In terms of entrepreneurship, capital can be described as a region’s funding with factors conducive to the construction of new entrepreneurship and it creates a positive impact on the region’s economic output.
Higher level of entrepreneurship capital regions express higher levels of output and productivity, in contrast to those lacking entrepreneurship capital that tend to produce lower levels of output and productivity. The result of entrepreneurship capital is powerful than that of knowledge capital.
Entrepreneurs are expected to hold three types of capital to acquire success in starting a new venture −
● Social capital − It is a quality acquired from the structure of an individual’s network relationships. It is not an intrinsic feature of an individual. The network is owned by the members of the network and is not solely the property of the individual. Social capital ensures the relationships by which an entrepreneur receives opportunities to utilize human and financial capital.
● Human capital − It indicates attributes possessed by individuals like personality, education, intelligence, and job experience. Creating value by the acquisition of human capital, specifically building a management team tends to be the biggest challenge for seed stage founders and investors of new ventures. A start-up with an experienced management team will receive a higher valuation by investors.
● Financial capital − It is any economic resource scaled with respect to money used by entrepreneurs and businesses to purchase what they need to make their products, or to facilitate their services to the sector of the economy upon which their operation is based, like retail, corporate, investment banking, etc.