Venture Capital and Entrepreneurship by Majid Hussain

Venture Capital:

What I understood from my recent studies about venture capital that the companies provide capital for startup businesses and to new entrepreneurs are known as “Venture Capital”. They own equity or share in that business in which they invest and then from profit of business they pay back that invested amount to the investors and they earn by charging management fee of about 1.5 to 2.5 percent or higher of the total capital invested. They get investors and show them potential areas to invest in and get entrepreneurs, new companies and startup businesses on the other side to get good source of investment. They could have single venture partner or also get a group of investors and on the other side they also look for persons, companies with new ideas to invest in but these have some high risks but have the potential for above-average returns. So we can say that they are the risk takers and assessing risk very early in the start or before investment so that capital can be saved as earlier as possible and they mostly succeed in doing that, research proved that IT startups are the area to invest in because of its minimum or zero failure rate in IT businesses.

Venture Capital Company identifies attractive areas of businesses to invest, let say we can have health care, IT industry, power sector or telecom in Pakistan and then communicate the advantages of investment in these attractive sectors and help investors in understanding business strategy. They have a very close eye on the risk assessment and future of the business areas in which they use to invest so that they could make sure that investor’s money is to grow and there is no insecurity in investment. There is a lot of potential in venture capital industry. It is emerging as a very huge industry for investors from around the world. Why..? Because as we know there are always challenges in knowing about the emerging businesses and where to invest at what time, so venture capital firms solved this problem of investors by informing about the potential markets. Venture capital firms are expanding their areas as they are getting investors from around the world and putting large investments in startups and high potential businesses and help them grow.

Entrepreneurship:

                Entrepreneurship is what entrepreneurs do and starting a new business makes you an entrepreneur. Its sounds very simple so we will be interested in knowing what entrepreneurs do. Entrepreneur are the people who took initiative, do some innovation or got some idea and then transform that innovation or idea  to economic goods in simple words generate income so that results in creating new organization. According to the business dictionary entrepreneurship is “The capacity and willingness to undertake conception, organization, and management of a productive venture with all attendant risks, while seeking profit as a reward”.

From what I read about this interesting topic I can say that our earlier generation in their last years of employment or after their retirement they use to do some self-employment activities i.e put there earned amount to start any new business and that’s how they become entrepreneur but in today’s age what we see is that we have very successful young entrepreneurs. It’s because of the IT business where young people have enough knowledge of the field so that they can start doing some smart and interesting idea and get there business setup in no time and make giants out of their startup. We have a lot of examples from recent years where we see many young entrepreneurs like Google or Facebook.

References:

http://en.wikipedia.org/wiki/Entrepreneurship

http://www.sbs.ox.ac.uk/centres/skoll/about/Pages/whatisse.aspx

http://www.businessdictionary.com/definition/entrepreneurship.html

http://stvp.stanford.edu/blog/?p=4169

http://www.nsansa.org/2012/what-is-missing-from-entrepreneurship-education/

http://www.mit.edu/people/jpbonsen/ecenter.html

http://ecorner.stanford.edu/teachingGuide/venture_capital/1/

http://en.wikipedia.org/wiki/Venture_capital

http://www.investopedia.com/terms/v/venturecapital.asp#axzz1pCvd7OqX

http://www.entrepreneur.com/vc100

Success Story:

                While going through some success stories I got to know about a local Afgani guy who becomes a very successful entrepreneur, so I would like to share his story with you. Liwal was a Afghani refugee living in Peshawar refugee camp. Got out of schooling a bit early, might be in 7^th class he left school and then not got any chance to join any school. Got interaction with computers in early nineties. Asked some of his teachers that computer is in English why we don’t have it in pushto, Persian or urdu.? What they reply you know.. they said its not the work of one or two persons there are thousands of people working to build these large systems so we can’t do this. So he took this as a challenge and started self-learning all the computer related stuff and programming languages. With that effort he came up with a pushto version of DOS..amazing… Then he produced the pushto, Persian and dari version of word perfect (an earlier software for word processing). And according to him people without any processing software only publishing about a 100 books a year but after his work they used to published more then thousand books in dari and Persian languages.

                From there his aim was clear that he has to do a lot for his community to make their life easier in using computer. So he goes on with producing windows in local language and then he put his efforts to education sector in Afghanistan where he came up with a very low cost learning solution for student of any area or any age at their door step. He done this by opening a TV channel and providing them education from TV and combined it with IT. He also started another company producing computer systems with his brand “Liwal Computers”. His company combine all parts to produce branded computers. So this was a brief story or Liwal a very successful entrepreneur that I shared with you…you can have more details about Liwal at Liwal.com and for his introduction can also look his interview.

So dear fellows this was my writing about Venture capital and entrepreneurship.. hope it was interesting reading for you.. will be waiting for your comments...!