Based on Subject Startup & New Venture Management: Pune University MBA Pattern 2019. This PPT comprising various subtopics under Unit 3 Financial Road-map of the syllabus, describes the Financial Schemes and EDP programmes to encourage Entrepreneur. Subtopics covered: Planning/Budgeting, Developing a financial roadmap, financial statements: the four components, How to budget for startup success, Bootstrapping and alternative sources of funding, Informal capital– Friends & Family, Role of Government in ED, various schemes - PMEGP, CGTMSE, MPDA, SFURTI. Role of MSDE; Schemes by MSDE: PMKVY, SANKALP, STAR. Crowd funding, Venture capital, Private Equity

1. UNIT 3:
THE FINANCIAL
ROAD-MAP
By,
Prof Sandeep D Chaudhary,
Asst Professor- MBA Dept,
ISMR Pune.

2. 1.
DEFINITION &
MEANING
Let’s start with the first set of slides

3. “An Annual projection of
income & expenses for a
department, division,
organization is called as a
Financial Plan”
3

4. USES OF FINANCIAL PLAN
╸ To allot future income to different kinds
of expenses like utilities, rent, etc.
╸ To reserve some money for short-term,
long-term savings
╸ To generate future income such as
shares in the existing business, real
estate or new business, product line.
╸ To serve as an Investment Plan in
which savings done by future income
are allotted to several assets, future
projects 4

5. TYPES OF FINANCIAL
STATEMENTS
Cash flow
statement
Is the color of gold,
butter and ripe
lemons. In the
spectrum of visible
light, yellow is
found between
green and orange.
Income statement
Is the colour of the
clear sky and the
deep sea. It is
located between
violet and green on
the optical
spectrum.
Balance sheet
Is the color of
blood, and because
of this it has
historically been
associated with
sacrifice, danger
and courage.
5

6. 2.
SOURCES OF
FINANCE
Let’s start with the first set of slides

7. Sources of Finance
Depending upon the period for which
finance is required, the finance
can be of the following Three
types….
Short-term Sources
(for period of 1 year)
Medium-term Sources
(for period beyond 1 year)
Long-term Sources
(for period beyond 5 years)

8. NEED FOR
SHORT-TERM SOURCES OF FINANCE
Fulfilling daily
expenses
Example:
Payment of wages,
salaries to workers
or employess
Purchase of
raw-material
Tax liabilities
Example:
Arising from
Process of
conversion of raw
material into
finished goods.
8

9. SHORT-TERM SOURCES OF FINANCE
Trade Credit
╸ Understanding between
companies to purchase
goods/services without
paying instantly.
╸ Payment is deferred for a
period
Accrued Expenses &
Deferred Income
╸ Expenses already
incurred but the payment
thereof not made or not
become due.
╸ Example: salaries,
wages,interest, taxes
╸ Income received in
advance for the supply of
goods/services in future
period
Commercial Paper
Unsecured promissory note,
money making instrument
issued by large corporate
houses for raising funds for
short-term debt obligations
9
Certificates of Deposit
╸ Issued by banks in form of
certificate showing
existence of deposit with
them
╸ Can be traded by the
depositors before the
maturity period among
their business associates
Letter of Credit
Bank guarantee where
bank assists customer to
get credit fom the
customer’s suppliers
Instalment Credit
The payment for
purchase of
goods/services being
made by the lender in one
go and the buyer is
required to make
payment in equal
instalments (usually
monthly)

10. SHORT-TERM SOURCES OF FINANCE
Bank Finance
╸ Trade credit
╸ Credit limit
Factoring Bill Discounting
╸ Discounting of trade
bills drawn by bank
borrowers on their
customers
╸ Discounting done by
the bank on the basis
of Commission
amount adding to the
bank’s revenue
10

11. NEED FOR
MEDIUM SOURCES OF FINANCE
Acquisition of fixed
assets or
replacement
thereof
Permanent
working capital
Specific expansion
or diversion plans
of entrepreneurs
11

12. MEDIUM-TERM SOURCES OF
FINANCE
FINANCIAL INSTITUTIONS
╸ LIC
╸ IFCI
╸ SFC
╸ SIDC
COMMERCIAL BANKS PUBLIC DEPOSITS
Money received or collected
from public as deposit or
loan is termed as public
deposit
Public refers to general
public, employees,
shareholders of the company
12
HIRE PURCHASE
╸ Hiring of an asset for a
specific period
╸ Paying of cost of the asset
in instalments during the
period
╸ After the full payment with
the last instalment, hirer
becomes the owner of the
asset
LEASE FINANCING
Acquiring an asset for its
use without making full
payment for a certain
period called lease period
CURRENCY BONDS
Issued by foreign,
domestic business
organizations or
government with a
maturity period of 9
months to 30 years
High level of popularity
due to better rate of
interest
INSTALMENT CREDIT

13. SOURCES OF LONG-TERM FINANCE
DEBENTURES
Acknowledgement of the debt of the
person signed by the company seal
in the form of issued securities
against the debt
SHARES
Capital of a company split into
smaller units termed as “Shares".
Investors subscribing to these
shares are called as “Shareholders”.
Shareholders are the owners of the
company to the extent of their
shareholding.
13

14. 3.
ROLE OF GOVERNMENT
IN ENTREPRENEURSHIP
DEVELOPMENT
Let’s start with the first set of slides

15. ROLE OF GOVERNMENT IN DEVELOPMENT
OF ENTREPRENEURSHIP
15
Training
Need-based & Technical training
Government, State Government, NGOs
MSME, NIESBUD, NSIC, IIE, NISIET, EDI
Marketing
assistance
NSIC:
Promotion of MSME products through Exhibitions
Marketing in domestic & international markets
Single point registration scheme for govt purchase
Promotional
schemes
Provision of developed lands, sheds with all amenities at
actual cost
Quality upgradation, Common facilities, Entrepreneurship
development, consultancy services at nominal charges.
Concession on
Excise duty
Exemption for MSME units with 1 cr turnover
Exemption for units producing Branded goods
in Rural areas
Credit facility
to MSMEs
SIDBI as the apex bank for supporting MSMEs
Other entities like SFCs, Scheduled Banks, SIDC, NSIC
No collateral for 5 lac loan by banks

16. Prime Minister Employment
Generation Programme (PMEGP)
Meaning:
credit-linked subsidy program implemented by
Ministry of MSME (Central Govt).
A Implementation:
1. National Level- Khadi and Village Industries
Commission (KVIC) as the nodal agency.
2. State Level- State KVIC Directorates, State
Khadi and Village Industries Boards (KVIBs)
District Industries Centres (DICs) and banks
A Objective:
To generate self-employment opportunities
through creation of micro enterprises by
organizing traditional artisans, unemployed youth
16

17. SCOPE OF PMEGP
❏ Applicable for all viable business
projects in rural & urban areas
❏ For manufacturing sector - 50 lakhs
For services sector – 20 lakhs
❏ Not applicable for:
❏ Grocery shop,
❏ Stationery shops,
❏ Farm related activities like
goatery , piggery, poultry,
❏ Rural/Urban transport activities.
17

18. Credit Guarantee Trust Fund for
MSE (CGTMSE)
A Credit-guarantee scheme implemented by
Ministry of MSME (Central Govt) & Small
Industries Development Bank of India
(SIDBI)
❖ 75% of the loan amount is guaranteed to
the bank
❖ Collateral loan up to a limit of INR 1 Crore
Objectives:
❖ To provide financial assistance to the
eligible MSME units in the form of credit
guarantee on collateral free term loans.
❖ To provide a loan guarantee for the
projects until Rs 1 Crore
18

19. Eligibility Criteria
❏ All-new, as well as existing MSME units
❏ ending partners under the scheme are all the
scheduled commercial banks, specifies Regional
Rural Banks, NSIC, SIDBI, NBFCs, Small Finance
Banks (SFBs)
❏ The institutes that are not eligible under the
scheme are the following activities or entities
❏ Retail trade
❏ Educational institutions
❏ Self Help Groups (SHGs)
❏ Training Institutions
❏ Agriculture
19

20. Market Promotion & Development
Scheme (MPDA)
A Unified scheme for Khadi sector including
assistance in publicity, marketing,
promotion & market development.
A 30% of subsidy on the prime cost of
Khadi (cotton, silk, woolen) & Polyvastra
A Three entities involved in the scheme are
Spinners & Weavers, Manufacturing
organisations, Selling organisations
A Total Amount of MPDA would be
subdivided with following percentage of
margins
Spinners & Weavers- 40 %
Manufacturing Organisation – 20 %
Sellers – 40 % 20

21. OBJECTIVES
╸ To support marketing development of Khadi
entrepreneurs
╸ To provide financial assistance & equal
distribution of subsidy
╸ To enable market segmentation for Khadi &
Village industry products
╸ To expand opportunities for Khadi & Village
units in national, international markets
╸ To organize, host, participate in Exhibitions
╸ To create demand for Khadi & Village Industry
products
╸ To Promote scheme & incentive offered to
entrepreneurs 21

22. SCOPE
╸ Production
╸ Selling
╸ Market Promotion
22

23. REVAMPED SCHEME of FUND for
REGENERATION of TRADITIONAL
INDUSTRIES (SFURTI)
❖ Cluster-development scheme
implemented by Ministry of MSME
(Central Govt)
❖ Khadi and Vikas Industries Center is the
nodal agency for promotion of cluster
development in India
❖ 76 Clusters developed by KVIC
23

24. OBJECTIVES
╸ To organize the traditional industries &
artisans into clusters
╸ To equip traditional artisans of the
associated clusters with skillset &
capabilities
╸ To make common provision for common
facilities & tools & equipment's
╸ To strengthen cluster governance systems
with the active participation
╸ To build up innovative and traditional skills,
improved technologies, advanced
processes, market intelligence, new
models of public-private partnerships 24

25. Financial assistance allowed
under Revamped SFURTI
The financial assistance provided for
Revamped SFURTI is classified into three
types of clusters, along with budget limit per
cluster:
╸ Heritage (1000 to 2500 artisans) – Rs. 8
crore
╸ Major (500 to 1000 artisans) – Rs. 3 crore
╸ Heritage ( 150 to 500 artisans) – Rs. 1.50
crore
25

26. MINISTRY OF SKILL
DEVELOPMENT &
ENTREPRENEURSHIP (MSDE)!
Key Details:
╸ Set up in 2014
╸ Coordinates all skill development
efforts across India
26

27. 2.
SCHEMES BY MSDE
Let’s start with the first set of slides

28. Developing a Program of Action
╸ Pradhan Mantri Kaushal Vikas
Yojana (PMKVY)
╸ Industrial Training Institutes (ITI)
╸ Overseas Employment
╸ Strategic partnerships.
28
Schemes
by MSDE
PMKVY
Sankalp
STAR

29. Pradhan Mantri Kaushal
Vikas Yojana
╸ Short-term Training
╸ Recognition of prior
learning
╸ Special projects
╸ Kaushal & Rozgar
mela
╸ Placement guidelines
╸ Monitoring guidelines.
KEY COMPONENTS OF THESE
SCHEMES
SANKALP (Skills Acquisition &
Knowledge Awareness for
Livelihood Promotion)
╸ Institutional development
& strengthening
╸ Entrepreneurship
development
╸ Capacity creation
29

30. STAR (Standard Training Assessment &
Reward Scheme)
╸ To encourage skill development
among the youth by providing
monetary awards
╸ Monetary incentives for successful
completion of market-driven skill
training
╸ Award of STAR certificate
╸ Targeted to 80% of entry-level
workforce required in various sectors
╸ Also enhance skills & knowledge of
currently employed youth.
KEY COMPONENTS OF THESE
SCHEMES
30

31. HOW TO FUND YOUR
START-UP.
31

32. 32

33. INDIVIDUAL SOURCES OF FUNDING
A STARTUP
Bootstrapping
Is a term used in
business to refer to the
process of using only
existing resources, such
as personal savings,
personal computing
equipment, and garage
space, to start and grow
a company.
Angel investors
Is usually a
high-net-worth individual
who funds startups at
the early stages, often
with their own money.
Crowdfunding
Is the practice of
funding a project or
venture by raising
money from a large
number of people,
typically via the
internet..
33

34. 34

35. 35
CROWD FUNDING
╸ It enables fundraisers to collect
money from a large number of
people via online platforms.
╸ Product: A eco-friendly E-Bike, as a
pre order
Music: Get a music album
crowdfunded
Literary: Get funds for a storybook
for children
Movies: Fund a short movie about
drug usage
Technology: Fund a new video game

36. CROWD FUNDING
It enables fundraisers to collect
money from a large number of people
via online platforms.
Place your screenshot here
36

37. 37
Crowdfunding campaigns in India
╸ Ketto.org
Help Delhi Breathe. Oxygen Concentrators for COVID-19 Relief
╸ Milaap.org
Save a Child's Heart. Empower Rural India
╸ ImpactGuru.com
Support for Cancer Treatment, Organ Transplants
╸ FuelADream.com
Support for NGOs, Social Causes

38. 38
Crowdfunding campaigns in the World
╸ Kickstarter
Best suited for: A wide variety of innovators.
Costs involved: If you raise 100% of your project, you get the capital with a
5% fee and the payment processor will charge an additional 3-5%.
╸ Indigogo
Best suited for: Entrepreneurs of all fields in their early stages of
development.
Costs involved: For both the fixed and flexible route you’ll encounter a 5% to
release your funds. Plus an added 3% processing fee as well as $0.30 per
transaction.
╸ GoFundMe
Best suited for: Personal and social fundraising.
Costs involved: While GoFundMe doesn't take any fees, there are still the
industry standard transaction fees (about 3%).

39. What Is
VENTURE CAPITAL?
39

40. SOME BASIC TERMS ABOUT
VENTURE CAPITALISM
╸ Seed Money- money used to bring ideas into
the business world
╸ Start-up - Businesses that want to place a foot
in the market and require funds to survive
╸ First-Round - Companies that were able to
place a foot and now are into manufacturing
and sales
╸ Second-Round - Businesses that are selling
their products but unable to make a profit yet
╸ Third-Round - An enterprise that has just
gotten on its feet and is beneficial
╸ Fourth-Round - Companies that are looking for
something known as bridge financing so they
can become publicly traded 40

41. Definition & Meaning
“Venture capital (VC) is a form of
private equity funding that is
generally provided to start-ups
and companies at the nascent
stage.”
╸ VC is often offered to firms that
show significant growth potential
and revenue creation, thus
generating potential high returns.
41

42. Importance of venture capital in
funding startups
╸ Access to Capital
╸ Early-Stage Financing
╸ Expertise and Guidance
╸ Validation and Credibility
╸ Network and Connections
╸ Long-Term Perspective
╸ Exit Opportunities
In summary, venture capital is vital in funding
startups due to its ability to provide capital,
expertise, validation, network connections,
long-term support, and exit opportunities.
42

43. Role of venture capitalists in
supporting entrepreneurship
╸ investing capital,
╸ providing analytical expertise,
╸ managing money and
╸ closing investments.
43

44. Factors considered by venture
capitalists before investing
╸ Market potential and size
╸ Competitive advantage and differentiation
╸ Management team and experience
╸ Technology or innovation
╸ Financial projections and scalability
44

45. Types of Venture Capital
45
Early-stage/Seed funding
● for those of you who just
want to start a business
● Even if you don’t have a
product or company set
up
● market research, cover
administrative costs, or
make product samples
Expansion/ Growth-stage
funding
● help your business grow
better after its
establishment
● help your business enter
new markets
● focus on initial public
offerings (IPOs),
recapitalizations, or
purchases
● financing for the short
term in case of IPO where
you need to pay a cost for
going public.
Mezzanine/ Bridge financing
● At this stage, the
company is well
established with fantastic
sales and revenue levels.
● Seeks capital to increase
marketing and make the
company bigger
Late-stage funding

46. Benefits for startups and
entrepreneurs
╸ Access to capital and
expertise
╸ Validation and credibility
╸ Potential for rapid growth and
scalability
Benefits and Risks of Venture
Capital
Risks for venture capitalists
and startups
╸ Uncertain returns and high
failure rate
╸ Loss of control and
dilution of ownership
╸ Limited liquidity and long
investment horizon
46

47. 47
CASE STUDY 1 OF VENTURE
CAPITAL BACKED FIRM
Founders: Sachin Bansal and Binny
Bansal in 2007
Venture Capital Backing:
early-stage funding from Accel Partners
and Tiger Global Management, among
others.
Journey:
╸ started as an online bookstore and
quickly expanded into a full-fledged
e-commerce platform.
╸ played a crucial role in shaping
India's e-commerce landscape.
╸ In 2018, Walmart acquired a
majority stake in Flipkart for
approximately $16 billion

48. 48
CASE STUDY 2 OF VENTURE
CAPITAL BACKED FIRM
Founders: Bhavish Aggarwal and Ankit
Bhati in 2010
Venture Capital Backing:
early-stage funding from SoftBank,
Sequoia Capital, and Tiger Global
Management.
Journey:
╸ started as a small-scale taxi
aggregator.
╸ expanded into new markets,
introduced new services (including
Ola Auto and Ola Bike), and made
strategic acquisitions leveraging
venture capital investments.
╸ Entered in International markets

49. 49
OTHER EXAMPLES OF VENTURE
CAPITAL BACKED FIRM
╸ Zomato
Sector: Online Food delivery
a restaurant discovery platform followed
by a food delivery and restaurant
aggregator service
╸ Paytm
Sector: Fintech/Mobile Payments
a mobile payments and digital wallet
platform

50. What is
PRIVATE EQUITY?
50

51. Definition & Meaning
“ Private Equity is an investment
strategy that involves investing in
companies or funds that are not
publicly traded on a stock
exchange. ”
╸ Private equity firms typically use
a range of strategies such as
leveraged buyouts, venture
capital, and growth capital to
acquire companies and help them
grow over time..
51

52. Meaning of Private Equity
╸ It is called "private" because the investments
are made directly into private companies
rather than buying publicly-traded shares on
the stock market.
╸ Examples: private equity firms, institutional
investors, wealthy individuals, and family
offices.
In summary,
52

53. Characteristics and Features of
private equity
╸ Investment Focus.
╸ Long-Term Capital
╸ Active Management
╸ Value Creation
╸ Fund Structure
In summary, Private equity plays a significant
role in the financial ecosystem, providing
capital, expertise, and guidance to
privately-held companies that may have
limited access to traditional forms of
financing. It also offers investors the
opportunity for potentially higher returns 53

54. INVESTMENT
STRATEGIES
╸ Buyouts: Involves acquiring a controlling
stake in a company, often by using
significant debt financing (leveraged
buyouts).
╸ Growth Capital: Focuses on providing capital
to growing companies to support their
expansion plans.
╸ Venture Capital: Invests in early-stage
startups with high growth potential, often in
technology and innovation-driven sectors.
╸ Distressed/Turnaround: Targets troubled
companies that are facing financial
difficulties and aims to turn them around to
profitability. 54

55. 55
CASE STUDY 1 OF PRIVATE EQUITY
BACKED FIRM
Founders: Byju Raveendran in 2011
Sector: EdTech
Venture Capital Backing:
funding from Sequoia Capital India, Tencent
Holdings, among others.
Journey:
╸ online learning resources and
personalized educational content to
students.
╸ expanded its product offerings,
covering various subjects and grades
╸ user-friendly app and engaging
content helped it gain popularity
among students and parents

56. 56
CASE STUDY 2 OF PRIVATE EQUITY
BACKED FIRM
Founders: Hari Menon, V.S. Sudhakar, Vipul
Parekh, Abhinay Choudhari, and V.S. Ramesh in
2011
Venture Capital Backing:
Alibaba Group, Abraaj Group, and others.
Sector: E-commerce/Groceries
Journey:
╸ leading online grocery delivery platform.
╸ expanded its services to multiple cities
and invested in a robust supply chain and
logistics infrastructure.
╸ With private equity support, BigBasket
achieved significant scale, offering a wide
range of grocery products to customers
across India.

57. 57
OTHER EXAMPLES OF PRIVATE EQUITY
BACKED FIRM
╸ PolicyBazaar:
Sector: Fintech/Insurance
online insurance comparison platform
╸ Paytm
Sector: Fintech/Mobile Payments
a mobile payments and digital wallet
platform

58. VENTURE CAPITAL
╸ 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..
VENTURE CAPITAL & PRIVATE
EQUITY FIRMS
PRIVATE EQUITY FIRMS
╸ A private equity firm is a
type of investment firm.
╸ They invest in businesses
with a goal of increasing
their value over time
before eventually selling
the company at a profit.
58

59. THANKS!
Any questions?
You can find me at:
╸ sundeep.chaudhari@gmail.com
59