INTRODUCTION

Entrepreneurs in order to Capital refers to any form It is basically the amount

finance their ventures of wealth employed to of money needed to start
rely on different sources produce more wealth for up a business and run
of capital. a firm. the business activities.

Sources of capital are divided into

‘debt or equity’ and ‘internal or
external’ sources
 Personal Funds
/ Personal
Savings
Government Family And
Agencies Friends

SOURCES
Banks And OF CAPITAL
Other Financial Business Angels
Institutions

Retirement Venture
Accounts Capitalists
 PERSONAL FUNDS / PERSONAL SAVINGS

A major source for personal

An entrepreneur’s personal
funds can be savings, life
funds or savings are his first
insurance, or mortgages on
source of capital.
houses or cars.
  To start up her business,
PUAN ROZITA IBRAHIM she mortgaged her own
jewelleries

 Started selling herbs with

her own capital of RM400

 All the herbs sold by

direct selling from a
house to another

 Give her own testimony

 Succeed to expend her

business till now
  Founder of Fareeda Scarf

PUAN FARIDAH ZAKARIA  With her own capital of RM500 and a

sewing machine

 Then the scarf got high demand

among women until today
FAMILY AND FRIENDS
 • Their expectation of getting back a good
return is set in an informal way.

FAMILY AND • But our family and friends will demand their

FRIENDS money back even we can least afford it.

• So entrepreneur must repays his loans as
• This type of fund is easier to raise. soon as possible.
• Families and friends are labelled as
informal investors

• Friends and families are another

conventional source of fund that is
limited.
HOW TO GET MONEY FROM
YOUR FAMILY AND FRIENDS
• Have you heard about the • Try to treat them as if they were
‘kitchen table pitch’? strangers. Have a lawyer to
• Know your mentor’s prepare the promissory note
motivations.
Promissory note A promissory note is a tangible
• Provide options for investing. recognition of a supplier’s claim or a note given
in connection with an acquisition of funds.
• Follow up with the written
memo.
 VIVY YUSOF

• The owner of FashionValet & Duck

Group
• Business start up is RM 10 000
which from her own savings and
family’s capital
BUSINESS ANGEL
• BUSINESS ANGEL also known as private
investor.
• This kind of investor can be wealthy family
and friends, another individuals or group.
• Business angels are those who invest their
capital in fresh ventures.
• Business angel invest in seeding stage to
enable the venture attract future capital
from venture capital.
 TYPES OF BUSINESS ANGEL
THE FAMILY INVESTOR

THE ARCHANGEL INVESTOR

BUSINESS THE RELATIONSHIP
ANGEL INVESTOR

THE ONCE REMOVED THE IDEA INVESTOR

INVESTOR
FABRICE GRINDA (245 INVESTMENT) CYAN BANISTER

HIS INVESTMENT : HER INVESTMENT :

 VENTURE CAPITALISTS (VCS)
Venture capitalist is an investor that provides start-up ventures with
potentiality of success with capital or helps small ventures to grow
that have not access to sufficient funds in order to get high fortunate
returns.
Venture capitalists are usually formed as limited partnerships where
the partners invest in the VC fund.
Venture capitalists look for a strong management team, a large
potential market and a unique product or service with a strong
competitive advantage.
Venture capitalists typically invest in companies
they anticipate being sold either to the public or to
larger firms within the next several years.
Companies they will consider investing in usually
have the following features:
• Rapid, steady sales growth
• A proprietary new technology or dominant position
in an emerging market
• A sound management team
• The potential for being acquired by a larger company
or taken public in a stock offering
 JIM BREYER
• an American venture capitalist,
founder and CEO of Breyer Capital
• Breyer has invested in over 40
companies and one of them is
Facebook

PETER FENTON
• an American venture capitalist
based in Silicon Valley
• an investor in Twitter
 RETIREMENT ACCOUNTS
It's better known as Employees Provident Fund (EPF) or Pension
Funds
A retirement plan for the private and public sectors in Malaysia
Employees may withdraw 30% of their accumulated EPF savings at
age 50, and 100% at age 55.
Therefore, an entrepreneur can use this money to fund the
development of his venture.
 BANKS AND OTHER FINANCIAL INSTITUTIONS

Banks and financial institutions are one of the sources for external
funding to initiate a new business venture or for expanding an existing
business.
For new businesses, loans from banks and financial institutions are not
only difficult to obtain because of their lack of track record,
But also because of the costs in terms of interest payments, which is a
burden to them.
Thus, financial institutions have a direct influence on an entrepreneur

FINANCING BY BANKS AND OTHER

FINANCIAL INSTITUTIONS

Long-term Medium-term Short-term

financing financing financing
 Long-Term Financing

• Refers to funds borrowed from external sources generally over a long

period which is in between 5 and 25 years
• this type of financing are commercial mortgage and long-term loan
agreement from banks
• The funds obtained from long-term financing are usually used to acquire
fixed assets such as land, buildings machinery and office equipment.

Example : Share capital, retained profits, venture capital, mortgages and

long-term banks loans.
Amri took a loan of RM 50,000 to buying a new car. He take loan for a period of
20 year at the 10% Annual Percentage Rate . Since the loan is for longer period it
will be treated as the long term finance. In 20 year amri has to repay the loan
amount along with the interest due.
 Medium-Term Financing

• Refers to a loan made by an entrepreneur that ranges around 1 year

and not exceeding 8 years.
• It is based on an agreement between the entrepreneur and the
organization that will be providing it.
• Medium-term financing covers hire purchase, lease, and loan
agreements

Example : Banks loans, leasing, hire purchase and government grants.

 Short-Term Financing

• Refers to a loan made by an entrepreneur that ranges not less form 1 year.
• Bank overdraft facilities are one of the most typically and frequently used
• Through this facility, the entrepreneur only pays interest on the amount
actually withdrawn.
• On the other hand, with a bank loan, the entrepreneur will be asked to pay
interest on the full amount of the loan regardless of whether he has utilized
the amount or otherwise

Example : Bank overdraft, trade creditors and factoring.

Mary took a loan of RM 5000 to buying

a new motorcycle. She take loan for a
period of 6 months at the 5% Annual
Percentage Rate . Since the loan is for
shorter period it will be treated as the
short term finance. In 6 month Mary has
to repay the loan amount along with the
interest due.
 GOVERNMENT AGENCIES

• The government also provides support for entrepreneurs through

various agencies that help entrepreneurs in many ways.
• Entrepreneurs that require assistance from the government to
expand their businesses can apply for loans, grants and incentives

The example of government agencies:

SME Corp. Malaysia (SMECorp.), Malaysian Technology Development
Corporation (MTDC), Perbadanan Nasional Berhad (PNB), Malaysian
Industrial Development Authority (MIDA), SME Bank and Majlis
Amanah Rakyat (MARA).
 NEBULLA HORIZON ENTERPRISE
This company has earned funding assistance from MARA RM
50,000.
Owner of this company, has undergone courses recommended by
the MARDI which is the Virgin oil income course through the
fermentation were recommended by the People's Council of
Trustees (MARA).

SKSBUS MALAYSIA Sdn. Bhd.

SKS Bus has come a long way since 20 year ago. MIDA helps their
companies aspire to invest in the manufacturing and services
sectors and facilitates their project implementation.

TELEKOM MALAYSIA BERHAD (TM)

The collaboration with SME bank to grain TM digital infrastructure
and service. SME bank is confident that it is able to reach out to
more underserved and unserved by providing the right financing.