Funding for start-ups in India: what shakes it?

Abstract

Purpose Using a novel monthly data set, this study aims to examine the factors affecting the funding of Indian start-ups. Design/methodology/approach Given the panel structure of the data, the fixed effects regression technique has been used. Findings The findings reveal that years of operation is a key factor. Amongst others, angel investors and equity financing are the key drivers of startup financing. Government policy does not appear to have gained adequate traction, although the improvement in the business reform action by state governments has begun to exert a salutary effect. Practical implications From a policy standpoint, the study provides insights into what policies and practices can be exploited to streamline the funding bottlenecks affecting startups in the Indian context. Originality/value Notwithstanding being a country with a significant presence in the startup space, there are admittedly limited studies, which examine this issue for India. Viewed from this standpoint to the best of the knowledge, the analysis is one of the early studies to shed light on the factors driving the funding of startups in the Indian context.