Islamic Emirate of Afghanistan

Afghan Islamic International University

Agriculture Faculty
Agricultural Economics & Rural Development Department
Entrepreneurship Management (Ag.Ec.1008)

Prepared by: Dr. Hamidullah Younisi

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 Chapter Four:
Entrepreneurial Ventures

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 Entrepreneurial Ventures

What is an Entrepreneurial Venture?

• The main characteristic of an entrepreneurial venture is their ability

to perform functions which are innovative, and can lead to rapid
change and growth. The size of the firm is irrelevant, as long as it
performs entrepreneurial functions; it is regarded as an
entrepreneurial venture.

• Entrepreneurial venture can be defined as an organisation that places

innovation and opportunism at its heart in order to produce economic
or social value. An entrepreneurial venture pursues opportunities, and
it is characterized by innovative practices, and has value-creation and
growth as its main goals.

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 Entrepreneurial Ventures

Launching Entrepreneurial Ventures

STAGES AND STEPS OF THE ENTREPRENEURIAL VENTURE

• The entrepreneurial process of launching a new venture can be

divided into three key stages of: Discovery; Evaluation; and
Implementation. These can be further sub-divided into seven steps
as shown below:

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 Entrepreneurial Ventures

Launching Entrepreneurial Ventures

Discovery Evaluation Implementation

Identifying Analysing and Launching and

opportunities selecting the developing the
opportunity enterprise

1. Discovering your 3. Evaluating the idea as a 5. Forming the enterprise to

entrepreneurial potential business opportunity create value
2. Identifying a problem 4. Investigating and 6. Implementing the
and potential solution gathering the resources entrepreneurial strategy
7. Planning the future

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 Entrepreneurial Ventures

1. Discovering your entrepreneurial potential: the first step is to know more about your
personal resources and attributes through some self-evaluation. 3 what will you bring to
the venture? What are your strengths and challenges? These will affect the type of
venture you choose.

2. Identifying a problem and potential solution: a new venture has to solve a problem
and meet a genuine need

3. Evaluating the idea as a business opportunity: find out information about the market
need. Is the solution to this problem really wanted by enough customers? Investigate the
feasibility of the proposed solution (technically, economically, socially, legally).

4. Investigating and gathering the resources: How will the product/service get to
market? How will it make money? What resources are required?

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 Entrepreneurial Ventures

5. Forming the enterprise to create value: set up a business entity and

protect any intellectual property. Get ready to launch the venture in a way
that minimizes risk and maximizes returns
6. Implementing the entrepreneurial strategy: activate the marketing,
operating, and financial plans.

7. Planning the future: look ahead and visualize where you want to go

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 Entrepreneurial Ventures
Process of New Venture Creation

1. Idea Generation: every new venture begins with an idea. In our context, we take an
idea to be a description of a need or problem of some constituency coupled with a
concept of a possible solution. (A characterization of this phase is still work in process
on this site.)

2. Opportunity Evaluation: this is the step where you ask the question of whether there
is an opportunity worth investing in. Investment is principally capital, whether from
individuals in the company or from outside investors, and the time and energy of a set
of people. But you should also consider other assets such as intellectual property,
personal relationships, physical property, etc.

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 Entrepreneurial Ventures

3. Planning: Once you have decided that an opportunity, you need a plan for how to
capitalize on that opportunity. A plan begins as a fairly simple set of ideas, and then
becomes more complex as the business takes shape. In the planning phase you will need
to create two things: strategy and operating plan.

4. Company formation/launch: Once there is a sufficiently compelling opportunity

and a plan, the entrepreneurial team will go through the process of choosing the right
form of corporate entity and actually creating the venture as a legal entity.

5. Growth: After launch, the company works toward creating its product or service,
generating revenue and moving toward sustainable performance. The emphasis shifts
from planning to execution. At this point, you continue to ask questions but spend more
of your time carrying out your plans.

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 Entrepreneurial Ventures

Methods to initiate ventures

Every potential entrepreneur wants to know the best methods for entering business.
There are 3 common methods

I. Creating the new venture

II. Acquiring the existing venture
III. Obtaining a franchise

A franchise is a joint venture between a franchisor and a franchisee. The franchisor is

the original business. It sells the right to use its name and idea. The franchisee buys this
right to sell the franchisor's goods or services under an existing business model and
trademark.

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 Entrepreneurial Ventures

The Pathways to New Ventures for Entrepreneurs

I. Creating the new venture

• New products or services frequently enter the market.

• All these products are introduced as a result of R&D efforts by major corporations.
However, unique ideas are not produced by only large companies.

• One way to discover new products is to make a list of annoying experiences or

hazards encountered with various products or services during a given time period.

• Most business ideas tend to come from people’s experience

I. Note: Group Work on Adv and Disadv of ….

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 Entrepreneurial Ventures

The Pathways to New Ventures for Entrepreneurs

II. Acquiring the existing venture:

• For some entrepreneurs, buying an existing business represents less risk than starting
a new business as it comes with an existing customer base and revenue stream.

• If you have decided to buy an existing business, you will want to be sure you are
making the right choice in your new venture. Only you can determine the right
business for your needs.

• Note: Group Work on Adv and Disadv of ….

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 Entrepreneurial Ventures

The Pathways to New Ventures for Entrepreneurs

III. Obtaining a franchise

• A franchise is a joint venture between a franchisor and a franchisee. The franchisor is

the original business. It sells the right to use its name and idea. The franchisee buys
this right to sell the franchisor's goods or services under an existing business model
and trademark.

• Note: Group Work on Adv and Disadv of ….

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 Entrepreneurial Ventures
Search for entrepreneurial capital
Sources of Debt Capital:
• Commercial banks: Is a financial intermediary that provides liquidity by bridging
sources of capital from depositors and creating credit that can be extended to
borrowers.
• Family and friends:
• Credit cards: Credit cards are plastic or metal cards used to pay for items or services
using credit. Credit cards charge interest on the money spent. Credit cards may be
issued by stores, banks, or other financial institutions and often offer perks like cash
back, discounts.
• Commercial lenders: Commercial lending occurs when a bank or other financial
institution loans money to a company for equipment, expansion or other business
improvements. A commercial lender or loan officer helps companies obtain the
necessary revenues to begin or expand their business.
• Credit unions: A credit union is a not-for-profit financial institution that accepts
deposits, make loans, and provides a wide array of other financial services and
products.

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 Entrepreneurial Ventures
Search for entrepreneurial capital

Concept of venture capital

• Capital is the money used to build, run, or grow a business. It can also refer to the net
worth (or book value) of a business.

• Capital most commonly refers to the money used by a business either to meet
upcoming expenses, or to invest in new assets and projects.

• Venture capital is money, technical, or managerial expertise provided by investors to

startup firms with long-term growth potential. A liquidity event is an event that allows
early investors in a company to cash out some or all of their equity.

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 Entrepreneurial Ventures
Search for entrepreneurial capital

Aims of venture capital

• 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.

• The purpose of venture capital is to responsibly generate returns for limited partners
by funding innovation and serving entrepreneurs.

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 Entrepreneurial Ventures
Search for entrepreneurial capital

Features of Venture Capital

Some of the features of venture capital include:

• VC is specifically offered to small and medium-sized businesses and not to large-

scale industries.
• Venture capital involves high returns for high risk in businesses. Eligible companies
may offer high returns but the risk is just as much.
• Companies seeking VC look to monetize their service or products idea.
• VC firms or retail investors may disinvest in a startup when it exhibits promising
turnover. This is done to raise more capital and not generate profits.
• Venture capital is a long-term investment. Returns under this can be seen after five to
10 years.

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 Entrepreneurial Ventures
Search for entrepreneurial capital

Criteria to provide venture capital finance

With so many investment opportunities and start-up pitches, VCs often have a set of
criteria that they look for and evaluate before making an investment. The management
team, business concept and plan, market opportunity, and risk judgement all play a role
in making this decision for a VC.

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 Entrepreneurial Ventures
Search for entrepreneurial capital

Forms of business-contract farming

Contract farming (CF) is defined as forward agreements specifying the obligations of

farmers and buyers as partners in business. Legally, farming contracts entail the sellers’
(farmers’) obligation to supply the volumes and qualities as specified, and the buyers’
(processors’/ traders’) obligation to off-take the goods and realise payments as agreed.

Contract farming is a world trend in agriculture and a number of other industries because
it minimizes the risk of shortage of goods needed by the market and, on the other hand,
it eliminates the overproduction of unnecessary goods.

Contract farming is an ecosystem that combines demand with production, logistics, and
financial resources into scalable and manageable pools, forms new business models and
drives growth in efficient production, and enables tracking of the full product lifecycle.

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 Entrepreneurial Ventures
Search for entrepreneurial capital

Joint venture and public private partnership

A Public-Private Partnership (PPP) is a partnership between the public sector and the
private sector for the purpose of delivering a project or a service traditionally provided by
the public sector.

Joint venture (JV) is a contractual arrangement whereby two or more parties carry
economic activity under joint control.

A joint venture is a combination of two or more parties that seek the development of a
single enterprise or project for profit, sharing the risks associated with its development.

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