This presentation depicts various challenges faced by new and existing entrepreneurs in India in order to start their venture and sustain them in terms of getting the right paper work to raising actual funds from commercial and government financial institutions. Certain solutions are also pointed out in order to overcome such hindrances.
3. Current Scenario
Sources of Startup phase
funding
9, 9%
3, 3%
3, 3%
22, 22%
63, 63%
State Finance
Corporation
Angel Investor
Venture Capitalist
Banks
Self Financed
Source: National Knowledge Commission
No. of proposals approved – Decreasing
Amount of funds dispersed – Increasing
Implications
• Stringent process
• Govt. schemes not getting utilised
• Rise of private equity – VCs
4. Difficulty levels faced by
types of entrepreneurs in
securing bank credit
Source: National Knowledge Commission
5. Challenges faced by New
Entrepreneurs
• Proper Preliminary docs
• Much emphasis on individuals/ team profile
• Time duration of credit acquisition
• Under financing – demand supply gap
• Collateral undervaluation
• Skillset, resources and infrastructure
overvalued
• Improper communication from the banks
• Unavailability of seed capital
• Gender bias-ness
6. Challenges faced by Existing
Entrepreneurs
• Re-work on the papers prepared prior to
loan application
• Previous financial records
• Past repayment schedule
• Debt restructuring
• Under-finance
7. Solutions for New Entrepreneurs
• Bankers require return on time invested – proper
compliance regarding docs before approaching a
bank.
• Availing of micro finance, micro equity. Schemes like
Mutual Credit Guarantee & Network Enterprises Fund
• Approaching Angel Investors, VCs, PE Funds.
• Set up a public fund using innovative PPP mechanisms
• Make incubators responsive to market needs
• Encourage enabling business environment
8. Solutions for Existing
Entrepreneurs
• Selection of bank according to the
nature of business
• Create a secondary market for
smaller companies
• Inclusion of more private sector
banks in case of debt restructuring
• Providing credit in clusters should
become more mainstream
• Bankruptcy laws
• PPP establishments for existing
firms