A

RESEARCH REPORT
ON
“A study on new venture finance: Start-up funding options in India”
Submitted in the partial fulfilment of the requirement for
the award of degree of
MASTERS OF BUSINESS ADMINISTRATION
(2020-2022)

Under the supervision of: Submitted by:

Mr. Vikas Deswal Mr. Sunny Rathee
Assistant Professor 201161444
(Department of Management Studies) MBA 2nd Year

Department Of Management Studies

Panipat Institute of Engineering And Technology
Samalkha, Haryana (India)-132101

Affiliated to Kurukshetra University, Kurukshetra

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 DECLARATION

This is to certify that I “Sunny Rathee” student of Panipat Institute of Engineering & Technology
studying in MBA 4th semester, Roll No.- (201161444) has prepared a project report entitled “A study
on new venture finance: Start-up funding options in India” for the partial fulfilment of degree of
Masters of Business Administration from Kurukshetra University, Kurukshetra.

I hereby declare that the project report submitted to the Kurukshetra University, Kurukshetra is a record
of an original work done by me under the guidance of Mr. Vikas Deswal (Assistant Professor, MBA,
PIET).

The matter presented in this project work has not been submitted by me for the award of any degree or
diploma/fellowship from any other institute.

Signature of Project Incharge Signature of Candidate

Mr. Vikas Deswal Mr. Sunny Rathee

(Dr. Akhilesh Kumar Mishra)

HOD, Department of Management Studies

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 ACKNOWLEDGEMENT

Gratitude of highest order is expressed to Dr. Akhilesh Mishra (Head, Department of Management
Studies) for encouragement and support during my project. His care, endless support and trust
motivated me for opportunity to achieve. This project could not be completed without his insight and
guidance.

I am highly grateful to my project guide Mr. Vikas Deswal (Assistant Professor, MBA, PIET) for
his inspiring guidance, continuous support and cooperation throughout my project, without which the
present work would not have been possible. Without his keen interest, incessant, encouragement and
invaluable suggestions this report could not have attained its present shape with zeal.

Lastly, I thank faculty and staff members of P.I.E.T. which gave me an opportunity regarding training
purpose and helped me in building some experience in my career.

Sunny Rathee
201161444

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 INDEX OF CONTENTS

Chapter No. Particulars Page No.

Declaration 2
Acknowledgement 3
Index 4

1. INTRODUCTION 5-32

1.1) Introduction to Industry 6-8

1.2) Introduction to Topic 9-11
1.3) Introduction to Company 12-32

2. LITERATURE REVIEW 33-35

3. RESEARCH METHODOLOGY 36-44

3.1) Research Methodology 37-41

3.2) Objectives of the study 42
3.3) Scope of the study 43
3.4) SWOT Analysis 44
3.5) Limitations of the study 44
4. ANALYSIS & INTERPRETATION 45-52
5. FINDINGS, SUGGESTIONS & CONCLUSIONS 53-57

5.1) Findings 54-55

5.2) Suggestions 56
5.3) Conclusion 57

BIBLIOGRAPHY 58-60
ANNEXURE 61-63

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 CHAPTER- 1
INTRODUCTION

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1.1 INTRODUCTION TO INDUSTRY

Start-ups have taken the world by storm, and the Indian start-up scenario is no less. It has been achieving
an impressive year on year growth, and there seems to be no stopping anytime soon. So, let us take a
look at what the Indian Start-up ecosystem really looks like, where we'll also get an insight into what
the various start-up sectors in India are.

Start-up ecosystem in India:

In 2014, there were approximately 29,000 start-ups in India. However, these numbers slowly and
gradually started rising. This number reached around 55,000 in 2020. Every day around 3-5 start-ups,
new start-ups are born. In order to analyse the ecosystem that exists in India, we can first look at the
different industries in which these start-ups exist.

1.1.1 Different sectors where start-ups exist:

With the importance and encouragement given to digitalization and the Government’s campaign of
Digital India, the start-up trend saw a significant rise in the technology sector. In 2019, the number of
tech start-ups in India grew to from 8900 to 9300 with around 1300 start-ups being added in the year
2019 itself.
So, the start-ups sectors in India can be broadly divided into two segments- tech-based start-ups and
non-tech-based start-ups. The tech-based segment includes sectors like Fintech, E-Commerce, Edtech
and Healthtech, whereas the non-tech based segment includes Agri-products, Construction, Textiles,
etc.
While sectors like e-commerce have become mature and seen a lot of growth, industries like Fintech,
Edtech and Healthtech have really been in the limelight recently. Let’s take a look at some of these
industries in detail.

Fintech sector:
With the advent of technology, finance has grown from what it used to be traditional. Now, technology
is very much integrated in it, and it is growing rapidly. Robo Advisory, Insurtech Digital Payments, etc.
are all developing.
This is definitely one of the upcoming sectors in the ecosystem of start-ups in India. It is still in the
beginning phase, but there is a lot of growth potential. With India moving towards a cashless economy
and digital payments gaining trend, Fintech is a booming industry. Also, India is one of the fastest
growing fintech markets in the world with its adoption rate being ranked the highest, along with
China. A good example of a company from this sector in India is.
Paytm which was founded in 2010, by Vijay Shekhar Sharma. The company started off as a prepaid
mobile platform and a recharge platform. It created the Paytm Wallet for enabling digital payments and
also started e-commerce services on its website and mobile application. Recently, it also started
stockbroking services. Paytm is also a Unicorn, currently valued at about $10 billion. It also has a lot
of investment from foreign investors which include Alibaba Group, Softbank, etc.

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Edtech sector:
This sector is also growing very rapidly, especially now during the coronavirus. Schools and colleges
have not been able to function properly, and many had to go online and embrace the world of tech with
the virtual mode. Due to this, the demand for online modes of learning has also grown tremendously.
Further now, with the New Education Policy that has been introduced recently, more emphasis will be
given to technology-driven education systems, with an introduction to coding as well.
According to a report, India’s Edtech market might reach a value of $3.5 billion by the year 2022. This
includes the estimation that Class 1-12 will create a valuation of about $1.7 billion, and post-class 12
will create a valuation of about $1.8 billion. In the edtech sector one start-up that has been doing really
well is,
BYJU’S, which has enjoyed a significant growth potential in the past few years. The lockdown attracted
a lot of new customers to their website. During April, the company earned a revenue of around Rs. 350
crores. Recently, taking advantage of the New Education policy, Byju’s also acquired another ed-tech
company called Whitehat Jr. which provides coding classes to school students. This clearly shows how
there is so much scope for growth in the education sector and how technology can play a key role in the
coming years and how new start-ups can leverage it.

Healthtech sector:
After India Stack, the next goal is the National Health Stack, which aims to do the same job as India
Stack and transform the way data storage works. This might help build the infrastructure in the health
care sector. The APIs for the National Health Stack also recently began with its testing phase. If it works
out well, then it might be a step in the right direction, which will help make the hopes of health tech a
reality. However, for that, it must be safe and reliable for its users.
In the midst of the Coronavirus Pandemic, India has been struggling in this war. However, in order to
fight this situation, Niti Aayog has even approached start-ups to come up with new innovations that can
boost the healthcare infrastructure of our country and also result in solutions like telemedicine,
conference solutions, etc.
Healthplix is a start-up that provides software for clinical purposes to doctors. It provides the service
of Electronic Medical Record software (EMR) to doctors and also provides them with the service of
Clinical Decision Support (CDS) and enables the doctors to generate e-prescriptions within seconds.
Recently, the start-up was able to raise funds to the tune of $6 million, which brings its total funding
amount to around $10 million.

1.1.2 Startup geography:

With India being a start-up hub, it is also important to identify the major areas or cities, which have
seen tremendous growth in start-ups. Seeing the geography of India, it can be seen that most of the start-
ups operate in Tier-1 cities.
The top 3 cities for start-ups in India are Banglore, Mumbai and NCR, which account for over 65% of
the total start-ups that operate in India. It is also important to know the reasons why these cities are so
popular among start-up owners.
The major hub for start-ups in India is Banglore that holds around 27% of the total number of start-ups
in India. The reason for this is a large number of multinational corporations and IT industries that have

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opened up in this city. This makes it a city which has a high corporate culture, and for this reason, it is
really conducive for the growth of start-ups as accessing resources and raising funds becomes
easier. Bangalore is ranked as one of the five fastest-growing start-up cities of the world and was also
present in the list of the world’s 20 leading start-up cities in the 2015 Start-up Genome Project.
Delhi/NCR and Mumbai are also growing in terms of the number of start-ups. Delhi/NCR accounts for
24% of the total start-ups in India, while Mumbai accounts for 17%. Mumbai is also the finance capital
of India, so it houses a lot of fintech start-ups, and Delhi/NCR also has many start-ups. However, some
believe that Delhi and the area around is not that safe for women in general, and that is why the
flexibility is less..
The ecosystem for start-ups is also developing in the Tier 2 cities. Cities like Pune, Hyderabad, Kolkata
and Ahmedabad are considered to be the emerging cities for start-ups. Even Kerala, Chandigarh and
Jaipur are emerging as start-up hubs.

1.1.3 What’s Next?

India is well on its way to achieving some great heights in the start-up ecosystem. We may think that
the pandemic may impact the growth of start-ups, but this has also led to a huge demand for various
other services under different start-up sectors in India, like ed tech and health tech.
Other than that during the lockdown, many people had really started focusing on their health and fitness,
which has also led to the growth of some innovative start-ups relating to mindfulness and fitness.
Looking at these positive impacts, we can say that the growth of the start-up ecosystem in India will
not be deterred.

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1.2 INTRODUCTION TO COMPANY:

Zepto, a start-up based in Mumbai, offers a 10-minute groceries delivery service. Aadit Palicha and
Kaivalya Vohra launched Zepto, a company known to deliver groceries in 10 minutes.

Specialising in delivering groceries before the turn of a year is what Zepto is hailed for. It has worked
with 86+ dark store owners in thirteen different areas in 2021, generating over one million deliveries.
To fulfil orders promptly, Zepto employs its network of 'cloud shops' or micro-warehouses.

Zepto's secret of the trade lies in its capacity to routinely produce 2,500+ goods for delivery in under
ten minutes. It's at the heart of everything the firm does, and it's why they've been able to grow so
quickly while maintaining incredible client loyalty.

With the dark store idea, the Parel-based rapid grocery delivery business has slashed the time it takes
to deliver groceries to only 10 minutes. According to reports, rapid commerce is the next major thing
the supermarket delivery sector is hoping to capitalize on. Start-ups like Zepto in India and Fridge No
More in New York City are among the fastest-growing companies in the faster-delivery business.

The legal name of zepto is Kiranakart Technologies Private Limited which is founded by Aadit Palicha
and Kaivlya Vohra. The total funding raised by the company till date is $360 million after which the
company is valued at $900 million. The CEO of Zepto is Aadit Palicha. Aadit Palicha and Kaivalya
Vohra, both 19-year-old childhood pals, created Zepto after walking out of Stanford University's
renowned computer science department to return to their home, India, and start up a business. The firm
was founded in September of 2020 and began operations in April of 2021.

The company is currently operating in 10 major cities of the country Mumbai, Banglore, Chennai, Delhi,
Ghaziabad, Gurgaon, Hyderabad, Kolkata, Noida and Pune.

During the Covid-19 outbreak, the concept for Zepto sprang from the limitations of their houses. A
surge in demand for delivery services meant that groceries and other necessities would arrive in a couple
of days, creating a void for quick delivery. As a result, Zepto was created with all this insight.

These teenagers were abruptly detained, because of Covid norms, detained in their Mumbai homes after
significant collaboration on many projects, including a ride-hailing commuting app for kids. Even while
grocery delivery, which was deemed important by local authorities, was still permitted across much of
the nation as the virus spread, the duo battled to get their provisions as the illness expanded.

While Zepto is the focus of attention, Palicha and Vohra's first venture, KiranaKart, did not receive the
same acclaim. Zepto, on the other hand, is inspired by KiranaKart. KiranaKart, like its name implies,
was a supermarket delivery service. It had made arrangements with Kirana merchants to provide

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groceries in 45 minutes or less. A $730,000 pre-seed round was led by Global Founders Capital, 2 AM
Ventures, Contrary Capital, and angel investors. At the time, Vohra and Palicha planned to make the
first 1.5 lakh deliveries at a cost of Rs 1.

Zepto delivers groceries in ten minutes through a system of dark storefronts and mini-warehouses, on
up to 90% of orders. Zepto works in the quick commerce segment of India. It is designed to be customer-
centric and built around the instant service model.

To ensure a flawless delivery experience, Aadit says that their average delivery time is 8 minutes and
47 seconds. Through a chain of dark stores or retail distribution centres, the Mumbai-based company
employs a hotspot method to cater largely to digital purchases.

A dark store is a tiny neighbourhood storehouse that customers cannot visit but purchase online to get
packaged delivery. While dark stores are not new to the Indian industry, Aadit believes that the idea has
yet to be completely explored. Population, traffic dynamics, topography, road patterns, weather
conditions, last-mile operational improvement, real estate prices, and other geographic data and local
intelligence are aids Zepto in optimising its connectivity. Furthermore, the startup's dark warehouses
and cool rooms are custom-designed to satisfy particular criteria such as ease of travel, allowing packers
to move as swiftly as possible to fill orders.

Zepto raised $360+ mn in total in funding over 4 rounds to date. The last funding round (Series D) was
raised by Zepto on May 2, 2022, which helped the company raise $200 mn. With this, Zepto has neared
the unicorn valuation. The startup is currently valued at $900 mn, as of May 3, 2022. The Zepto seed
funding was led by Contrary in September 2020.

There was a fresh allotment of shares after Zepto has raised its Series D round, which is why we will
be looking at the Zepto ownership.

Among the shareholders, Nexus Ventures holds the largest stakes, holding 20.07% stakes of Zepto,
after which comes Y Combinator, Lachy Groom and Glade Brook, which hold 14.8%, 10.32%, and
8.7% of the Zepto stakes respectively. Zepto Co-founder and CEO Aadit Palicha holds 15.18% stakes
along with his relative Kavit Palicha, and Kaivalya Vohra, along with his relative Jaideep Vohra holds
12.64% stakes.

Zepto is growing in Bengaluru, Mumbai, and Delhi-NCR, with Hyderabad, Chennai, Pune, and Kolkata
to follow in the coming months. Its technical office is in Bengaluru, while its operations are in Mumbai.
Dream11, Flipkart, Pharmeasy, Uber and Pepperfry have all hired key executives for Zepto.

Engineering, operations, marketing, and financial positions are also available at Zepto. Palicha claims
that month-over-month growth is 200%, with a monthly retention rate of 78%. Zepto, when it was a
five-month-old startup, had secured a valuation of $570 million after raising $100 million in a Series C

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round headed by Y Combinator's Continuity Fund, which was a 2X increase from its previous valuation
of $60 million only 45 days before that. Zepto raised another round led by Y Combinator to lift its
valuation further to $900 mn, so there is certainly an impressive growth that the company has received
in funding as well.

Another positive development for Zepto has been the expertise it has been able to acquire in previous
months. Plenty of well-known senior executives from Uber, Flipkart, Dream11, Amazon, and
Pharmeasy have joined the team.

According to Palicha, one of the reasons why several entrepreneurs have chosen Zepto is that it has
enabled individuals who had transferred from Mumbai to Bangalore to come back to their homes. He
says, nevertheless, that the startup's rapid development, rigorous execution, and ambitions have
captivated others who share his interests. "We've been able to walk the walk," he said.

Zomato and Swiggy reportedly held talks for a potential acquisition of Zepto, a 10-minute grocery
delivery app founded by 19-year-old Stanford dropouts, a few months ago, which did not fructify.
Zomato approached Zepto with a nearly $1-billion buyout offer, while talks with Swiggy didn't reach
offer stage, Moneycontrol reported citing sources. Zepto said it won't comment on speculative stories.

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1.3 INTRODUCTION TO TOPIC

1.3.1 NEW VENTURE FINANCE:

An idea can be transformed into a start-up. In some cases, the crisis creates an opportunity and the end
result can be a start-up. Many times it is seen that there is an idea, but we do not have courage to start
it or we do not feel it is worthy. On the contrary some people take that idea as an opportunity and
mobilize into reality. (Dutta, 2016) Paul Graham [1] says that "A start-up is a company designed to
grow fast. Being newly founded does not in itself make a company a startup. It is not at all required for
a start-up to work on technology or take venture funding or have some sort of "exit". The only essential
thing is growth. Everything else we associate with startups follows from growth." (Sharifi1, 2015)
Startup is defined as “an entrepreneurial venture or a new business in the form of a Company, a
partnership or temporary organization designed and search of a repeatable and scalable business model.
“Startup India brings excitement and immense possibilities for the future. India admits the evident truth
of modern business and its complexity. (Dr. Shailja Badra1, 2016)
Startups are generally small in size and in the development stage being funded and operated by few
promoters or one individual. The main objective of startup enterprises is to provide service or a product
which is presently not being available elsewhere in the market, or being offered in an inferior manner.
In the beginning stages, expenses of startup companies' tend to go much ahead then their earnings as
they center themselves on developing, testing and making there idea marketable. In many cases, they
require funding. Startups enterprises always look for financial support from commercial banks or credit
unions, in the shape of business loans or through Small Business loans from local banks sponsored by
government, or approach nonprofit organizations and state governments for different grants. Easy and
quick accessibility to finance for startup enterprises has always been a challenging issue to address by
Economists and startup entrepreneurs.
Funding gaps occur usually in cases of companies in a given point of their life and with special field of
activity. The problem of funding gap is prevalent in young, technology-oriented startup enterprises. As
a result of the funding gaps, companies with huge growth potential are not able to obtain the necessary
capital for their operation; hence they cannot live up to their growth potential. Funding gaps evolve in
case of startup companies as a result of their special characteristics. In the seed and early stages of their
lives these companies are in the phase of product development or they have just made their market
entry. They are in the lack of collaterals or significant revenues; hence they are unable to obtain bank
financing.(Balázs Fazekas, 2015)
Problems linked to the decision of capital structure have attracted lot of attention, as these issues are
primarily associated in small and comparatively new firms. This paper aims on finding different funding
options that can be utilized by startup firms and also the pattern and duration of availability. Furthermore
with the significance on the possible options the startup firms can acquire in order to make sure the
smooth flow of funds in crucial times. The enterprises which are addressed in this paper refer to “Start-
ups”. During there early start period the startup enterprise applies for finance, they face many problems
as well. These problems will be addressed along with the relevant fiancé options available to startup
enterprises. The startup Odisha policy have a major role in establishment, operation and recognition of
startups in the state, this paper will study the important aspect of the policy as well as the changes made
afterwards to explain the different aspects of the policy which can be very beneficial for the forth
coming startup enterprises. The study will also suggest changes which are needed for the betterment
and growth of startup enterprises in India.

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1.3.2 THEORITICAL BACKGROUND:
Growth is a necessary & essential condition for economic development and inclusive growth. Growth
is used as an indicator of economic wellbeing. The growth graph of the progressed countries gives the
view that as growth increases, the conversion of economy takes place from traditional to modern sector
i.e. from agro to industry to service sector.
The share of industry and service sector in the Gross Domestic Product (GDP) starts to dominate the
economy while the agricultural sector witnessed a decline in its share. One of the objectives of the
inclusive growth is to generate both higher quantity and quality of employment.(Joshi2, 2018) Talking
about startup enterprises in Odisha, cities of Bhubaneswar, Cuttack and Puri have appeared as the
startup destination. One of the primary reason which make the state capital Bhubaneswar a start-up
destination are the presence of premier educational institutes like Indian Institute of Technology,
National Institute Of Science Education And Research, College Of Engineering & technology, Indian
Institute of Information Technology, Central Institute Of Plastics Engineering & Technology etc that
provide global exposure. The presence of software and IT majors like Infosys, Tata Consultancy
Services, Wipro and MindTree in Bhubaneswar also acts as a stimulant for the fast developing start-up
ecosystem in the city.
The young generation of the capital is talented, enthusiastic and innovative. In the subsequent year,
Bhubaneswar has earmarked as best pathway and environment which is friendly to do business as
reported by World Bank. The situation is being studied by the venture capitalists and they are looking
forward for action in recent future. During communicating with the business think tankers, it is observed
that Bhubaneswar acts a great place to start and affirm customers. During 2015-19 period, Odisha
government has a “target of generating 0.4 million jobs by promoting 0.15 million enterprises in the
MSMEs (micro, small & medium enterprises) sector”.(Priyabrata Nayak, Feb 2018) The other
important districts, Jagatsinghpur, Kendrapada, Ganjam, Keonjhar, Mayurbhanj and Sundergarh district
are also taken into consideration for the study. There are a many startups which are operating and face
different challenges and opportunities in development and growth in Odisha. The literature review is
done to focus light on the related study. In last few years, the Indian startup growth & development has
been on a fast track and made its mark—driven by elements, for instance, the increase in number of
subsidy, amalgamation exercises, advancement in innovation and steps towards expansion of local
market however it has long approach and there are different problems which are encountered in method
for Startup on the grounds that many controlling powers introduce in condition will ruin entire
amusement. Development of business enterprises depends to the great extent on government directives,
since government plays the major part in creating business person in a country however young moving
business person bypass that due protracted approach and customs it is extremely hard to work together
in India and world bank report totally bolster their feeling in light of the fact that as indicated by this
report India is positioned 130th out of 189 economies on the effortlessness of working together, 133rd
on the simplicity of exchanging crosswise over fringes and 157th on the simplicity of paying charges
besides India is positioned 155th if there should arise an occurrence of beginning a business. Growing
business visionaries need to make various excursions to government workplaces to enlist and look for
clearances.(Kamaldeep Kaur, 2017)

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1.3.3 STARTUP FUNDING OPTIONS IN INDIA:

A lot of start-ups business get confused to choose the right kind of funding options to finance their start-
up. With the numerous alternatives out there, picking the perfect source of financing can be a staggering
procedure; in any case, considering the upsides and downsides of each source will enable you to pick
the perfect one to proceed with.
Many start-ups get confused to select the right type of funding options to continue their business
operations. With many choices available in the industry, it is important to choose the right funding to
help meet your requirements. Of these, bootstrapping, crowdfunding, angel investors, venture capital
and bank loans are the common options you can consider.
Recorded underneath are some basic funding sources, with a concise clarification of each that will help
improve fixing your problem.

1) Personal Savings:
This is the most engaging source of financing since you utilise your very own cash to kick off
your business and do not owe any other person in the course.

a. Upsides:
Firstly, you have absolute control of your business, and you may do however you see fit
your capital.
Secondly, there’s this fulfilment that you are utilising your own money to support the
business.

b. Downsides:
Firstly, on the off chance that the business bombs, all the diligent work that you had put
into your reserve funds will fritter away.
You may fail to see the generally significant supervision and guidance from angel investors
and venture capitalists.

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2) Bootstrapping:

You can ask your companions, family or close contacts to help finance your business. This sort of
subsidising has more to do with the relationship itself, as opposed to the appraisal of a viable
marketable strategy. The point of this sort of subsidizing is to help kick off a business to a point
where it can look for and get different sort of financing.

a. Upsides:
Quicker financing procedure and adaptable reimbursement approach.

b. Downsides:
Family and companions offer to finance without evaluating the suitability of a business
strategy.
Brings no profit in return apart from the initial investment.

3) Crowdfunding:

This includes financing a business by taking little measures of capital from an enormous number of
individuals, generally by means of the internet. This kind of financing utilises the immense network
you have from your family, friends, and other contacts by means of various social media platform
to let people know about the business, with the objective of pulling in new investors.

a. Upsides:
Has the capability of extending a business by getting a pool of investors who can help raise
capital.

b. Downsides:
This procedure commands time and devotion before results might be figured it out.

4) Angel Investors:

Angel investors are well off people who will help fund your business in return to a share of rights in
the business. A few investors work in groups and screen bargains jointly before giving assets, while
most work without anyone else.

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 a. Upsides:
Angel investors can propose profitable recommendation and assistance because they have
knowledge in the business you are in.
Adjustable business terms.

b. Downsides:
You might be compelled to surrender control of your business at some level.

5) Venture Capital:

Venture capitalists are sponsors who put in a lot of cash in return for value in the business and get
returns when the business opens up to the world or is procured by another organisation. These
investors are all about the capital and put resources into organisations with the sole motive that the
organisation they invested has the capability of giving great profits for their speculation.

a. Upsides:
Firstly, the venture capitalists offer investment, yet can offer mastery and mentorship to
help build up the business.
Venture capital funding provides the business quick validity and opens different ways to a
wide system of significant people, for example, future financial specialists and business
partners.

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 b. Downsides:
You might be compelled to surrender an enormous lump of your business because of the
critical measure of funding endowed with.

6) Bank Loans:
Bank loans are a well-known funding source for some new companies. Before applying for a bank
loan, guarantee that you are accomplish about the different alternatives accessible, and the financing
costs that accompany every choice.

a. Upsides:
Firstly, the availability of various govt business funding schemes & programmes.
The financing procedure is moderately fast in the event that you qualify.
You do not need to surrender control of your business.

b. Downsides:
Requires a great amount of documentation, which can be tiring and tedious.
The invested money must be paid back whether the business succeeds or not, coming up
short which may prompt loss of your advantages.
Be well-informing about the best alternative accessible for you; else you may finish
picking up an arrangement that will inevitably hurt your business.

7) Small Business Administration Loans (SMA’s):

However, this includes financing from a government organisation committed to helping private
ventures to succeed. SBA’s assist independent ventures get capital and guarantees that a specific
level of agreements grant to the private ventures.

a. Upsides:
It improves the connection between banks and borrowers.
Greater chances of acquiring a bank loan if the SBA loan is appropriately overseing.

b. Downsides:
Strignent qualification procedures.

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8) Accelerators & Incubators:
While all the above funding options are for startups already doing business, incubators and
accelerators are like prep schools for startups. These programs run for four to eight months, where
they provide business owners with funding and a platform to connect with investors, mentors, and
other startups.
Accelerators and incubators are generally found in major cities and take an equity stake in return for
the program. These programmes are either run by individual entities or are part of large corporations
or big tech companies.
Some of the popular accelerator programmes for Indian startups include Y Combinator, GSF
Accelerator, Microsoft Accelerator, Google Launchpad Accelerator, JioGenNext amongst others.

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1.3.4 8 STAGES OF STARTUP FUNDING IN INDIA:
The information age has introduced a rapid increase in the number of start-up companies. This
phenomenon continues today, and start-ups can be a lucrative endeavour for the entrepreneurs who
succeed. In this article, we explain what a start-up is, how start-up funding works and what the stages
of start-up funding are.

How does startup funding works?

Start-up funds go to people or groups of people to raise money for their new business, which allows the
company to grow. When investors help to fund a start-up, they do so hoping that they can receive a
larger amount of money from the business in the long term. Depending on how much someone has
invested into a company, they may also be able to make business decisions that affect how the company
runs.

Here are the phases start-ups go through to obtain funding:

1. Pre-seed funding stage:
This is the research phase of beginning a start-up. In many situations, much of the
business funding during this phase either comes from you or friends and family. The
total value of a start-up in this stage can range anywhere from $10,000 to $100,000.
Example: Anya has an idea for a new car wheel-washing kit. She researches similar
products currently on the market, tests her own formula to determine its performance,
examines the costs associated with producing her product and decides on her business
model.

2. Seed funding stage:

At this point, your idea is an actual business with some customer traction.
Entrepreneurs in this phase provide company equity in return for larger amounts of
cash provided by investors. Costs covered by seed funding include:
• Product launch
• Product marketing
• New employees
• Market research on product market fit
Start-ups valued anywhere from $100,000 million to $6 million are eligible for this
phase of fund raising.
Example: During seed funding, Anya receives input to determine her final products
and targeted customer demographics. She also hires three new employees.

3. Series A funding:
The Series A funding stage marks the beginning of venture capitalist investment, and
shares of the company are offered in exchange for capital.
At this point, you can begin to set yourself up for future business growth. This includes
the following:
• Optimizing your business
• Offsetting financial losses or shortfalls
• Further developing your product or service

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 • Creating a scalable blueprint for growth
Example: Anya has proven her product is a great idea. Now she wants to show
investors that she has a great strategy for future growth. She decides to go into a new
market and start selling to large retailers. The more she demonstrates the ability to
generate income, the more investment she'll receive.

4. Series B funding:
Start-ups in this stage have dedicated user bases and steady streams of revenue. At this
point, you've proven you can scale your idea. Investors can now help you:
• Employ advanced market reach activities
• Increase market share
• Form operational teams such as business development and marketing
Example: Anya uses this round of investments to open two new departments at her
company: public relations and diversity and inclusion.

5. Series C funding:
Series C funding is for a company well on its growth path and often interested in
expanding globally. It may be easier to find investors at this stage, as they trust the
startup to succeed. Funds at this phase are used to do the following:
• Build new products
• Reach new markets
• Acquire underperforming startups in the same industry.
Example: Anya received Series C cash. She begins development on a product to clean
car windshields and starts shipping her original product overseas.

6. Series D funding and beyond:

There are usually two reasons a startup goes past the Series C funding round. They are:
• New opportunities: A potentially lucrative opportunity appears that requires
the company to act before the Initial Public Offering (IPO).
• Subpar performance: The startup misses the goals set during the Series C
round of funding. It then raises more funds in the Series D round to address the
issues.
There is no limit to how many funding rounds a startup can go through. If a
company has more advanced revenue goals, it may complete as many fundraising
series as necessary.
Example: Anya planned to take her business public at the beginning of December.
However, a competitor in her industry came up for sale in November. She decides
to raise Series D funds to purchase the competitor instead of proceeding with the
IPO.

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7. Mezzannine funding and bridge loans:
These loans are designed for fairly mature businesses worth at least $100
million. A mezzanine loan blends debt and equity for lenders, while bridge loans
are short-term financing. They close the financial gap between this phase and
the IPO. The funds might be used to buyout the management at another
company or acquire a competitor. Loans typically last six to 12 months and are
paid back with proceeds from the IPO.
Example: Anya's goal is to issue an IPO for her company. However, she needs
to produce her product on a larger scale before an IPO is feasible. She takes out
a bridge loan to buy a competitor, which increases her market share.

8. IPO:
An IPO is the pinnacle of startup success. It occurs when shares of the company are
offered up for public purchase for the first time. The IPO is used to generate funds for
further growth or allowing the startup owners to cash out their remaining shares for
personal income.
Important events occur in preparation to issue an IPO. They are:
• Formation of a public offering team comprised of SEC experts, lawyers,
accountants and underwriters.
• Compilation of the startups’s information such as financials and anticipated
future operations.
• Preparation of an audit of the company’s financial statements.
• Completion of the government IPO requirements, which include filing the
startup prospectus with the SEC and formalizing the offering date.
Example: Jane is ready for her hard work to pay off. She uses an IPO to sell her
shares in the company, amassing her a great deal of wealth.

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1.3.5 TOP 5 ANGEL INVESTORS OF INDIA:

1. Kunal Shah:
Kunal Shah is the founder of CRED and the founder and ex-CEO of Freecharge. He was
also a part-time partner at Y combinator and advisor for companies like Sequoia Capital,
AngelList, Times Group, etc.
He has invested in several famous ventures, like Unacademy, TVF, Innov8, Shuttl,
Razorpay, etc. Kunal Shah has participated in 124 rounds and has 118 portfolio
companies under his umbrella that have raised a total of $1,381 million.

2. Rohit Bansal:
Rohit Bansal is the co-founder of Snapdeal. An IIT graduate, he has been an investor at the
venture capital firm Titan Equity since 2011. Titan Capital prefers to be the 'first investor'
that an entrepreneur brings on board at the seed level. Titan Capital has invested in
companies like Ola, Mamaearth, UrbanCompany, Razorpay, etc.
Rohit Bansal has participated in 123 rounds and has 104 portfolio companies that have
raised a total of $1,097 million.

3. Anupam Mittal:
The Shark Tank India famed judge, Anupam Mittal, is a Boston College graduate and has
been in business for over 20 years. He founded People Group in 2001 and serves as its
CEO. People Group has created businesses like Shaadi.com, Makaan.com, etc.
Anupam Mittal is also a prominent investor. He has participated in 119 rounds and has 100
portfolio companies.

4. Kunal Bahl:
Kunal Bahl is the co-foudner of Snapdeal and Titan Capital. He also keeps the view of
being the first investor for budding entrepreneurs. Tital Capital has also invested in
companies like Shadowfox, Bira, Khatabook, etc.
Kunal Bahl has participated in 119 rounds and has 105 portfolio companies. His portfolio
companies have raised a total of $1,089 million. In case you are looking to raise seed
capital, you can drop a detailed mail at [email protected].

5. Rajan Anandan:
Rajan Anandan is the Managing Director of Sequoia Capital. He has previously served as
the Managing Director of Microsoft India and Vice President of Google India and SEA.
Studied at prestigious institutions like MIT and Stanford University, Rajan Anandan has
participated in 112 rounds and has 90 portfolio companies.

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1.3.6 INCUBATORS AND ACCELERATORS:

➢ INCUBATOR: The incubator center is an organization that helps startups to get disruptive
ideas and an MVP(Minimum Viable Product). Incubation centers can be supported by a
university, government, or some venture capitalists. Most of the incubation centers are directly
or indirectly supported by the government of India to support and help entrepreneurs. Even
colleges and universities have their startup incubators and accelerators for their students as well
as non-students.
➢ ACCELERATORS: An accelerator is an organization that helps startups that have an
MVP(Minimum Viable Product) to grow at scale. Most of the startup accelerators are supported
by venture capitalists.

1.3.7 BENEFITS OF ACCELERATORS AND INCUBATORS:

These are the major benefits one can get from business Incubators and startup Accelerators:

• Expsoure to venture capitalists and angel investors.

• Can get access to a network of successful entrepreneurs.
• Access to funding.
• Access to industry experts and mentors.
• It saves time and money.
• Also, a startup can get customers from the portfolio of accelerators and incubators.
• Like minded entrepreneurs who come together can become partners/co-founders.
• Consultation.

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1.3.8 DIFFERENCES BETWEEN ACCELERATORS AND
INCUBATORS:

Stage Incubator Accelerator

Start-up stage Focuses on early stage companies Focuses on start-ups that have
that have yet not figured out their found their MPV and have
MPV. high growth potential.
Funding Most of the time incubators don’t Accelerators can also provide
invest money and they just ask for funds directly or via a group of
the equity in return for the services their network.
they provide.
Duration They usually work for long term and They are fast paced
stay with founders for 1-5 years. organisations that stay with
founders for 3-6 months only.

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1.3.9 TOP 5 STARTUP INCUBATORS IN INDIA:

1. CIIE-IIMA:
The Centre for Innovation Incubation and Entrepreneurship was started by IIM Ahmedabad as
an initiative to support early-stage start-ups with the help of the government of India and the state
government of Gujarat.
CIIE consists of IIMA faculty, Alumni, and their like-minded partners. It provides benefits such
as funding, mentoring, and networking with alumni and industry experts.
Founding year: 2002.
Founded by: IIM Ahmedabad.
Remarkable Start-ups: Razorpay, Thrillophilia, Biosense.

2. INDIAN ANGELS NETWORK (IAN):

Indian Angel Network started in April 2006, where in addition to money, it also provides regular
access to high-quality mentoring, vast networks, and inputs on strategy as well as execution.
The Indian Angel Network seems at making an investment upto USD 1 mn, with approximately
USD 400-600K, and exiting over three to five years via a strategic sale. The Network may also
consider investments over one million dollars.
Founding year: 2006
Founded by: Saurabh Srivastava, Padmaja Ruparel, Raman Roy.
Remarkable Startups: Mukunda Foods, Collegesearch, WOW! Momo

3. iCreate:
iCreate is an organization established with a vision of developing an efficient methodology for
selecting tech innovators and helping them convert into successful entrepreneurs and, with this,
create a large positive impact on India’s economy.
iCreate plays an important role in helping startups from ideation to execution. iCreate adds value
for startups by mentoring, funding, and new business opportunities.
Founding year: 2012.
Founded by: GFEE (Gujarat Foundation for Entrepreneurial Excellence), it’s a 50:50 joint
venture between GMDC (Gujarat Mineral Development Corporation, a public sector
undertaking) and GEVPF (Gujarat Entrepreneurship and Venture Promotion Foundation.
Remarkable Startups: TecSo CHARGE+ZONE, Drone Nation, The Solar labs.

4. Amity Innovation Incubator:

Amity Innovation Incubator supports innovative and tech-driven startups, and in total, they have
helped 100+ companies that have shown significant growth.
Amity Innovation Incubator has close ties with venture capitalists and angel investor networks
and with them, they have invested over $40m in companies through mergers & acquisitions and
angel investments.
Founding year: 2008.
Founded by: Amity institution.
Remarkable Startups: Apnacircle.com, Marksman, Anduril Technologies.

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 5. SINE (Society for Innovation and Entrepreneurship):
Society for Innovation & Entrepreneurship was established in 2004 and is one of the oldest
incubation centers in India. It is an initiative by IIT Bombay, and it provides nurturing to startups
going from idea to execution.
Till date, they have helped more than 190 startups succeed via various activities to support
venture creation and their startups have raised more than 4000 crores in funding.

1.3.10 TOP 5 STARTUP ACCELERATORS IN INDIA:

1. GSF Accelerators:
GSF is a tech-focused early-stage venture capital firm that provides funding and mentoring to
start-ups to scale their products and services.
GSF accelerators have a portfolio of more than 110 companies and their portfolio companies
have a combined valuation of more than 2 billion dollars.
Founded by: Rajesh Sawhney
Founding year: 2012.
Remarkable Start-ups: HackerEarth, Bimaplan,eBIkeGo.
Funding: Upto 150k USD.
Location: Gurgaon.
Duration: 12 weeks.

2. 500 Startups:
500 start-ups were started in Mountain View, California and it is a global venture capital firm
with over 2.7 billion dollars in assets under management that invests early in start-ups building
fast-growing tech companies.
500 start-ups is at the forefront when it comes to supporting start-ups. They have helped more
than 2600 companies globally.
Founded by: Dave McClure
Founding year: 2010.
Remarkable Start-ups: Instamojo, Udemy, Canva.
Funding: Upto 150k USD.
Location: Bangalore.
Duration: 4 months.

3. Cisco Launchpad:
Cisco Launchpad is an initiative by Cisco which is aimed at supporting early-stage startups with
their expertise.
Cisco Launchpad has invested in around 54 start-up companies. They help start-ups by giving
them access to their technologies and support. They provide co-working space as well.
Founded by: Cisco.
Founding year;2016.
Remarkable Start-ups: Teslon, NavStik Labs, VuNet Systems
Location: Bangalore.
Duration: 6 months.

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4. Microsoft Accelerator:
Microsoft Accelerator was started by Microsoft to bring technology, guidance, and support to
start-ups
Microsoft Accelerator provides help to start-ups in creating new markets and distribution
channels.
Founded by: Microsoft
Founding year: 2012.
Remarkable Start-ups: Plustxt(Acquired by One97), Nowfloats, Explara.
Funding: Non-monetary benefits upto 150k USD via access to Microsoft Azure and office 365
tools.
Location: Bangalore.
Duration: 4 months.

5. Zone Startups:
Zonestartups is a not-for-profit foundation set up as a joint venture between Ryerson University
(Toronto) and Bombay Stock Exchange Institute (BSE).
Zonestartups is a Mumbai-based organization that helps early-stage start-ups to grow with their
support.
Founded by: Ryerson University (Toronto) and Bombay Stock Exchange Institute (BSE).
Founding year: 2014.
Remarkable Start-ups: Nimble, Sismatik.Bioscan Research.
Funding: Ranging from 50k-750k USD.
Location: Mumbai.
Duration: 4-6 months.

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1.3.11 TOP 10 VENTURE CAPITAL FIRMS IN INDIA:

• Sequoia Capital
• Accel
• Blume ventures
• Elevation capital
• Tiger global management
• Kalaari capital
• Matrix partners
• Nexus venture partners
• Indian angel network
• Omidyar network India

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1.3.12 Why India can be a hub and testing ground for innovation and
startups?

By leveraging its strengths in human capital and ICT services, and transitioning to a digital and
knowledge-based economy, India is fast becoming a breeding ground for innovation and startups.
Knowledge economies use ICT, innovation and research, and higher education and specialized skills to
create, disseminate, and apply knowledge for growth. According to the four indicators of the World
Bank’s Knowledge Economy Index, India ranked 109th out of 145 countries covered in 2012; however,
there has been no update to that study. India moved up five spots from 2018 to 2019 in the Global
Innovation Index (GII) from 57th to 52nd place, among 129 countries across 80 indicators ranging from
rates of intellectual property filing and mobile-application creation to spending on education, scientific
and technical publications, as well as many other criteria.
This is promising, but challenges also exist in areas like developing low-cost technologies for price-
sensitive customers, popularly known as “frugal innovation.” Such low-ticket, low-tech solutions need
to be implemented on a large scale to address underprivileged and underserved populations. Such swift
technological advances provide startups in countries like India – unburdened by older, legacy
technologies – with the ability to leapfrog and leverage mobile to further the digital and mobile data
transformation. Payments, banking, and associated services are also quickly moving towards mobile.
In fact, FinTech has been one of the most well-funded sectors in the past 2 years (Rajan 2019).
Despite having moved up 14 places in a year and ranking 63rd out of 190 nations in the Ease of Doing
Business 2020 rankings, India still lags behind in areas such as enforcing contracts (163rd) and
registering property (154th) (The World Bank Group 2020). However, it is encouraging to know that
the latest reforms are in the Doing Business areas of Starting a Business, Dealing with Construction
Permits, Trading Across Borders, and Resolving Insolvency, among others.
The shift to a knowledge-based economic growth model is critical for India to reinvent its comparative
advantages as labor- and capital-intensive manufacturing are fading. With the fourth industrial
revolution (Industry 4.0) underway, future trends present a great opportunity for startups to disrupt and
innovate by using technologies such as blockchain, the Internet of Things (IoT), artificial intelligence
(AI), and machine learning (ML), among others. With the right backing and environment, startups can
play a big role here, especially with a culture of research and innovation with respect for intellectual
property rights, and flexible capital and labor markets.

1.3.13 Definition of startups in the Indian context:

Though there is no precise definition, the accepted characteristics of a “start-up” span its age, scale of
operations, and mode of funding. It is usually defined as a young company, a few years old, and yet to
establish a steady stream of revenue. These firms have a small scale of operations, usually with a
working prototype or paid pilot with the potential to grow and scale rapidly. They are initially funded
by the founders’ own private network of friends and family and actively seek additional funds to sustain
themselves and become a viable business.
As an example, the GoI’s Startup India program defines a “startup” as a company (PIB 2017) that is:
I. Headquartered in India with not more than ten years since incorporation or registration.
II. Having an annual turnover of less than INR 1 billion (roughly $14 million) (Startup India 2019).

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Following a revision in 2019, Startup India has updated its list of benefits (Startup India 2019) to include
income tax exemptions on capital gains and investments above fair market value, options for self-
certification on various compliances, fast-tracking of patent applications at a discounted rate, the ability
to sell to the government, and the ability to wind up a failed company within 90 days. Registering with
Startup India provides exemptions from Angel Tax, access to a Knowledge Bank, partnered services,
online courses, and innovation challenges. The program has recognized nearly 27,000 startups (Startup
India 2019).
In 2019, the DPIIT worked with representatives from the startup ecosystem to do away with problems
stemming from what was labeled as the controversial “Angel Tax” (levied at 30% when a privately held
company raises funds at a rate higher than its fair valuation) – an anti-money-laundering provision since
2012 that was allegedly being misused. The law was originally introduced to deter high-net-worth
individuals (HNWIs) from investing in bogus startups (or shell companies) as a way to launder money.
The Angel Tax was criticized for stifling startups that had raised equity funding from unregistered
foreign investors.

1.3.14 Government support through startup India and other initiatives:

In 2012, India’s market regulator SEBI had introduced new norms for angel investors to be registered
as AIFs as a new class of pooled-in investment vehicle for real estate, private equity (PE), and hedge
funds. To prevent abuse of the regulation through money laundering, SEBI restricted investment by
such funds to INR 5‒50 million and only in companies incorporated in India not more than 3 years old,
and with no family connections. By 2019, INR 17 billion had been invested in 254 startups through
SEBI’s AIFs and SIDBI committed a further INR 31 billion, as of July 2019, to 47 AIFs registered with
SEBI (FE Online 2019).
When the Startup India program was launched in January 2016, the GoI also announced a Fund of
Funds for Startups (FFS) at the Small Industries Development Bank of India (SIDBI) with a corpus of
INR 100 billion to be allocated to alternative investment funds (AIFs). In the 4 years since, this FFS
has consistently fallen short of its targeted allocations, both in terms of direct investments in startups
(only INR 6.02 billion across 142 startups) and in its allocation to AIFs (INR 226.5 million versus a
targeted INR 33 billon) (Sen 2019).
A look at the industry-academic-government linkages in patents, for example, shows that India is
emerging as a patent hub, especially with newer government initiatives such as the Startup Hub at the
Ministry of Electronics and Information Technology (MeitY), which helps strengthen 51 incubation
hubs through fast-track patent clearances, with India known to have far fewer international patents filed
vis-à-vis other countries like the Republic of Korea and Japan.

1.3.15 Unicorns and potential disruptors:

For the Indian startup ecosystem, 2019 was the year of unicorns, with eight more joining the club (Table
4). Though India has the third-largest startup market by value, it only has a meager 26 unicorns when
compared to the over 200+ unicorns in the US and the PRC. Projections by Fosun RZ Capital (Outlook
2019) suggest that India is likely to have 54 tech unicorns by 2024. What started as a testing ground a
decade ago for US-based VC firms such as Tiger Global and Sequoia Capital, which were looking for

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the next big market after the US and the PRC, India has now emerged as one of the most promising
destinations for investors from the PRC, the Republic of Korea, Japan, and the UAE.

TOP 5 UNICORNS IN INDIA:

Startup Valuation Year of Industry and Key Investors

in Valuation Vertical
USD
One97 $16 billion 2015 Fintech Intel capital, Sapphire
communication ventures, Alilbaba group

OYO $10 billion 2018 Travel Softbank group, sequoia

capital, lightspeed india
group
Snapdeal $7 billion 2014 E-commerce Softbank group, blackrock,
Alibaba group

BYJU’s $5.75 2017 Edtech Tencent holdings, lightspeed

billion partners, sequoia capital

Freshworks $3.5 billion 2018 Saas Accel partners, Tiger global,

Google, Sequoia capital

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1.3.16 Challenges faced by startups in India:

Some of the major challenges faced by start-ups in India are:

• Financial resources: Availability of finance is critical for the start-ups and is always a problem
to get sufficient amounts. A number of finance options ranging from family members, friends,
loans, grants, angel funding, venture capitalists, crowd funding etc are available.
• Revenue generation: Several start-ups fail due to poor revenue generation as the business
grows. As the operations increase, expenses grow with reduced revenues forcing start-ups to
concentrate on the funding aspect, thus, diluting the focus on the fundamentals of business.
• Team members: Start-ups normally start with a team consisting of trusted members with
complementary skill sets. Usually, each member is specialized in a specific area of operations.
Assembling a good team is the first major requirement, failure to have one sometimes could
break the start-up (Skok, 2016).
• Lack of mentorship: Lack of proper guidance and mentorship is one of the biggest problems
that exist in the Indian start-up ecosystem (Choudhury, 2015). Most of start-ups have brilliant
ideas and/or products, but have little or no industry, business and market experience to get the
products to the market.
• Lack of a good branding strategy: Absence of an effective branding strategy is another issue
that prevents start-ups from flourishing at a faster pace. Hemant Arora, Business Head-Branded
Content, Times Network opines that branding demands paramount attention as it gives an
identity and occupies a space in the consumer minds (Choudhury, 2015).

1.3.17 Opportunities for start-ups in India:

In spite of challenges and problems that start-ups are facing, Indian markets provide a plethora of
opportunities to find solutions tailored to solve them. Below is a list of few of the opportunities that are
discussed for consideration by start-ups.

• India’s large population: The population of India is a huge asset for the country. By 2020, it
is expected that the working age population would surpass the non-working population. This
unique demographic advantage will offer a great opportunity to any start-up. Various
infrastructure issues and the bottom of the pyramid market would provide huge opportunities
for the start-ups.
• Change of mind set of working class: Traditional career paths will be giving way to Indian
start-up space. Challenging assignments, good compensation packages would attract talented
people to start-ups. Also, it is seen that several high-profile executives are quitting their jobs to
start or work for start-ups.
• Huge investment for start-ups: Huge investment in Indian start-ups from foreign and Indian
investors is taking place. In 2015, more than 300 deals were done by 300+ angels and venture
capital/ private equity players with around $6.5-billion (Rs 42,300Cr) investments making India
the most sought-after destination for investments. Some of the active players are New
Yorkbased Tiger Global Management, Russian company- DST Global, Japanese telecom giant
Softbank, Kalaari Capital, Sequoia Capital and Accel Partners. More and more are going to join
the bandwagon as this is the tipping point in Indian commerce for making good returns by
backing potential unicorns.

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 CHAPTER- 2
LITERATURE REVIEW

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2.1 REVIEW OF LITERATURE:

• Omid Sharifil, 2015: In all business idea has an important role; new companies can extent
the spectrum. Some are unshaped, when we consider them in commercial sense, where the
promoter of the business focuses on an idea that he thinks can fill an unfilled need among
consumers. In many other cases promoters moved ahead to reach up the scale and have
transformed the idea into a marketable product, with little to show in terms of revenues. Still
others have moved even further down the road to commercial success, and have a market
for their product or service, with revenues and the potential, at least, for some profits.

• Salamzadeh, 2015A: “The organizational approach argues the conditions under which an
organization is planned and the processes followed in its initial development [phase, which]
have important consequences on its structure and performance in later life”. Yet,
organization theories are silent on the issue of organizational evolution, or more specifically
on startup evolution. However, there is limited research which investigates the startup phase
example: (Boekerb & Wiltbank, 2005), (Aidin Salamzadeh, 2015).”

• Cole & Sokolyk, 2013: For a sample of startups from 27 countries, Nofsinger and Wang
(2011) report that experience in managing startups is the key factor in securing funding, as
experienced owners are able to reduce information asymmetry and obtain financing in the
first year of operations. Besides experience, education is another trait found to increase the
likelihood of using credit in the startup year.

• Sarkar, 2016: Startup implies to an institution created or registered in India not prior to 5
years with an annual turnover not exceeding Rs 25 core in any preceding financial year ,
working towards innovation, development, deployment, or commercialization of new
products process or services driven by technology or intellectual property. Provided that
such entity is not formed by splitting up or reconstruction of a business already in existence.
Provided, also that an entity shall cease to be a startup if its turnover for the previous
financial year has exceeded Rs 25 core or it has completed 5 years from the date of
incorporation / Registration. This definition is applicable only for Government enlisted
startup schemes. In General scene, A Startup Company is a young company that is just
beginning to develop. Startups are usually small and initially financed and operated by a
handful of founders or individual.

• Cassar, 2004: However, for a sample of Australian startups, Cassar (2004) reveal that
owner’s demographic and socioeconomic characteristics are irrelevant for capital structure
decisions. The entrepreneur’s personal wealth may also affect the composition of capital in
small businesses.
• For example, Coleet al. (2004) show that the commitment of a small business owner’s
personal wealth is important to obtain external credit.

• Carmen Cotei, 2017: Overall, these findings attest to the impact of owner characteristics,
suchas attitudes and beliefs, education, and experience, on financial decision-making.In
addition, the entrepreneur’s gender may have an impact on type and size of theirstartup
financing sources as males tend to be more risk tolerant than females. The empirical
evidence on the impact of owners’ characteristics on startup financing has mixed results.

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• The main concern for these startup firms is not only limited up to the fact that how these
sources of finance are successfully acquired but also how these sources are effectively
implemented once they are made available, since the startup firms lack both the experience
and expertise in dealing with the core business operations.

• Tariq, 2013: The alternative of financing growth from retained earnings is feasible;
however for a start-up this can be very slow. Moreover, technology-based start-ups often
experience a period of financial losses prior to the generation of surpluses for reinvestment.

• DOSSANI, 2002: The relative difficulty of start-ups in accessing finance is likely to be

aggravated by a weak business environment, in particular by inadequate legal frameworks
and underdeveloped financial systems. Given very limited access of entrepreneurs to
international financial markets, they are particularly sensitive to institutional constraints in
domestic countries.

• Mickiewicz, 2008: Investing in a fledgling start-up firm is extremely risky, because of the
high rate of failure among new firms, something Stinchcombe (1965) termed the ‘‘liability
of newness.’’
• In general, private banks are unwilling to lend money to a newly established firm, because
of the lack of collateral and high risk of losing the principal as a startup is faced with no of
issues that have to be dealt with it in order to grow into a successful organization. Apart
from planning the most effective business strategy for this Startup Company is to look at the
regulatory environment and various legal issues and laws of the country where Startup
proposed to be set up.

• Kaur, 2017: A Startup business should be protected from specific risk faced by the sector
in which it operates. Empowered with unique demographic advantages and guided efforts,
analysts are predicting that India will be poised to a position by itself among developed
economics with in the next 10 to 15 years. As indicated by the most recent UN articulation
India with 356 million 10-24 year-olds have the real centralization of youth populace
regardless of having a littler populace than China. Youth is the main thrust behind
advancement, creation, and the future pioneers of a nation besides Youth likewise drives
request and utilization design in a nation.

• Apoorv Ranjan Sharma, 2014: It provides a huge opportunity to create a dominant

position in the Global Market. In an Indian context the ecosystem is growing however the
speed of execution is slow. In the past couple of years we have seen a good rise in the number
of angel investments and early stage investments. However the number of initial public offer
(IPO’s) has decreased drastically. Hence the cycle as such becomes incomplete. This creates
an imbalance which gets carried forward to the future years. Therefore, in order to have a
flourishing start-up ecosystem in India there has to be a balanced marketplace. Entities like
Accelerator are crucial because they avoid further inefficiencies and help create trust
between entrepreneurs and angels while giving them an active mentorship on all aspects on
business.

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 CHAPTER- 3
RESEARCH
METHODOLOGY

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3.1 RESEARCH METHODOLOGY:

Research methodology is a strategy that guides a research in providing answers to research

questions and for this, research survey is being done. “Accuracy of the study depends on the
systematic application of the method. It provides a detailed description of the research approach
adopted in this study.

Research Methodology manages the strategy for study for example how the examination was
completed and what were the different systems used. It is cautiously examination or enquiry in a
precise way arranged by discover answer for issue in research. It comprises of characterizing and
rethinking issues, defining theory or recommended arrangement, gathering and assessing
information, making finding and achieving computation and so forth and in any event cautiously
testing the ends to decide if they fit the figured speculation or not.

Research methodology is a way to systematically solve the research problem. It may be

understood as the science of studying how research is done. Research in the common parlance
refers to a search for knowledge.

The process used to collect information and data for the purpose of making business decisions.
The methodology may include publication research, interview, surveys, and other research
techniques, and could include both present and historical information.

Research methodology of any research project is designed tailor made as per the specific
objectives of the research project. Research objectives are set basing upon the identified research
gap. From the literature review and gap analysis, presented in the objective part, following points
were identified as issues for investigation, as the factors are related to the formation and growth
of entrepreneurship.

Intention as a construct has multiple variables associated. At the same time each variable would
vary in its level. Multiple intent variables would interact with each other and in combination
would generate a level of intent which could be substantial for new venture formation. Similarly,
for each of the construct representing different activities or dimensions of new venture formation
it could be argued that there would be a threshold level of the construct and the interaction among
construct would indicate success or satisfaction from entrepreneurship.

The objective of linking the intention, support, ideation, measure and satisfaction presented a
novel challenge to the research design. Generally intention is take a priori to the formation of
new venture. (Kar, 2015) The personal values as sex, ages etc. are taken into consideration to fit
into their scale of measurement. Average men and average women participation were calculated
and also average age were also calculated to analysis various factors. Variance analysis and
reliability test was done along with averages (Panagiota Darvyri1*, Michael Galanakis2,
Adamantios G. Avgoustidis3, Niki Pateraki1, Spyros Vasdekis4, Christina Darviri1,2014).The
questionnaire is designed with lot of care so as to elicit the right kind of information. The primary
focus was on the three major Research objectives of effectiveness of the intervention,
additionality and counterfactual.

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3.1.1 TOOLS USED FOR THE STUDY:

For the present study researchers used primary data. Primary data has been collected through
structured questionnaire. Secondary data was collected from internet, journals, articles and
books. For scaling purpose likert’s 5point scale was used for certain questions. For analysis and
interpretations, researcher used simple statistical tools and some of the simple and relevant data
are presented in the tabular form. Chi-square test was used for testing the hypothesis.

3.1.2 TESTING HYPOTHESIS:

• The four types of hypothesis are interrelated and correlated to examine the impact of
different finance support in development and growth of startups.
• Startup entrepreneurs start their enterprise by investing fund from self but in the later
stage alternative sources of finance fulfill their fund need for research and expansion.
• Loans from commercial banks and establishment of startup enterprises are correlated
with each other.
• The indicators of startup establishment have positive correlation with employment
generation in the country.
• Government policies have a significant impact on the growth of startups in the country.
• Startup policies and schemes have significantly impacts on growth of women
entrepreneurs in the country.

3.1.3 SOURCES OF DATA:

The data required for the study is collected from secondary sources. The sources of secondary
data used by the researcher include, Library research, Journals and Brochures on related subject,
opinions and views of various authors in related subject, conference/seminar papers etc.

3.1.4 RESEARCH DESIGN:

A research design is the “blueprint” of the study. The design of a study defines the study type
(descriptive, correlational, semi-experimental, review, meta-analytic) and sub-type (e.g.,
descriptive-longitudinal case study), research question, hypotheses, independent and dependent
variables, experimental design, and, if applicable, data collection methods and a statistical
analysis plan. Research design is the framework that has been created to seek answer to research
questions.

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3.1.5 SAMPLE DESIGN:

A sample design is a definite plan for obtaining a sample from a given population. It refers to
the techniques or the procedure the researcher would adopt in selecting items for the sample.
Sample design may as well lay down the number of items to be included in the sample for
example the size of the sample. Sample design is determined before data are collected. Here
we select the population as sample in our sample design. The selected respondents should be
as representatives of the total population.

3.1.6 DATA COLLECTION OR ITS METHODS:

Data collection is the process of gathering and measuring information on variable of interest, in an
established systematic fashion that enables one to answer stated research questions, test hypotheses, and
evaluate outcomes. The data collection components of research are common to all field of study including
physical and social sciences, humanities, business, etc.

3.1.7 METHODS OF DATA COLLECTION:

➢ REGISTRATION: Registers and licenses are particularly valuable for complete

enumeration, but are limited to variables that change slowly, such as numbers of fishing
vessels and their characteristics.
➢ QUESTIONNAIRES: Forms which are completed and returned by respondents. An
inexpensive method that is useful where literacy rates are high and respondents are co-
operative.
➢ INTERVIEWS: Forms which are completed through an interview with the respondent.
More expensive than questionnaires, but they are better for more complex questions,
low literacy or less co-operation.
➢ DIRECT OBSERVATIONS: making direct measurements is the most accurate method
for many variables, such as catch, but is often expensive. Many methods, such as
observer programs, are limited to industrial fisheries.
➢ REPORTING: The main alternative to making direct measurements is to require fishers
and others to report their activities. Reporting requires literacy and co-operation but
can be backed up by a legal requirement and direct measurements.

39 | P a g e
3.1.8 PRIMARY SOURCES OF DATA:

Primary research consists of collection of original primary data collected by the research. It can
be accomplished through various methods, including questionnaires and telephonic interview
in market research, or experiments and direct observation in the physical science, amongst
others.

Primary Data could be collected in many different ways, which is interview by visit, emails,
interview by phone, google forms or by questionnaires. Every method has its advantage and
disadvantages. In this thesis, focus has been on telephonic interviews.

The telephonic interview has the advantages of that they are immediate, the percentage of
answer is high and necessary complementary question are easy to ask. The disadvantages with
telephonic interview are that the question have to be rather easy to ask, that the affect by
interviews could influence the respondent and that sensitive questions are that the suitable in
this kind of interview situation. In primary data, data is collected through sample.

3.1.9 TYPES OF SAMPLING IN PRIMARY DATA COLLECTION:

Sampling methods are broadly divided into two categories: probability and non-probability. In
probability sampling every member of population has a known chance of participating in the
study. Probability sampling methods include simple, stratified systematic, multistage, and
cluster sampling methods.

In non-probability sampling, on the other hand, sampling group members are selected on non-
random manner, therefore not each population member has a chance to participate in the study.
Non-probability sampling methods include purposive, quota, convenience and snowball
sampling methods.

In our research, we use Convenience Sampling, Convenience Sampling is a non-probability

sampling technique where subjects are selected because of their convenient accessibility and
proximity to the researcher.

3.1.10 SECONDARY DATA:

Secondary data is research data that has previously been gathered and can be accessed by
researchers. The term contrasts with primary data, which is data collected directly from its
source. Secondary data is used to increase the sampling size of research studies and is also
chosen for the efficiency and speed that comes with using an already existing resource.
Secondary data facilitates large research projects, in which many research groups working in
tandem collect secondary data. The main researcher is then allowed to focus on primary
research or particular areas of interest. This division of labour helps researchers learn more in
less time.

Common sources of existing secondary data include data collected by government public
services departments, libraries, internet searches and censuses, such as the United States
Census. Companies use market research to draw on existing information from social media as
a source of secondary data. Social media is becoming heavily favored in market research, as

40 | P a g e
 opinions are already available from millions of users on many topics and products. The benefit
of using secondary data is that much of the preliminary work is done. The data may have already
been sorted in an electronic format, published and reviewed with case studies already
conducted. Secondary data can quickly become more or less public knowledge through use in
the media. Due to its exposure and public examination, secondary data can carry more
legitimacy than primary research data and is often used as verification of primary data.

However, there are a number of potential problems in using secondary data. It can be difficult
to attain secondary data that the fits exact requirements of research studies. It can also be hard
to verify the accuracy of secondary data, which can also become outdated over time.

3.1.11 SAMPLE PLAN:

Tools: Qualitative & quantitative method of data collection was used.

Sample size: 100 respondents.
Sampling method: Random sampling.
Respondent profile: MBA students.
Sampling place: Delhi (NCR).

3.1.12 RESEARCH DESIGN USED IN THE STUDY:

The research design used in this study is Descriptive Research Design. Descriptive research is
also called Statistical Research. The main goal of this type of research is to describe the data
and characteristics about what is being studied. The idea behind this type of research is to study
frequencies, averages, and other statistical calculations. Although this research is highly
accurate, it does not gather the causes behind a situation.

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3.1.13 STATEMENT OF PROBLEM:

The project report has been formulated on “A study on new venture finance: Startup funding
options in India” which has developed after review of related literatures and discussion with
experts.

3.2 OBJECTIVES OF THE STUDY:

• The primary objective of this research paper is to determine whether the financial support
available is adequate for funding of start-up’s.
• To determine and study the impact of alternative sources of finance.
• Examine the role of commercial banks in funding of start-up’s.
• Determine the growth and development of start-up’s in the country.
• To understand the initiative for start-up India.
• To study the awareness about start-ups in the light of recent changes announced by the
government.
• To find about respondents expectations from the initiative.

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3.3 SCOPE OF THE STUDY:

Based upon the literature review, the further research is to be carried out globally. The research
design is done on the light of source literatures.

• Determine the impact of different schemes specifically meant for startup enterprises.
• To find out different alternative sources of finance available for raising fund for startup.
• Find out different bank loan facilities available for startup enterprises and the different
criteria needed to avail the loan facility.
• F- test and t- test, Z- test are to be applied for testing of large sectional data and also
small number of samples.
• A review of different startup study to be done.

3.3.1 NEED OF THE STUDY:

• The need of the study was to investigate whether India has made sufficient
arrangements to fund the entrepreneurial ideas that have potentials of success and
growth in times to come.
• The study was also required to know whether entrepreneurs from y and z category cities
have equal access to funding and other resources.
• The study was also needed to find out the lapses in having access to funding.

43 | P a g e
3.4 SWOT Analysis:

➢ STRENGTHS:
i) Major energetic independence.
ii) Major control of resources.
iii) To share the ownership of the renewable.
iv) Lower price volatility.

➢ WEAKNESSES:
i) High financial and investment costs.
ii) Start-up risks.
iii) Lack of competitiveness.
iv) Possible overlap of economic activities.

➢ OPPORTUNITIES:
i) Access to Foreign direct investments.
ii) Decree to incentive.
iii) Renewable energies through public funding.

➢ THREATS:
i) Early stage of the MRE Market.
ii) Lack of market acceptance.

3.5 LIMITATIONS OF THE STUDY:

This research is limited to 100 respondents in Delhi (NCR). A broader base of respondents is
always desirable. Further research could be conducted on respondents from other metropolitan
cities.
• The impact of different schemes specifically meant for start-up enterprises is not done.
• The study of different alternative finance facilities available have to be done.
• Investigating the role of commercial banks in funding start-up enterprises.
• Direct personal interview and in depth interview of samples are not accessed.
• The role of start-up enterprises in employment generation has to be ascertained.
• Study the impact of government policies in establishment of start-up.
• The significance of special government schemes for growth of women entrepreneurs
has to be done.
• To determine the major obstacles in the growth and development of start-up
enterprises.

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 CHAPTER- 4
DATA ANALYSIS
AND
INTERPRETATION

45 | P a g e
 Q.1 What is the best source of funding entrepreneurs look for early stage
startups?

TABLE- 1

S.No. Opinion Respondents Percentage

1. Personal saving 10 10%
2. Bootstrapping 48 48%
3. Crowdfunding 30 30%
4. Grants 12 12%
Total 100 100%

FIGURE- 1

Opinion

12% 10%
Savings
Bootstrapping
30% Crowdfunding
48% Grants

INTERPRETATION:
Above data shows that most of the entrepreneurs like bootstrapping their startup in an early stage.

• Personal savings (10%)

• Bootstrapping (48%)
• Crowdfunding (30%)
• Grants (12%)

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Q.2 Why do entrepreneurs love bootstrapping their startup?

TABLE- 2
S.No. Opinion Respondents Percentage
1. To retain full ownership 36 36%
2. To increase leverage for future 13 13%
fundraising

3. To get better control 27 27%

4. Freedom in decision making 24 24%
Total 100 100%

FIGURE- 2

Opinion

24% Retain ownership

36%
Increase leverage
better control

27% Freedom in decision making

13%

INTERPRETATION:
Above data shows that entrepreneurs love bootstrapping to retain full ownership at early stage.

• Retain ownership (36%)

• Increase leverage (13%)
• Get better control (27%)
• Freedom in decision making (24%)

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Q.3 What does an investor looks the most before investing in a startup
company?

TABLE- 3
S.No. Opinion Respondent Percentage
1. Passion & commitment 38 38%
2. Unique business plan 12 25%
3. Market opportunity 25 25%
4. Team structure 25 12%
Total 100 100%

FIGURE- 3

Opinion

12%
Commitment
38% Unique business plan
25%
Market opportunity
Team structure
25%

INTERPRETATION:
Above data shows that an investor wants commitment the most before investing in a startup.

• Passion & commitment (38%)

• Unique business plan (25%)
• Market opportunity (25%)
• Team structure (12%)

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Q.4 What is the biggest disadvantage of going into an accelerator program
according to entrepreneurs?

TABLE- 4

S.No. Opinion Respondents Percentage

1. Loosing equity 42 42%
2. Unsuitable network 18 18%
3. Less support 17 17%
4. Commitment & risks 23 23%
Total 100 100%

FIGURE- 4

Opinion

23% Loosing equity

42% Unsuitable network
Less support
17%
Commitment & risks
18%

INTERPRETATION:

Above data shows that loosing equity is the biggest disadvantage of going into an accelerator program
according to entrepreneurs.

• Loosing equity (42%)

• Unsuitable network (18%)
• Less support (17%)
• Commitment & risks (23%)

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Q.5 What is the biggest advantage of going into an accelerator program
according to entrepreneurs?

TABLE- 5

S.No. Opinion Respondents Percentage

1. Curriculum 22 22%
2. Marketing 23 23%
3. Funding 40 40%
4. Other perks 15 15%
Total 100 100%

FIGURE- 5

Opinion

15% 22% Curriculum

Marketing
Funding
40% 23% Other perks

INTERPRETATION:

Above data shows that easy access to funding is the biggest advantage of going into an accelerator
program according to entrepreneurs.

• Curriculum (22%)
• Marketing (23%)
• Funding (40%)
• Other perks (15%)

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Q.6 What is the best method of valuation of startup companies according
to entrepreneurs?

TABLE- 6
S.No. Opinion Respondents Percentage
1. Berkus approach 10 10%
2. Risk summation method 10 10%
3. Discounted cash flow 40 40%
4. EBITDA multiple 20 20%
5. Revenue multiple 20 20%
Total 100 100%

FIGURE- 6

Opinion

10%
20% Berkus
10%
Risk summation
Discounted cash flow
20% EBITDA

40% Revenue

INTERPRETATION:
Above data shows that discounted cash flow is the best method of valuation of start-up companies
according to entrepreneurs.

• Berkus approach (10%)

• Risk summation method (10%)
• Discounted cash flow (40%)
• EBITDA multiple (20%)
• Revenue multiple (20%)

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Q.7 What is the best way of negotiating term sheet according to
entrepreneurs?

TABLE- 7
S.No. Opinion Respondents Percentage
1. Get more than one VC interested 35 35%
2. Understand common market terms 10 10%
3. Consulting with experts 33 33%
4. Understanding valuation & dilution 22 22%
Total 100 100%

FIGURE- 7

Opinion

22% Multiple VC
35%
Understand market terms
Expert consultation
Understanding valuation
33% 10%

INTERPRETATION:
Above data shows that getting multiple VC’s interested is the best way of negotiating a term sheet.

• Get more than one VC (35%)

• Understand common market terms (10%)
• Consulting with experts (33%)
• Understanding valuation & dilution (22%)

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 CHAPTER- 5
FINDING, SUGGESTIONS
AND
CONCLUSIONS

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5.1 FINDINGS OF THE STUDY:

This chapter presents summary of findings, conclusion and recommendations of the study in line
with the objectives of the study.

Early stage financing is essential when moving from the startup to the real business life cycle. In
this phase, sales and firm growth begin. The objective of early stage financing is to create a stable
and permanent organization.

During this phase, all problems related to project, design, test, and launch have been resolved.
Financial resources are used to fund a little developed company that needs equity to boost its
growth. For financiers, this is the stage where financing really begins.

The risk-return profile at this stage is similar to earlier phases: there is more uncertainty within the
market rather than technical items or feasibility questions. Because of this, financing during this
phase is opened to investors new to the sector or the market.

The expected IRR and the relative risk are high, because investments are already made and there
is no certainty about sales development. In this phase financial institutions are asked to revise and
strengthen the business plan. Private equity operators or venture capitalists are very involved in
management and own a large numbers of shares. Realized and required activities range from
assistance to strategic decisions to business plan certification to marketing and financial advice.

54 | P a g e
5.1.1 MAJOR FINDINGS:

• It was found that the indicator start-up establishment have positive correlation with
employment generation in the state.
• It is found that government policies have a significant impact in establishment of start-
ups.
• It was found that government schemes have insignificant role in the growth of women
entrepreneurs in the state.
• It was found that only few entrepreneurs feel that the financial support is adequate for
starting their start-up enterprise.
• It was found that entrepreneurs fund their start-up in the early stage but face major
difficulty in attaining alternative finance for their start-up to fulfil their need of fund
for research and expansion.
• The findings suggest that the loans from commercial banks are not at all correlated
with establishment of start-up enterprise.

55 | P a g e
5.2 SUGGESTIONS FOR THE STUDY:

• The impact of different schemes specifically meant for start-up enterprises is not done.
• The study of different alternative finance facilities available have to be done.
• Investigating the role of commercial banks in funding start-up enterprises.
• Direct personal interview and in depth interview of samples are not accessed.
• The role of startup enterprises in employment generation has to be ascertained.
• Study the impact of government policies in establishment of start-up.
• The significance of special government schemes for growth of women entrepreneurs has
to be done.
• To determine the major obstacles in the growth and development of start-up enterprises.

56 | P a g e
5.3 CONCLUSION:

The success of Start-up India campaign hinges on initiatives like faster and easier registration of
Companies, self-certification for many legal requirements, zero inspection for three years,
funding for patents, and speed of patent protection. It is important to add provisions which aid
theclosure of dead companies within 90 days. Indian lawmakers could do this under the new
bankruptcy bill. The central theme is that ease of starting and ending is critical in the context
high rate of startup mortality. This research paper found that respondents supported the idea of
funding for incubation centers. The Government proposal do so, across Universities, innovation
movements, research parks and industry parks is on similar lines. The promise of an initial
capital of ten thousand crores over a period of four years from the government is capable of
attracting tenfold investment by 2022. Credit guarantee for startup lending is the booster dose
required to galvanize Indian industry. Incentives in the form of tax holiday for three years are a
benefit worth considering. It is also apt to considerequating capital gains with the regime in the
listed market. Most importantly, foreign exchange regulations are to be in tune with investor
needs, so that the best do not register outside India. Global investors demand a benign tax
certainty regime so that they remained invested for the long term.

The literatures review defines that the startup enterprises are developing in the state of Odisha.
But constantly face challenges in different areas specifically in attaining timely finance. In some
cases the startup entrepreneurs are not getting benefits from the schemes lunched by the
government from time to time due to unawareness. Although specific commercial bank loan are
lunched by the central and state government but the startups are not successful in availing it. One
of the primary objectives behind startup enterprises is employment generation but that too need
to be addressed. It is seen in some cases that few startups are getting benefits from government
schemes but others are not.

If you think you want to grow and leverage the opportunities, then the best way to grow your
start-up is with start-up incubators and accelerators. Before selecting the right incubation centre
and start-up accelerator, we should do thorough research as many of the incubators aren’t worth
it as some do not provide funding, some have limited networks with them, and some don't
provide access to tools like Microsoft accelerator and Cisco launchpad are able to provide, etc.
Now we know the difference between business incubators and accelerators and the benefits they
provide to us.

The financing patterns identified in this paper do not follow previous analysis that provide
definitive support either for or against pecking order patterns in new venture financing. This may
be because studies such as those by Chittenden et al. (1996) and Howorth (2001) focused on
established small businesses that had a trading history and, typically, a credit record, whereas this
article concerns itself with nascent enterprises. It is also not surprising that these findings do not
tally with those of Paul et al. (2007). That study concerned itself with high growth new ventures
that had secured finance from informal equity investors; whereas the sample used in this study
covers a wider and more diverse range of new ventures with capitalization values ranging from
less than £5000 to more than £2m.

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BIBLIOGRAPHY

58 | P a g e
REFRENCES:
• Anson, M. (2006) Handbook of Alternative Assets , 2nd edn (John Wiley & Sons)
• Bachelier, L. (1964) Théorie de la spéculation, translated by A. J. Bones in P. H. Cootner
• (ed), The Random Character of Stock Market Prices (MIT Press)
• Blessing, S. (2011) Alternative Alternatives – Risk, Returns & Investment Strategy (John
• Wiley & Sons)
• Brealey, R., Myers, S., and Allen, F. (2008) Principles of Corporate Finance, 9th edn (McGraw
• Hill)
• Brooke, P., and Penrice, D. (2009) A Vision for Venture Capital – Realizing the Promise of
• Global Venture Capital and Private Equity (New Ventures)
• Capital Dynamics (2010) The Definitive Guide to Risk Management in Private Equity (PEI
• Media)
• Cendrowski, H., Martin, J., Petro, L., and Wadecki, A. (2008) Private Equity: History,
• Governance and Operations (John Wiley & Sons)
• Cornelius, P. (2011) International Investments in Private Equity (Academic Press)
• Cornelius, P., Diller, C., Guennoc, D., and Meyer, T. (2013) Mastering Illiquidity – Risk
• Management for Portfolios of Limited Partnership Funds (John Wiley & Sons)
• Demaria, C. (2004) Développement durable et finance (Maxima)
• Demaria, C. (2010) Introduction to Private Equity (John Wiley & Sons)
• Demaria, C. (2013) Introduction to Private Equity: Venture, Growth, LBO and Turn-Around
• Capital (John Wiley & Sons)
• Draper, W. (2011) The Startup Game – Inside the Partnership between Venture Capitalists and
• Entrepreneurs (Palgrave Macmillan)
• Fraser-Sampson, G. (2007) Private Equity as an Asset Class (John Wiley & Sons)
• Gompers, P., and Lerner, J. (2006) The Venture Capital Cycle, 2nd edn (MIT Press)
• Hilb, M. (2010) New Corporate Governance , 3rd edn (Springer)
• Hirschman, A. (1970) Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations
• and States (Harvard University Press)
• Hobohm, D. (2010) Investors in Private Equity Funds: Theory, Preferences and Performances
• (Gabler Research)
• Kocis, J., Bachman, J., Long, A., and Nickels, C. (2009) Inside Private Equity: The Professional
• Investor’s Handbook (John Wiley & Sons)
• Lerner, J. (2009) Boulevard of Broken Dreams – Why Public Efforts to Boost Entrepreneurship
• and Venture Capital Have Failed – and What to Do About It (Princeton University Press)
• Lerner, J. (2012) The Architecture of Innovation: The Economics of Creative Organizations
• (Harvard Business Review Press)
• Mathonet, P.-Y., and Meyer, T. (2007) J-Curve Exposure: Managing a Portfolio of Venture
• Capital and Private Equity Funds (John Wiley & Sons)
• Meyer, T., and Mathonet, P.-Y. (2005) Beyond the J-Curve – Managing a Portfolio of Venture
• Capital and Private Equity Funds (John Wiley & Sons)
• Miles, M., and Huberman, M. (1994) Qualitative Data Analysis, An expanded Sourcebook ¸
• 2nd edn (SAGE Publications)

59 | P a g e
BOOKS:
• The art of startup fundraising- Alejandro Cremades.
• Introduction to private equity- Cyril Demaria.
• Venture capital for dummies- Nicole Gravagna, Peter K Adams.
• Kotler, Philip, Marketing Management, Pearson Publication.
• Govindrajan, Vijay & Trimble, Chris.
• Zenas Block and Ian C Macmillan, Corporate Venturing, Harvard Business School, Press,
Boston.
• Chandra, Financial Management 9th edn. McGraw Hill Education.

NEWSPAPERS & MAGZINES:

• Times of India
• Business today
• Forbes
• Economic times
• Hindustan times
• Business line
• The financial express

WEBSITES:
• https://blog.finology.in/startups-india/startup-ecosystem-in-india
• https://startuptalky.com/zepto-success-story/#Zepto_Zepto-StartupStory
• https://vakilsearch.com/advice/what-are-the-different-types-of-funding-for-indian-startups/
• https://www.indeed.com/career-advice/career-development/startup-funding-stages
• https://blog.finology.in/startups-india/startup-incubators-accelerators-in-india

60 | P a g e
ANNEXURE

61 | P a g e
 ANNEXURE- I (QUESTIONNAIRE)

Name- ________________
Age- _________________
Gender- ______________
Occupation- ____________
Qualification- ____________

Q.1 What is the best source of fundraising entrepreneurs look for early stage startups?
A. Personal savings
B. Bootstrapping
C. Crowdfunding
D. Grants

Q.2 Why do entrepreneurs love bootstrapping their startups?

A. To retain full ownership
B. To increase leverage for future fundraising
C. To get better control
D. Freedom in decision making

Q.3 What does an investor looks the most before investing in a startup company?
A. Passion & commitment
B. Unique business plan
C. Market opportunity
D. Team structure

Q.4 What is the biggest disadvantage of going into an acceleration program according to entrepreneurs?
A. Loosing equity
B. Unsuitable network
C. Less support
D. Commitment & risks

Q.5 What is the biggest advantage of going into an accelerator program according to entrepreneurs?
A. Curriculum
B. Marketing
C. Funding
D. Other perks

62 | P a g e
Q.6 What is the best method of startup valuation according to entrepreneurs?
A. Berkus approach
B. Risk summation method
C. Discounted cash flow
D. EBITDA multiple
E. Revenue multiple

Q.7 What is the best way of negotiating term sheet according to the entrepreneurs?
A. Get more than one VC
B. Understand common market terms
C. Consulting with experts
D. Understanding valuation & dilution

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