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Capital Sources -
Capital Sources

Financial capital is any economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provide their services to the sector of the economy upon which their operation is based, i.e. retail, corporate, investment banking, etc. Financial capital generally refers to saved-up financial wealth especially that used to start or maintain a business.

One needs money to make money. Finance is the lifeline of business. A business firm requires finance to commence its operations, to continue its operations and for its expansion and growth. There must be continuous flow of funds in and out of business. Sound plans, efficient production and marketing are all dependent on smooth flow of finance. Hence, a financial plan needs to be prepared, which indicates the requirements of finance, sources for raising the finance and the application of funds. Financial planning for starting a business begins with estimating the total amount of capital required by the firm for the various need of the business.


The financial plans of an enterprise should be formulated by taking into consideration the following factors :-

— The financial objectives of the company

— Nature and size of the business

— The image and credit-worthiness of the enterprise

— Growth and expansion plans

— Capital market trends

— Government regulations

If you want to turn your idea into a business, or need more funding to take your venture to the next level, here’s a look at main sources of capital.

Friends and family. Some entrepreneurs turn to neighbors, old classmates, relatives or other loved ones when looking for seed money. Your family and friends want to see you succeed and may even want a stake in your potential goldmine for themselves. However using family and friends as a source of raising money can be problematic. It can create a strain that can ruin personal relationships. It is also worth remembering that over 50% of small businesses fail in their first five years often because of factors completely outside of the control of the owners. Make sure that you are not borrowing money that they can’t afford to lose. Put any lending agreement in writing with the terms clearly laid out even if it is a “friendly” loan.

Incubators and accelerators A business incubator is a company that helps new and startup companies to develop by providing services such as management training or office space. A Business Accelerator is very similar to an incubator but differs in that they usually have a greater focus on companies entering or growing in a national or global market. Business accelerators are more likely to be financed by venture capitalist looking for an opportunity to finance growth potential through defined action plans. Business accelerators will generally offer all of the services offered by a business incubator. The key difference is the level of hands-on involvement by accelerator management which should increase the chances of success. For more information click the below links:

Angels & venture capitalists.  After entrepreneurs have made their fortune many of them look to invest their funds back into startup businesses. These are known as angel investors. Some of the worlds largest businesses including Google, Facebook, Skype and Twitter have received angel investing. The benefits of receiving angel investment go beyond the purely financial. The advice and connections that a good angel investor can offer can be equally as valuable. Angel investors are willing to take on the risk of a brand new startup. There are a number of angel investing networks which connect entrepreneurs and investors. Some of the biggest networks include Golden Seeds, Tech Coast Angels and Investors Circle. Venture capitalists aim to invest in early stage businesses with high growth potential. Traditionally venture capitalists received equity in the business in exchange for funding it. However these days they typically demand a mixture of equity and debt financing. For more information click the below links:
Angel Investors
Venture Capitalist

 Crowdfunding.  Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet. One early-stage equity expert described it as “the practice of raising funds from two or more people over the internet towards a common Service, Project, Product, Investment, Cause, and Experience, or SPPICE (Service, Project, Product, Investment, Cause and Experience).”

The crowdfunding model is fueled by three types of 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. In 2013, the crowdfunding industry grew to be over $5.1 billion worldwide. Crowd funding takes it name from the fact that your project is funded by the public using their own personal funds. To start with, you propose the idea that you wish to see funded. People can then choose how much or how little they want to give you. For more information Click here…


Bank Financing Capital in the form of debt or equity is one of the fundamental requirements for starting, managing and growing a business. In India, it is easy for most businesses to syndicate capital in the form of debt from Banks as banks have a strong mechanism for evaluating and disbursing funds. Further, banks contribute more capital to businesses in India more than Private Equity Funds or Angel Investors or Venture Capitalist, therefore it is important for all Entrepreneurs to know about the banking facilities available and avail them properly.  Banks and financial institutions provide financial assistance for companies all stages of the business lifecycle. Startup companies can avail a host of term loan or working capital or asset backed loans based on their requirements. Banks will lend even to a start, if they are satisfied with the business model, projected returns from the business, the ability to pay back the loan (through business or otherwise), management experience and expertise and other security provided. For more information Click here…