
(v) Seed Accelerator: This is a business incubator focused on early startups. Seed accelerators, also known as startup accelerators, are fixed-term, cohort-based programs, that include mentorship and educational components and culminate in a public pitch event or demo day. While traditional business incubators are often government-funded, generally take no equity, and focus on biotech, financial technology ("FinTech"), medical technology ("MedTech"), clean tech or product centric companies, accelerators can be either privately or publicly funded and focus on a wide range of industries.
Unlike business incubators, the application process for seed accel-erators is open to anyone, but highly competitive. There are specific types of seed accelerators, such as corporate accelerator, which are often subsidiaries or programs of larger corporations that act like seed accelerators.
(vi) Corporate Accelerator: It is a program of a larger company that acts akin to a seed accelerator. A corporate accelerator is a specif-ic form of seed accelerator which is sponsored by an established for profit corporation. Similar to seed accelerators they support early-stage startup companies through mentorship and often capital and office space. In contrast to regular programs, though, corporate accelerators derive their objectives from the sponsoring organization. These objectives can include the wish to stay close to emerging trends or to establish a funnel for corporate venture capital investments.
Corporate accelerators differ from Business incubators, which usually have a continuous intake, due to their fixed-term, cohort-based or-ganization (similar to seed accelerators) and are distinct to corporate venture capital which is a direct, targeted investment.
(vii) Startup Studio: This is a business incubator with interacting portfolio companies. Startup studio, also known as a startup factory, or a startup foundry, or a venture builder, is a studio-like company that aims at building several companies in succession. This style of business building is referred to as "parallel entrepreneurship".
Idealab, founded by Bill Gross in 1996, was one of the first to introduce the 'incubator industry', and has started over 75 companies. Idealab was founded to test many ideas at once and turn the best of them into companies while also attracting the human and financial capital necessary to bring them to the market.
The startup studio trend had really begun to gain momentum around 2008. Betaworks is one of the pioneers of this model. Today, there are over 65 startup studios across the world, of which 17 have been built since 2013.
(viii) Venture Builder: These are similar to a startup studio, but builds companies internally. Venture-builders are also called tech stu-dios, startup factories, or venture production studios: They are organizations that build companies using their own ideas and re-sources. Unlike incubators and accelerators, venture builders do not take any applications, nor do they run any sort of competitive program. Instead, they pull business ideas from within their own network of resources and assign internal teams to develop them such as Engineers, advisors, business developers, sales managers, etc.
Venture builders develop many systems, models, or projects at once and then build separate companies around the most promising ones by assigning operational resources and capital to those portfolio companies.
5. Explain the advantages of Angel Investor?
Ans:1. Startups are No Problem: Angel investors specialize in investing in startups, filling a gap left by traditional lenders. Traditional loans, like SBA loans for startups, require profitability, collateral, and a familiar business model. Whereas angel investors only require that startups demonstrate traction and a good plan for growth. This makes angel investment the most accessible form of funding for startups after friends and family.
2. Business can be Located Anywhere in the U.S. : New York, Boston, and San Francisco are all known for startups that come out of those cities. Some business founders assume they need to be in those regions to get angel investor funding. This is not the case. Not only are angel investors well distributed across the United States, but according to a 2017 Angel Capital Association study, 63% of them are investing outside those cities.
3. All Industries are Eligible for Funding: Most angel investors invest in the industry in which they are most knowledgeable and well connected to guide startups on the path to success. Although angel investors predominantly come from a technology background, other industries such as financial services, health care, and consumer goods are catching up.
4.Paperwork is Minimal : Completing paperwork for traditional financing can take valuable time away from running your company. Instead, most investors are comfortable using the Simple Agreement for Future Equity, or SAFE, introduced by Y Combinator, a seed accelerator for startups. They'll also often request certain documents to complete their due diligence, like financial statements and team bios.A SAFE is a simple agreement between investors and founders for funding. It specifies the funding amount and terms clearly. This is valuable when working with multiple angel investors needing the same terms. It also saves founders and investors the cost of working with an attorney to draft an agreement. Y Combinator prepared it with both startups and investors in mind and published a detailed SAFE user guide.
5. Monthly Payments are Not Required: Once you've received funding from an angel investor, there are no monthly payments. This can be huge for your business. Instead of using valuable cash flow to repay a loan, you can instead use the money to fund your business operations. Angel investors are repaid eventually; however, this happens at a liquidity event like an acquisition or when new funding is raised by the startup.
6. High-Risk Ventures are Accepted: Startups are risky and more than 20% fail in the first year. Innovation requires risk, but some startups take on too much, even for angel investors. Although your friends and family may not be willing to back an idea they consider too risky, angel investors may do so. Typically, you should expect to give up 20% or less of your equity, which is fair to compensate the angel investors for their risk.
Angel investors can take on more risk, due to the higher returns they can expect from investing in startups. Although some startups will fail, those that are successful often generate enough returns to make up for the losses. Angel investors also implement controls, set performance goals, and help founders navigate around common pitfalls to manage risks.
7.Guidance and Support is Included: Guidance and support is an understated benefit of angel investment. When your company takes on angel investment, you can pick the investor's brain when faced with difficult decisions. Not only does that reduce the uncertainty for a founder, but it also leads to more successful companies. For this reason, angel investors often look for coachability in the founders in which they invest.
8. Networking Opportunities are Provided : The adage "it's not what you know, it's who you know" is often true in business, and especially true for startups. A timely introduction from an angel investor can change your probability of success and this isn't only limited to getting more funding. Angel investors often introduce founders to potential clients, other founders, and future members of the team.
9. Assistance with Future Funding is Available: Angel investors are incentivized to get your company to the next round of funding, which is when they get repaid. Knowing someone can handle making introductions when it's time to raise more money allows you to focus on growing the company, instead of spending your time looking for investors.
10. Help with Building Strategic Partnerships is Available: Many angel investors specialize in specific industries and invest in startups with the potential to help each other out in their growth. They often introduce these startups to share information and resources. Additionally, angel investors can sometimes introduce you to companies willing to make a strategic investment in your startup, with a path toward future acquisition.
6.Explain the Disadvantages of Angel investor?
Ans: 1. Availability is Based on Who You Know: According to a report from the University of New Hampshire Center for Venture Research, there were 288,380 active angel investors in the United States in 2017. But, only 61,560 startups received angel funding that year. This can be a con for founders with access to few angel investors in their network that may decide not to invest in a given year.
2. Terms can be Ambiguous: Like any negotiation, neither party wants to commit until they feel comfortable with the deal. This process results in unclear verbal agreements that don't lead to funding. To mitigate this, it's important to get your agreement in writing, outlining the terms of the investment. The best way to do this is by drafting something informal during a meeting and reviewing the details together.
3. Funding can be Slow: Angel investor funding times will vary but expect it to take one to nine months. The initial process of finding angel investors can take several months. If your network is small or you need several investors for a large round of funding, it can take even longer. To expedite the process, search for an angel investor before you need funding. Work on building a relationship early to get funding more quickly in the future.
4. Average Amounts are less than Venture Capital : In 2017, the average deal size for rounds of funding with angel investors was $388,860, which includes deals that involved multiple investors. Angel investors can invest any amount, but individual checks averaged $37,000 nationwide in 2017. If this is an insufficient amount of funding, then your company may be ready to raise a venture capital round.
5. An Option for the Investor to Convert Debt to Equity is Required: Angel investors typically want convertible debt, with a premium of 20%. This gives them the option of converting it into equity at the next valuation, at a 20% premium. In 2017, this was an average of 12.2% equity when converted. Investors that own equity have input into your business and when founders dilute their position each time they raise funds, they may end up with a minority holding in the company.
6. Rapid Growth is Expected: Angel investors expect startups to grow quickly over three to five years. This is because the return they receive on their investment depends on that growth. The pressure to grow the company can go against the founders' plans, especially if founders are more interested in building a smaller business. This is a con for founders that want a microbusiness and don't plan to scale their company.
7. Founder Control is Reduced: Some startups discover a problem that requires a change in the direction of their business. Before any form of funding, this can be done with agreement from the founding team. However, after receiving funds from angel investors, they will want to be consulted on this decision. Although this is inconvenient, it leads to better decisions and increases the chances of success. This is a con for founders that secured angel investment too soon.
8. Angel Investor Support and Guidance may be Limited : Angel investors are typically involved in startups and can assist with any problems founders encounter. However, this isn't formalized and will vary from one angel investor to another. It should be discussed with the angel investor to ensure that they are willing to offer the necessary support. This can be a con to founders that need extensive guidance in their business.
9. Angel Investors may be Overextended: Most angel investors advise multiple startups, besides other work and time commitments. This can sometimes lead to less attention being paid to their investments than startup founders expected. Founders should discuss the expected time an investor can devote to them and also gauge whether the investor may be overextended. This is a con for founders that need the additional guidance offered by angel investors to succeed.
10. Founder and Angel Investor Roles may be Unclear : Angel investors and founders can sometimes disagree over their role in the business. This may happen because investors are too demanding, inexperienced, or assume greater control. To mitigate this problem, founders should consult other companies the angel investor is involved with to determine their investment style. This con is most common with inexperienced founders and investors that don't make individual roles clear.
7. Explain the features of Venture Capital?
Ans: 1. New Concept: Venture capital is a new concept because it has been formed for fulfilling the financial needs of entrepreneurs taking high risks for technical developments and processing.
2. Risk and Adventure: The provision and use of venture capital are possible only where the entrepreneur establishes risk involving industry for the first time.
3. Important Tools and Method: Venture capital is called as animportant tool or method because through it is not only the innovators are encouraged to establish Industries, but small and medium entrepreneurs are also encouraged. 4. Various Forms: Various forms of venture capital are visible, like in the project, venture capitalist functions as an entrepreneur, as co-promoters and in the form of equity participation in various stages of projects.
5. Investment of Venture Capital: One important feature of the capital venture is that an individual, Institutions, and government invests the venture capital only in High-risk projects because only they have wide possibilities.
6. Distribution of Profits and Risks of Enterprise : We know that in entrepreneurship, an individual (entrepreneur) or group of individuals take the risk and for that, they get the return. Under some projects, venture capitalists work as co-promoters with the entrepreneur, then they distribute the profits and risks combined, according to the agreed ratio.
7. Investment in Small and Medium Enterprises: Investmentof venture capital is made for the establishment of small and medium enterprises only, and not for the establishment of large Industries.Because risks involved in the establishment of small and medium enterprises are less than the large Enterprises.
8. New Enterprises : Venture capital is often invested in new enterprise only, because new techniques and methods are used for the production of new commodities, with the hope that it will enable the earning of maximum profits.
9. An Important Input: Venture capital is an important and needed input, without which neither new enterprise can be established nor marketing strategy is possible and management and organizing are Virtually Impossible.
Thus, venture capital is also an input along with other inputs (raw materials And Labour), etc. 10. Availability of Venture Capital: Venture capital is available only for the commercialization of new ideas and new technology. It is not available for Enterprises, like - booking of the train, bus, or another journey, financial services by individuals, banks, and financial institutions, agency, research, and development, etc.
11. Limit of Investment: Venture capitalists make investments in venture capital development of established enterprise to the highest stage or up to full potential.
Thereafter, they start disinvestments of their shares to the promoters or other persons in the market.
Here, it should be remembered that the main objectives of disinvestment are not to earn profits but increase capital by the process of disInvestments.
12. Not Payable on Demand: Venture capital is not payable on demand, like paying off loans, whereas General capital is payable on demand and in accordance with the provisions of the act.
13. Financial Process for Making Funds available from the Beginning: Venture capital is a financial process for making the funds
available from the beginning or starts a new business enterprise.A new enterprise or industry may not be established without it.
14. Representation of Funds: The industry or institution forms various types of sources of funds to meet its financial require ments and uses them ac according to need, so that financial adjustments may not have to be made in an emergency. But venture capital represents collective funds in the new enterprises. It does not mean that some other funds are not made available.
15. Venture Capital is Different than other Investment Vehicles: The investors make the investment of capital in the institution, by taking various objectives in view, like, development, expansion, research, investigations, innovations, etc. For an existing project.
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