Choice of Financial Sources for Entrepreneurial Activity: The Case of Agricultural Sector of Pakistan

Among factor driven economies Pakistan has lowest number of established firms revealing the inability to utilize available agriculture and non-agriculture resource. To become an entrepreneur raising finances and choosing the most appropriate financial source (i.e. bank finance, venture capital finance, friends and family, and personal savings). The entrepreneurial literature indicates that the small entrepreneurial startups fail due to ignoring importance of procedural and financial management and planning. The study addresses the issues related to choosing financial source and collected data from four sub-sectors i.e. crop production, livestock, agricultural engineering, and agricultural marketing. The agricultural sector does not have developed financial markets and bank finance is generally avoided due to formal conditions and guarantees. Firms are either established with personal or family investment and entrepreneurs are life style entrepreneurs. Despite financial constraints entrepreneurs in agricultural sector of Pakistan have a strong attitude of venturing by using personal finances.