CHAPTER 1

INTRODUCTION

1.1 WHAT ARE STARTUPS

Startups are young companies founded by entrepreneurs to develop a unique product or service, bring it
to market, and make it irresistible for customers. These companies typically focus on a single product or
service that the founders want to bring to market. Startups aim to remedy deficiencies of existing
products or create entirely new categories of goods and services, disrupting entrenched ways of thinking
and doing business for entire industries. They are rooted in innovation and often built around an exit
strategy – designed with the end goal of selling the company to a larger corporation.
Startups face high uncertainty and have high rates of failure at the beginning, but a minority of them
does go on to be successful and influential. They often begin with a founder or co-founder who has a
way to solve a problem. The founder will begin market validation by problem interview, solution
interview, and building a minimum viable product (MVP), i.e., a prototype, to develop and confirm their
business idea.
Startups typically raise funds by turning to family and friends or by using venture capitalists –
professional investors that specialize in funding startups. Crowd funding has become another viable way
for many people to get access to the cash they need to move forward in the business process. However,
startups face the risk of shutting down or not having enough capital to continue operations before turning
a profit. Long hours are characteristic of startups as everyone is working toward the same goal – seeing
the startup succeed. This can lead to high-stress moments and sometimes compensation that isn’t
commensurate with the hours worked. Competition is also always high as there tend to be only a handful
of startups in each industry
Startups are newly founded companies, typically with a small team of entrepreneurs working on
developing and bringing a new product or service to market. These companies are often
ccharacterized by their innovative business model, disruptive technology, or novel approach to
addressing a particular problem or need in the market.

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Startups are typically created by founders who are passionate about a particular idea, and are willing to
take significant risks to turn that idea into a successful business. They often seek out funding from
investors, such as venture capitalists or angel investors, to help them get off the ground and scale their
operations.
Startups can be found in a variety of industries, including technology, healthcare, finance, and more.
They play an important role in driving innovation, creating jobs, and contributing to economic growth.
However, startups also face a high degree of uncertainty and risk, and many fail within their first few
years of operation.

1. Culture:
Startups are known for their unique culture, which often includes long hours, a high degree of
collaboration, and a focus on experimentation and learning. They are often characterized by a flat
organizational structure, with employees encouraged to take ownership of their work and
contribute to the company’s growth and success.
2. Funding:
Startups typically require funding to get off the ground and scale their operations. They may raise
money from venture capitalists, angel investors, or through crowd funding platforms. In
exchange for funding, investors typically receive equity in the company.
3. Growth:
The goal of most startups is to grow rapidly and achieve market dominance. This can be achieved
through a variety of strategies, including expanding into new markets, launching new products or
services, and acquiring or partnering with other companies.

4. Risks:
Startups are inherently risky, as they are often working with unproven business models,
technologies, or products. Many startups fail within their first few years of operation, but those
that succeed can have a significant impact on their industries and society as a whole.

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5. Exit strategies:
Startups often have a plan for how they will exit the market, whether through acquisition by a
larger company, going public through an initial public offering (IPO), or continuing to operate as
a profitable business. This is an important consideration for investors, who want to see a return
on their investment.

Overall, startups play an important role in driving innovation and economic growth. While they
face significant risks and uncertainty, those that succeed can have a major impact on their
industries and society as a whole.

1. Agility:
Startups are often more agile and able to pivot quickly in response to changing market conditions
or customer needs. Because they are smaller and more nimble than larger, established companies,
they can often adapt and iterate more quickly, which can be a significant advantage in a
competitive market.
2. Innovation:
Startups are often founded on innovative ideas and disruptive technologies. They may be focused
on solving a particular problem or addressing an unmet need in the market. This focus on
innovation can lead to the development of new products or services, as well as new business
models that challenge established ways of doing things.
3. Entrepreneurship:
Starting a startup requires a certain degree of entrepreneurship, which involves taking calculated
risks, being resourceful and creative, and having a strong sense of Determination and resilience.
Successful startup founders often have a combination Of technical skills,
Business acumen and a passion for their ideas that drives them to overcome challenges and keep
pushing forward.
4. Network effects:
Many startups are built on network effects, which mean that their value increases as more people
use their product or service. For example, a social media platform becomes more valuable to
users as more of their friends and connections join the platform. This can create a powerful
network effect that helps to drive growth and establish market dominance.
5. Social impact:

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 Some startups are founded with a mission to make a positive social impact, in addition to
generating profit. These social enterprises may be focused on addressing social or environmental
issues, or on creating opportunities for underserved communities. They may be structured as
nonprofit organizations, or as for-profit companies that prioritize social impact alongside
financial performance.
Overall, startups are a diverse and dynamic sector of the economy that plays an important role in driving
innovation, creating jobs, and contributing to economic growth. While they face significant challenges
and risks, successful startups can have a major impact on their industries and society as a whole.

1.2 HISTORY OF STARTUPS

The startup culture in India has been prevalent for over four decades. However, the startup revolution
took shape in India in 2008 after a global recession hit the world. The rise of startups in India didn’t
happen overnight but slowly, over a gradual period. In recent times, the Indian startup ecosystem has
garnered significant attention due to its strong angel investor network and the sheer number of
entrepreneurial initiatives.
India is a young country with 65% of its population falling under the age bracket of 25 to 35 years.
Startups are known for their flexible work culture, late-night parties, and an impartial.
Transparent work environment. According to Inc42, India boasts more than 6,000 startups, and Prime
Minister Narendra Modi is confident that 44 percent of these startups are based in Tier II and Tier III
cities.
The recent scale-up of the Indian startup ecosystem is the result of a confluence of multiple factors. On
the demand side, there has been a massive explosion of consumers going online driven by smartphone
proliferation. The sheer number of these individuals and their ever-rising income levels coupled with
their desire for consumption makes them a lucrative market for startups. In recent years, investment in
Indian startups has increased significantly. In 2021 alone, promising startups had no trouble finding
investors eager to fund fast-growing firms with big ideas. That year investment in Indian unicorns rose
by more than three times compared to 2020. However, not all startups have been successful – many have
failed due to lack of funding or poor business models. Despite this, India’s startup culture continues to
evolve and grow as more professionals dissociate themselves from traditional corporations and embrace

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entrepreneurship and freelancing.
The startup ecosystem in India has witnessed significant growth over the past decade, with the
emergence of several successful startups in various sectors. Here’s a brief history of startups in India:

1. 2000-2010:
 The period between 2000 and 2010 saw the emergence of the first generation of Indian
startups, primarily in the areas of e-commerce, online travel, and classifieds.
 Companies like MakeMyTrip, Naukri, and Redbus were established during this time.

2. 2010-2015:
 The next five years saw a surge in the number of startups in India, with a focus on
technology-driven solutions.
 This period saw the emergence of several unicorns, including Flipkart, Ola, and Paytm.
 The government’s Startup India initiative, launched in 2016, also played a significant role in
boosting the startup ecosystem in India.

3. 2015-2020:
 This period witnessed a significant increase in the number of startups in India, with a focus on
sectors like healthcare, fintech, and edtech.
 The number of unicorns in India also increased during this time, with companies like OYO,

Byju’s, and Swiggy joining the list.

4. 2020-2025:
 Despite the challenges posed by the COVID-19 pandemic, the Indian startup ecosystem
continues to grow, with a focus on emerging technologies like AI, block chain, and IoT.
 The government has also launched several initiatives to support startups, including the
Startup India Seed Fund, which provides funding to early-stage startups.
Overall, the Indian startup ecosystem has come a long way in the past two decades, and the future
looks Bright with several promising startups emerging in various sectors.
5. Late 1990s:
 The dot-com boom of the late 1990s played a significant role in the emergence of the first
generation of startups in India.
 This period saw the launch of several online ventures, including Rediff, India’s first internet.

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 6. 2000s:
 The early 2000s saw the emergence of several successful startups in the online travel and
classifieds space.
 Companies like MakeMyTrip, Naukri, and Justdial were established during this time.

7. 2005-2010:
 The mid-2000s saw a shift towards e-commerce, with companies like Flipkart and Snapdeal
launching their online marketplaces.
 This period also saw the emergence of several startups in the mobile and digital payments space,
including Paytm and Mobikwik.
8. 2010-2015:
 The next five years saw a surge in the number of startups in India, with a focus on
technology-driven solutions.
 The government’s Startup India initiative, launched in 2016, also played a significant role in
boosting the startup ecosystem in India.
 During this period, several unicorns emerged, including Flipkart, Ola, and Paytm.

9. 2015-2020:
 This period witnessed a significant increase in the number of startups in India, with a focus on
sectors like healthcare, fintech, and edtech.
 The number of unicorns in India also increased during this time, with companies like OYO,

Byju’s, and Swiggy joining the list.

 The government’s Digital India initiative, launched in 2015, also helped boost the startup
Ecosystem by promoting digital literacy and connectivity.

10. 2020-2025:
 Despite the challenges posed by the COVID-19 pandemic, the Indian startup ecosystem
continues to grow, with a focus on emerging technologies like AI, blockchain and IoT.
 The government has also launched several initiatives to support startups, including the
Startup India Seed Fund, which provides funding to early-stage startups.
Overall, the Indian startup ecosystem has evolved significantly over the past two decades, with several
successful startups emerging in various sectors. With government support and a favorable business
environment, the future looks bright for startups in India.

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 1.3 STARTUPS IN INDIA
India has a thriving startup ecosystem, with around 50,000 startups in 2018[1]. Of these, around 8,900-
9,300 are technology-led startups and 1,300 new tech startups were born in 2019 alone.
India has the third-largest startup ecosystem in the world and is expected to witness consistent annual
growth of 12-15%.
The rise of startups in India didn’t happen overnight but slowly over a gradual period. However, if one
were to pin down the exact year the startup revolution took shape in India, it would be 2008. India is a
young country with 65% of its population falling under the age bracket of 25 to 35 years. The Indian
youth and community aren’t afraid of casting aside their 9 to 5 jobs. These entrepreneurs are all set to
break the glass ceiling and attain powerful leadership roles in their businesses, cities, and globally.
The Indian government has launched Startup India as a flagship initiative to build startups and nurture
innovation. Through this initiative, the government plans to empower startup ventures to boost
entrepreneurship, economic growth and employment across India. The Startup India campaign focuses on
restricting hindrances and promoting faster growth by way of creating prosperity in India. It allows
entrepreneurs to focus on their core business while empowering them with a strong eco-system to support
their growth.
India’s top startups include Flipkart, Big basket, Ola cabs, First Cry, Cure Fit among others.
Swiggy is one of the most successful startups in India that stands out from other food delivery startups
like Tiny Owl and Food Panda by being customer-obsessed. InMobi is another successful startup that
provides mobile advertising solutions for businesses worldwide
Startups in India refer to new and emerging companies that are often technology-driven and focused on
innovation. These companies are usually small in size, with a limited budget, but have the potential to
grow rapidly with the right support and funding. The term “startup” is often used to describe companies
that are in their early stages of development, and are typically less than 10 years old.

Startups in India operate in various sectors, including e-commerce, fintech, healthcare, edtech, logistics,
and more. They often leverage technology and digital platforms to disrupt traditional industries and create
new business models. Many startups in India are focused on solving local problems and catering to the
needs of the Indian market, while others have global ambitions.

The Indian government has taken several initiatives to promote startups in the country, including the
Startup India initiative, which provides funding, mentorship, and other support to startups.

These efforts have helped create a favorable business environment for startups in India, and the country
has emerged as one of the fastest-growing startup ecosystems in the world.

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Startup Ecosystem in India:
The Indian startup ecosystem has witnessed significant growth over the past decade, with a surge in the
number of startups, venture capital funds, and accelerators. According to a report by NASSCOM, India had
over 50,000 startups as of 2020, making it the third-largest startup ecosystem in the world after the US and
China. The report also states that India is expected to have over 100 unicorns by 2025.

The Indian startup ecosystem is concentrated in cities like Bangalore, Delhi-NCR, Mumbai, and
Hyderabad.
These cities have a high concentration of talent, a favorable business environment, and access to funding and
other resources.

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 1.4 AWARNESS OF STARTUPS

Startups are companies or ventures that are focused on a single product or service that the founders want
to bring to market. Startup India is a Government of India flagship initiative to build startups and nurture
innovation. Through this initiative, the Government plans to empower startup ventures to boost
entrepreneurship, economic growth and employment across India. The Startup India campaign has
received worldwide support for its attempt to bring startups to the forefront of India’s growth story.
Awareness of customer problems is important for startups. Customers can clearly articulate their
problems, but it’s the startup’s job to come up with the solution. Startups must solve real problems and
test their concept around end-user engagement before launching in the market.
Working at a startup can be more rewarding as innovation is welcomed and managers allow talented
employees to run with ideas with little supervision. However, one of the primary disadvantages of a startup
is increased risk. New businesses need to prove themselves and raise capital before they can start turning a
profit. Keeping investors happy with the startup’s progress is critical. The risk of shutting down or not
having enough capital to continue operations before turning a profit is ever-present

India’s startup ecosystem has garnered significant attention in recent times due to its strong angel
investor network. However, funding in 2016 has been much harder than in previous years, with investors
marking down the value of many startups and asking tougher questions around business model
sustainability
Awareness about startups in India has increased significantly in recent years, driven by several factors
such as media coverage, government initiatives, and the success stories of startups. Here are some ways
in which awareness about startups has increased in India:

1. Media Coverage:
The Indian media has been playing a significant role in creating awareness about startups in
India. The coverage of success stories of startups and the growth of the startup ecosystem has
attracted the attention of the general public and investors. Opportunities and benefits of starting a
business in India.
2. Government Initiatives:
The Indian government has taken several initiatives to promote startups in the country, such as
the Startup India initiative. These initiatives have created awareness about the

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3. Startup Events:
Startup events such as Startup Weekend, TiECon, and Nasscom Product Conclave provide a
platform for startups to showcase their ideas, network with investors, and learn from experts.
These events also create awareness about the startup ecosystem and the opportunities it presents.

4. Social Media:
Social media platforms such as LinkedIn, Twitter, and Facebook have become an important
channel for startups to create awareness about their products and services. These platforms also
provide a way for startups to engage with their customers and investors.

5. Startup Accelerators:

Startup accelerators such as Y Combinatory, 500 Startups, and Techstars have become popular in
India. These accelerators provide mentorship, funding, and resources to startups and create
awareness about the startup ecosystem.

Overall, awareness about startups in India has increased significantly in recent years, and the
ecosystem is expected to continue growing in the future. The Indian government and various
stakeholders are taking several initiatives to promote startups, and the increasing number of
success stories is creating a positive impact on the overall awareness of startups in India.

6. Incubators:
Incubators provide startups with resources, mentorship, and support. Incubators are present in
various educational institutions such as IITs, IIMs, and NITs. These incubators provide startups
with the necessary infrastructure and resources to develop their products and services. They also
create awareness about the opportunities in the startup ecosystem.

7. Angel Investors:
Angel investors are high-net-worth individuals who invest in startups at an early stage. Angel
investors in India are becoming more active, and they are investing in startups across various
sectors. These investors provide startups with funding and mentorship, which creates awareness
about the opportunities in the startup ecosystem.

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 8. Government-Backed Funds:
The Indian government has set up several funds to support startups. These funds provide startups
with access to funding, mentorship, and other resources. The government-backed funds create
awareness about the opportunities in the startup ecosystem and encourage more startups to start in
India.

9. Startup Hubs:
The Indian government has set up several startup hubs across the country to support startups. These
hubs provide startups with access to infrastructure, resources, and mentorship. They also
create awareness about the opportunities in the startup ecosystem and encourage more startups to
start in India.

10. Corporate Accelerators:

Several large corporations in India have set up corporate accelerators to support startups. These
accelerators provide startups with funding, mentorship, and access to resources. They also create
awareness about the opportunities in the startup ecosystem and encourage more startups to start in
India.

1.5 TYPES OF STARTUPS

There are several types of startups, including:

1. Lifestyle startups:
These startups are usually small businesses that are created to provide the founder with a
comfortable living. They are often funded by the founder’s savings and don’t have any external
investors.

2. Small business startups:

These startups are similar to lifestyle startups but have slightly larger ambitions. They are often
created to serve a local community or a specific niche market.

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3. Scalable startups:
These startups are designed to grow rapidly and reach a large market. They typically have a
product or service that can be easily replicated and sold to a large number of customers.

4. Technology startups:
These startups focus on developing new technologies and creating innovative products or
services. They often require significant investment in research and development.

5. Social startups:
These startups aim to solve a social or environmental problem. They often operate as nonprofit
organizations or social enterprises.

6. Corporate startups:
These startups are created by existing companies to explore new markets or technologies. They
often have access to significant resources and expertise from their parent company.

7. High-growth startups:

These startups have the potential to grow rapidly and become unicorns (startups with a valuation
of $1 billion or more). They typically require significant funding and a strong team to achieve
this level of growth.

8. Platform startups:
These startups create a platform that connects buyers and sellers or enables users to access certain
services or products. Examples include Uber, Airbnb, and Amazon.

9. Biotech/Healthcare startups:
These startups focus on developing new medical treatments, devices, or technologies. They often
require significant investment in research and development and may need to navigate regulatory
hurdles.

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10. FinTech startups:
These startups use technology to disrupt the financial industry, often by providing new and
innovative ways for consumers to manage their money, invest, or access financial services.

11. Education startups:

These startups aim to improve the way people learn or access education, often through the use of
technology. Examples include online course providers, language learning apps, and educational
software companies.

12. E-commerce startups:

These startups sell products or services online, often using a direct-to-consumer model. They
may focus on a specific niche or industry, such as fashion, home goods, or beauty.

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13. AI/ML startups:
These startups use artificial intelligence and machine learning to develop new products or
services. They may focus on developing new algorithms, predictive models, or automation tools.

14. Energy startups:

These startups focus on developing new energy technologies or creating more sustainable energy
sources. Examples include companies developing new battery technologies, solar power
technologies, or energy storage solutions.

15. Robotics startups:

These startups focus on developing new robotic technologies or creating robots for specific
applications. Examples include companies developing robots for manufacturing, healthcare, or
agriculture.

16. Gaming startups:

These startups focus on creating video games or developing technology to improve the gaming
experience. They may also create gaming platforms or tools for game developers.

17. Media startups:

These startups focus on creating or distributing media content, such as news, video, or podcasts.
They may also focus on developing new media technologies or tools for content creators.

18. Food and beverage startups:

These startups create new food or beverage products or services. They may focus on creating
healthier or more sustainable food options, or they may create new types of cuisine or culinary
experiences.

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 19. Environmental startups:
These startups focus on creating new technologies or services to protect or preserve the
environment. They may focus on issues such as waste reduction, water conservation, or
sustainable agriculture.

20. Art and design startups:

These startups focus on creating new products or services in the art and design space. They may
focus on developing new technologies to enhance the creative process or creating new art and
design products for consumers.

1.6 IMPORTANCE OF STARTSUPS

Startups play a crucial role in the growth of the Indian economy. Since startups are centres of novel
innovations, they generate jobs, which imply more career opportunities. More employment leads to a
stronger economy, and a healthier economy has a direct bearing on the growth of cities where startups
locate. Startups also increase revenue domestically, and consumer capital can circulate throughout the
nation if we keep promoting and supporting more startup initiatives. Many enterprising people who
dream of starting their own business lack the resources to do so. As a result, their ideas, talent and
capabilities remain untapped – and the country loses out on wealth creation, economic growth and
employment.
The Indian government has launched Startup India, a flagship initiative to build startups and nurture
innovation. Through this initiative, the government plans to empower startup ventures to boost
entrepreneurship, economic growth and employment across India. The 19-point action plan focuses both
on restricting hindrances and promoting faster growth by way of creating prosperity in India. Over 1500
CEOs, startup founders and investors attended the

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Startup India launch included. The campaign has received worldwide support for its attempt to bring
startups to the forefront of India's growth story. It allows entrepreneurs to focus on their core business
while empowering them with a strong ecosystem to support their… The mere act of developing In order
for a “Startup” to be considered eligible.

The dynamic evolution of Indian startups took place over the previous two decades. Many startups came
into existence in the 2000s but because limited investors were available at that time; limited support
organizations like accelerators and incubators were proactively available to perform their tasks; thus, it
was difficult for these startups to survive in such an environment. However, with elements of
entrepreneurship seeping into the veins of the Indian ecosystem more professionals have started
dissociating themselves from big corporations only. This trend has led many young entrepreneurs
towards starting up their own businesses.
Despite having good intentions from founders and investors alike, lack of scalable ideas causes nine out
of ten Indian startups fail like lead balloons. Nonetheless, many successful Indian startups have emerged
over time such as Flipkart (an e-commerce platform), Ola (a ride-hailing service), Paytm (a digital
wallet), and Zomato (an online food delivery platform) among others

Startups play a crucial role in the economy and society for several reasons:

1. Innovation:
Startups are often founded on new and innovative ideas, products, or services that have the
potential to disrupt existing industries and create new markets. This innovation can drive
economic growth and create new jobs.

2. Job creation:
Startups are important job creators, especially in the early stages of their development. They
often hire young and talented individuals, and can provide opportunities for people who might
otherwise struggle to find employment.

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 3. Economic growth:
Successful startups can create significant wealth and contribute to economic growth. They can
attract investment, create new markets, and drive productivity.

4. Entrepreneurship:
Startups foster a culture of entrepreneurship, encouraging people to take risks and pursue their
ideas. This can lead to a more dynamic and diverse economy.

5. Social impact:
Many startups aim to solve social or environmental problems, creating products or services that
can improve people’s lives or reduce the impact of human activity on the environment.

6. Competition:
Startups can introduce new competition into existing markets, driving innovation and improving
quality while lowering prices for consumers.

7. Collaboration:
Startups often collaborate with other businesses, universities, and research institutions, creating
opportunities for knowledge transfer and cross-disciplinary innovation.

Overall, startups are a key driver of economic growth, job creation, and innovation. They contribute to a
dynamic and diverse economy, creating new opportunities and improving people’s lives.

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 8. Flexibility:
Startups are often more flexible and adaptable than larger, established businesses. They can pivot
quickly in response to changing market conditions or customer needs, allowing them to stay
competitive and relevant.

9. Investment:
Startups often attract investment from venture capitalists, angel investors, and other sources of
funding. This investment can provide the capital needed to grow and scale the business and can
also bring in valuable expertise and mentorship.

10 Cultural impact:
Successful startups can have a significant cultural impact, shaping the way people think, behave,
and interact with each other. They can create new trends and influence consumer behavior, as
well as driving changes in industry standards and practices.

11 Diversity:
Startups often bring together people from different backgrounds and disciplines, creating a
diverse and inclusive workforce. This diversity can lead to new perspectives and ideas, as well as
driving innovation and creativity.

12 Regional development:
Startups can play a key role in the development of regional economies, creating new clusters of
innovation and entrepreneurship. This can help to spread economic growth and prosperity
beyond major cities and urban areas.

13 Skills development:
Working for a startup can provide valuable skills and experience, such a entrepreneurship, innovation, and
creativity. This can help to develop a new generation of business leaders and entrepreneurs.

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 1.7 ADVANTAGES OF STARTUPS

Startups play a significant role in the growth of the economy by generating jobs, which leads to more
career opportunities and a stronger economy. They also increase revenue domestically, and consumer
capital can circulate throughout the nation if we keep promoting

and supporting more start-up initiatives. Startups drive innovation and technology, demonstrating how
their benefits reach even remote customers. Fintech startups are now reaching out to remote areas with
their solutions and making financial solutions easily accessible in tier 2 and tier 3 cities.
One of the biggest advantages of being a startup is the ability to be nimble and adapt to change quickly.
Startups are typically small companies with fewer employees, which enable them to wear many hats.
While job titles may suggest that employees have a defined set of responsibilities, startups operate with
an “all hands-on deck” mentality. Employees are expected to pitch in when work needs to get done. The
work at startups can also be more rewarding as innovation is welcomed, and managers allow talented
employees to run with ideas with little supervision. However, one of the primary disadvantages of a
startup is increased risk. New businesses need to prove themselves and raise capital before they can start
turning a profit. Keeping investors happy

With the startup’s progress is critical. The risk of shutting down or not having enough capital to continue
operations before turning a profit is ever-present. Long hours are characteristic of startups as everyone is
working toward the same goal – seeing the startup succeed. This can lead to high stress moments and
sometimes compensation that isn’t commensurate with the hours worked. In conclusion, startups have
several advantages such as being nimble, adapting quickly to change, driving innovation, creating jobs,
increasing revenue domestically, democratizing technology benefits, among others. However, they also
come with risks such as increased risk due to lack of proven track record or profitability before raising
capital from investors.

There are several advantages of startups, including:

1. Innovation:
Startups often bring new and innovative ideas to the market. They are typically led by
entrepreneurs who are willing to take risks and think outside the box.

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 2. Agility:
Startups are often smaller and more nimble than larger companies, which allows them to be more
agile and adapt quickly to changing market conditions.

3. Flexibility:
Startups have the ability to pivot and change their business model if their initial strategy isn’t
working out. This flexibility is essential in the early stages of a business when the market and
customer needs are still being understood.

4. Lower costs:
Startups generally have lower costs than established companies, which allows them to operate
with less overhead and more efficiently.

5. Greater potential for growth:

Startups have the potential for rapid growth, especially if they are able to secure funding and
expand their customer base.

6. Ability to disrupt industries:

Startups are often able to disrupt industries and challenge established players by
introducing new technologies or business models.

7. Ownership and control:

Startups offer founders the opportunity to own and control their own business, which can be
extremely rewarding and motivating.

Overall, startups offer a unique and exciting opportunity for entrepreneurs to bring new ideas to market,
disrupt industries, and potentially achieve great success.

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 1.8 DISADVANTAGES OF STARTUPS

Startups can be a risky venture, and most of them fail. The lack of scalable ideas is one of the reasons
why 9 out of 10 Indian startups fail. Working for a startup can also be unstable, with gaps in funding or
resources. Startups may not have clear job descriptions or KPIs, and employees may have to put in long
hours and pick up responsibilities that don’t align with their position title. However, startups also have
advantages. They are centres of innovation that generate jobs and lead to a stronger economy. Startups
drive innovation and technology, making solutions easily accessible even in remote areas. Startups tend
to have a relaxed dress code and interactions with coworkers, providing flexibility and freedom in work
schedules and approaches to work itself. In conclusion, while startups offer many advantages such as
innovation, flexibility, and freedom, they also come with risks such as instability and unclear job
descriptions. It is important to weigh the pros and cons before joining or starting a startup.
While startups offer many advantages, there are also several disadvantages that entrepreneurs should be
aware of, including:

1. High failure rate:

Startups have a high failure rate, with many failing within the first few years of operation. This
can be due to a variety of factors, including market conditions, competition, and lack of funding or
resources.

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2 Financial risk:
Starting a business requires a significant financial investment, and there is always a risk that the
business will not generate enough revenue to cover expenses.

3 Limited resources:
Startups often have limited resources, including staff, funding, and equipment, which can make it
challenging to compete with larger, more established companies.

4 Lack of structure:

Startups are often less structured than established companies, which can lead to confusion and
inefficiencies.

5 Uncertainty:
Startups operate in a constantly changing and uncertain environment, which can be stressful for
founders and employees.

6 Difficulty attracting talent:

Startups may struggle to attract top talent due to their limited resources, lack of brand recognition,
and perceived instability.

7 Legal and regulatory challenges:

Startups may face legal and regulatory challenges, such as obtaining licenses and permits,
complying with labor laws, and protecting intellectual property.

Overall, startups require a significant amount of hard work, dedication, and risk-taking, and
entrepreneurs should carefully consider both the advantages and disadvantages before starting a new
business.

1. Long hours and high stress:

Starting a new business is a demanding and time-consuming process, and founders often work
long hours and experience high levels of stress.

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 2. Difficulty in securing funding:
Startups often struggle to secure funding, especially in the early stages when they have little or no
revenue or track record. This can make it challenging to invest in product development,
marketing, and other essential areas.

3. Lack of brand recognition:

Startups typically have little or no brand recognition, which can make it difficult to attract
customers and compete with established players in the market.

4. Inexperience:
Many startup founders are first-time entrepreneurs and may lack experience in running a business
or managing a team. This can lead to mistakes and missteps along the way.

5. Dependence on key personnel:

Startups often rely heavily on the skills and knowledge of key personnel, such as the founder or a
particular engineer. If these individuals leave the company, it can be difficult to replace them and
maintain momentum.

6. Difficulty in scaling:
Startups may struggle to scale their operations as they grow, especially if they rely heavily on
manual processes or have limited resources. This can lead to inefficiencies and bottlenecks as the
business expands.
Overall, while startups offer many potential rewards, they also come with significant challenges and
risks that entrepreneurs need to be prepared to face.

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 1.9 NEED OF STARTUPS

Startups play a crucial role in the growth of the economy in India. They generate jobs, which leads to
more employment opportunities and a stronger economy. Startups also create innovative solutions and
technologies that enhance people’s quality of life. The Indian government has launched Startup India, an
initiative to build startups and nurture innovation. Through this initiative, the government plans to
empower startup ventures to boost entrepreneurship, economic growth, and employment across India.
The startup ecosystem in India contributes immensely to economic prosperity by enhancing the growth
of the nation. Many startups came into existence in the 2000s, but because of limited investors and
support organizations like accelerators and incubators were proactively available to perform their tasks,
the ecosystem came to a halt. However, entrepreneurs have witnessed that their businesses are all set to
shine and walk on the path of accomplishments in 2021 and upcoming years.
Self-sustainable startups or corporations resemble survival stage businesses. The base of independent
companies and startups is generally sound. It is known for holding a solid customer base and generates
better revenue as well. Business self-sustainability is a business advancement strategy that helps startups
grow even with a more disciplined and optimistic approach along with collaboration.
India is a young country with 65% of its population falling under the age bracket of 25-35 years. The
rise of startups in India has been significant over the past few years. Some Indian startups are doing
great in terms of business, idea or innovation such as What’s Up Wellness which plans on developing
innovative products that make wellness easy & fun for young people always on- the move generation.
However, having a good idea isn’t always enough as lack of scalable ideas causes nine out of ten Indian
startups to fail like lead balloons Startups are important for several reasons, including:
1 Innovation:
Startups are often the source of new and innovative ideas that can transform industries and
improve people’s lives. They bring fresh perspectives, challenge the status quo, and drive
progress through the development of new technologies, products, and services.

1.8.1 Job creation:

Startups create jobs and drive economic growth, particularly in emerging industries and regions.
They offer employment opportunities for skilled professionals, recent graduates, and individuals
who may not fit into traditional corporate structures.

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 1.8.2 Competition:
Startups bring healthy competition to markets, which can benefit consumers by driving down
prices, improving quality, and increasing choice. They also challenge established companies to
innovate and improve their offerings.

1.8.3 Entrepreneurship:
Startups foster entrepreneurship and encourage individuals to take risks, pursue their passions,
and realize their dreams. They offer a path to financial independence and personal fulfillment that
may not be available through traditional employment.

1.8.4 Social impact:

Startups have the potential to make a positive social impact by addressing societal challenges,
such as healthcare, education, and the environment. They can bring new solutions and
technologies to these areas, making them more accessible and affordable for everyone.

Overall, startups are an essential part of the economy and play a critical role in driving

innovation, job creation, competition, and social impact. They provide opportunities for entrepreneurs to
pursue their dreams and make a difference in the world.
1. Disruption:
Startups are often disruptive, challenging traditional business models and industry norms. They
can break down barriers to entry and create new markets, disrupting established players and
driving innovation across the industry.

2. Investment:
Startups attract investment from venture capitalists, angel investors, and other sources, providing
much-needed funding to develop new products and services. This investment can also have a
positive ripple effect, creating jobs and spurring economic growth in the local area.

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3. Diversity:
Startups are often more diverse and inclusive than traditional corporations, with a higher
proportion of women and underrepresented groups in leadership roles. This can lead to better
decision-making and innovation, as diverse perspectives bring fresh ideas and approaches to the
table.
4. Agility:
Startups are typically more agile and adaptable than large corporations, able to pivot quickly in
response to market conditions and customer feedback. This allows them to stay ahead of the
curve and respond to changing needs and preferences.

5. Global impact:
Startups have the potential to make a global impact, tackling some of the world’s most Pressing
challenges through innovation and creativity. From climate change to social justice to healthcare,
startups can bring new solutions and ideas to the table, making the world a better place for
everyone.
Overall, startups are important for a wide range of reasons, from driving innovation and
investment to fostering diversity and making a positive social impact. They are essential for
creating a vibrant, dynamic economy that benefits everyone.

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 1.10 FINANCIAL PROBLEMS FACED BY STARTUPS
Startups face several financial challenges that can make or break their business. The first challenge is
securing the necessary funds to keep the business going. Business owners must have a clear idea of the
capital they would need to cover their operational expenses, cash needs, and set aside a fund for
unexpected situations. However, securing funds is not easy as it requires a clean credit history, which is
impossible for most small business owners. Startups can consider other funding options such as
crowdfunding or partnering up with another company in their niche.
The second challenge is managing money effectively. Many startups experience serious issues stemming
from the lack of proper money management. Business owners and founders need to have a crystal clear
understanding of the numerous moving parts that affect their finances. They should also avoid
comingling business and personal finance.
The third challenge is poor cash flow. Cash flow measures the amount of money coming into and going
out of a business, making it the most reliable indicator of financial health. Inconsistent cash flow can
wreak havoc on a business and is the number one reason why businesses fail.
Other financial challenges faced by startups include external factors such as economic downturns or
changes in regulations, insolvency, tax compliance issues, insufficient.
Marketing and advertising, lack of access to capital, client dependence, among
others. To overcome these challenges, startups need to plan everything ahead and be super careful when
taking loans or making partnerships. They should also seek professional advice from financial advisors
who can help them manage their finances effectively. Additionally, startups should focus on building
strong relationships with customers to reduce client dependence and ensure consistent cash flow.
Startups often face a variety of financial problems, some of which include:

1.10.1 Limited access to funding:

One of the biggest financial problems for startups is limited access to funding. This is especially
true in the early stages of a company when the business has little or no revenue or track record.
Without sufficient funding, startups may struggle to invest in product development, marketing,
and other essential areas.
1.10.2 Cash flow management:
Startups must manage their cash flow carefully to ensure they have enough money to cover
expenses and invest in growth. This can be challenging, especially if the business has irregular
income or high overhead costs.

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 1.10.3 Budgeting and forecasting:
Startups must develop accurate budgets and financial forecasts to plan for future growth and
investment. This requires a deep understanding of the business’s financials and market trends,
which can be difficult for new entrepreneurs.

1.10.4 High burn rate:

Startups often have a high burn rate, meaning they are spending more money than they are
bringing in. While this is common in the early stages of a company, it can lead to cash flow
problems and make it challenging to attract investors.

1.10.5 Profitability:
Startups must eventually become profitable to survive and grow. This can be challenging,
especially in highly competitive industries or with a product that requires significant investment
before it can generate revenue.

1.10.6 Tax and regulatory compliance:

Startups must comply with tax and regulatory requirements, which can be complex and time-
consuming. Failure to comply can result in fines, penalties, and legal trouble.

1.11 EXAMPLES OF STARTUPS COMPANIES IN INDIA

India has a thriving startup ecosystem, with around 50,000 startups in 2018. Of these, around 8,900-
9,300 are technology-led startups and 1,300 new tech startups were born in 2019 alone. Some of the top
startups in India include Cred, Skit.ai, Pharm Easy, Digit Insurance, Meesho, Groww, Nykaa and Udaan.
Groww is a Bangalore-based startup that allows users to invest in mutual funds. Nykaa is an online
beauty and wellness store that provides its customers with good quality goods at reasonable prices. The

28
company is currently worth over $2.1 billion and has major Bollywood artists like Alia Bhatt and
Katrina Kaif as its investors.
However, not all startups succeed. Some examples of failed Indian startups include Pepper Tap,
Doodhwala, Local Banya, Tiny Owl and Bite Club. Despite this risk of failure, the Indian startup
ecosystem continues to grow and innovate.
Startups play an important role in the growth of the Indian economy by generating jobs and creating
innovative solutions that enhance people’s quality of life. They also contribute to the growth of cities
where they locate by increasing revenue through the purchase of goods and services. With India having
emerged as the world’s third-largest startup ecosystem as of August
2022, it is clear that startups will continue to play a significant role in shaping India’s future. India has
a thriving startup ecosystem with many innovative companies across various industries. Here are a few
examples of startups in India.
1.11.1 Ola:
A ride-hailing platform that provides transportation services in India and abroad.

1.11.2 Zomato:
A food delivery and restaurant discovery platform that operates in India and other countries.

1.11.3 Flipkart:
An e-commerce company that offers a wide range of products, including electronics, fashion,
and home goods.
1.11.4 Paytm:
A digital wallet and e-commerce platform that allows users to pay bills, recharge mobile phones,
and shop online.

1.11.5 Byju’s:
An edtech company that provides online learning programs for students of all ages.

1.11.6 Swiggy:
A food delivery platform that connects customers with local restaurants.

1.11.7 Policy Bazaar:

An online insurance aggregator that allows customers to compare and purchase insurance policies
from multiple providers.

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 1.11.8 Udaan:
A B2B e-commerce platform that connects small and medium-sized businesses with
wholesalers and manufacturers.
1.11.9 Freshworks:
A cloud-based customer engagement software company that provides customer support, sales,
and marketing solutions
1.11.10 Razor pay:
A digital payments platform that allows businesses to accept online payments and manage
transactions.

These are just a few examples of the many startups operating in India. The country has a vibrant
entrepreneurial culture, with many innovative companies emerging in recent years.
1. Cure. Fit:
A health and fitness startup that provides online workout sessions, yoga classes, and nutrition
coaching.

2. Meesho:
A social commerce platform that enables small businesses to sell products directly to customers
through social media channels.

3. Unacademy:
An online learning platform that provides courses and tutorials for students preparing for
competitive exams.

4. Cars24:
An online platform that enables users to sell and buy used cars, providing a hassle-free
experience for both buyers and sellers.

5. Khatabook:
A digital bookkeeping app that helps small businesses and entrepreneurs keep track of their
finances and manage invoices.

30
 6. PharmEasy:
An online pharmacy that provides prescription medicines and healthcare products delivered
directly to the customer’s doorstep.

7. Urban Company:
A home services platform that connects customers with local service providers for services

Such as cleaning, repair, and beauty treatments.

These are just a few examples of the many innovative startups in India, showcasing the diverse range of
industries and solutions that entrepreneurs are exploring and developing.

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 CHAPTER 2

RESEARCH METHODOLOGY

2.1 OBJECTIVES OF THE STUDY

The objectives of a study on financial problems faced by startups can vary depending on the scope of the
research and the specific goals of the study. However, here are some general objectives that such a study
may have:

1. To identify and analyze the common financial problems faced by startups, such as limited access
to funding, cash flow management, budgeting and forecasting, high burn rate, profitability, and
tax and regulatory compliance.

2. To explore the causes and consequences of these financial problems and how they impact the
growth and survival of startups.

3. To examine the strategies and tactics that startups use to address financial challenges, such as
raising capital, reducing expenses, improving cash flow, and optimizing pricing and revenue
models.

4. To compare and contrast the financial problems faced by startups across different industries and
business models.

5. To provide insights and recommendations for entrepreneurs, investors, policymakers, and other
stakeholders on how to support the growth and success of startups, particularly in terms of
addressing financial challenges.

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Overall, the objective of a study on financial problems faced by startups is to deepen our understanding
of the financial dynamics of startups, to identify best practices and strategies to overcome financial
challenges, and to support the growth and success of the startup ecosystem.

2.2 SCOPE OF THE STUDY

The scope of a study on financial problems faced by startups can vary depending on the research
objectives, the target audience, and the resources available for the study. However, here are some
general areas that a study on financial problems faced by startups may cover:

1. Startup financial challenges:

The study may explore the common financial challenges faced by startups, such as limited access
to capital, cash flow management, budgeting and forecasting, high burn rate, profitability, and
tax and regulatory compliance.

2. Industry and business model analysis:

The study may analyze the financial challenges faced by startups in different industries and
business models, such as software, hardware, biotech, e-commerce, social media, or fintech.

3. Financial management strategies:

The study may examine the strategies and tactics that startups use to address financial challenges,
such as raising capital, reducing expenses, improving cash flow, and optimizing pricing and
revenue models.

33
 4. Investor perspectives:
The study may also explore the perspective of investors, such as venture capitalists, angel
investors, or crowdfunding platforms, on the financial challenges faced by startups and the
factors that influence their investment decisions.

5. Policy and regulatory environment:

The study may analyze the impact of policy and regulatory environment on the financial
challenges faced by startups, such as tax incentives, grants, loans, or regulatory barriers.

6. Case studies and best practices:

The study may provide case studies and best practices of successful startups that have overcome
financial challenges, as well as practical advice and recommendations for entrepreneurs,
investors, policymakers, and other stakeholders.

Overall, the scope of a study on financial problems faced by startups is to provide a comprehensive
understanding of the financial dynamics of startups, to identify best practices and strategies to overcome
financial challenges, and to support the growth and success of the startup ecosystem.

2.3 NEED OF THE STUDY

A study on financial problems faced by startups is important for several reasons:

1. Understanding the challenges:

By identifying the common financial challenges faced by startups, the study can help entrepreneurs
and investors to better understand the financial dynamics of startups, and to anticipate and prepare
for potential financial risks and difficulties.

34
 2. Developing solutions:
The study can also help to develop effective solutions and strategies for startups to overcome
financial challenges, such as improving cash flow, optimizing revenue models, and raising
capital.

3. Supporting entrepreneurship:
Startups play a vital role in driving innovation, economic growth, and job creation. By providing
insights and recommendations for policymakers, the study can help to create a supportive policy
environment for entrepreneurship, and to encourage the growth of the startup ecosystem.

4. Improving investment decisions:

Investors need to understand the financial challenges that startups face in order to make informed
investment decisions. By examining the perspectives of investors, the study can provide valuable
insights into the factors that influence investment decisions and help to improve the investment
landscape for startups.

5. Strengthening the ecosystem:

By sharing best practices and case studies of successful startups, the study can help to build a
strong and vibrant startup ecosystem and encourage the growth and success of startups in
different industries and sectors.
Overall, the study on financial problems faced by startups is essential for supporting the growth and
success of startups, and for promoting entrepreneurship and innovation in the economy.

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2.4 LIMITATION OF THE STUDY

A study on financial problems faced by startups can have several limitations, some of which are:

1. Sample size:
The study may have a limited sample size, which may not be representative of the entire population
of startups. This could limit the generalizability of the findings.

2. Data collection:
The data used in the study may be self-reported, which may be subject to biases or errors. In
addition, the data may be limited to certain types of financial information, such as revenue or
funding, and may not capture other important financial indicators.

3. Timeframe:
The study may cover a limited timeframe, which may not capture the full range of financial
challenges that startups face over the entire lifecycle of the business.

4. External factors:

The study may not take into account external factors, such as economic conditions or
regulatory changes, which may impact the financial challenges faced by startups.

5. Contextual factors:
The study may not fully capture the contextual factors that influence the financial
challenges faced by startups, such as industry, market conditions, or business model.

6. Subjectivity:
The study may involve subjective judgments or interpretations, which may be influenced by the
researchers’ perspectives or biases.
Overall, it is important to acknowledge the limitations of a study on financial problems faced by
startups, and to interpret the findings in the appropriate context.

36
2.5 RESEARCH DESIGN

A research process consists of stages or steps that guide the project from its conception to the final
analysis, recommendations and ultimate actions. The research process provides a systematic, planned
approach to the research project and ensures that all aspects of the research project are consistent with
each other.
Research studies evolve through a series of steps, each representing the answer to a key question. This
chapter aims to understand the research methodology establishing a framework of evaluation and
revaluation of primary and secondary research. The techniques and concepts used during primary
research in order to arrive at findings; which are also dealt with and lead to a logical deduction towards
the analysis and results.
Change, this shall be further taken up in the next stage of exploratory research. This stage shall help me
to restrict and select only the important questions and issues, which inhabit growth and segmentation in
the industry.
The various tasks that the researcher has undertaken in the research design process are:

RESEARCH DESIGN

Defining the information need Design exploratory,

descriptive and causal
research.

37
Research design is a conceptual structure within which research was conducted, A research design is the
detailed blueprint used to guide a research study towards its objective. It is a series of advanced decision
taken together comprising a master plan or a model for conducting the research in consonance with the
research objectives. Research design is needed because it facilitates the smooth sailing of the various
research operations, thereby making research as efficient as possible yielding maximum information
with the minimum effort, time and money.
The methodology describes the research pathway to be followed, the instruments to be used, the
population and study sample for the data to be collected, the analysis tools used, and the pattern for
drawing conclusions.
The methods used to collect the data are both primary and secondary. Therefore, the descriptive research
design would be used for the analysis and will essentially be a research approach.

2.6 RESEARCH TYPE

Descriptive research aims to accurately and systematically describe a population, situation or

phenomenon. It can answer what, where, when and how questions, but not why questions.

A descriptive research design can use a wide variety of research methods to investigate one or more
variables. Unlike in experimental research, the researcher does not control or manipulate any of the
variables but only sees and measures them.

Descriptive research is an appropriate choice when the research aim is to identify characteristics,
frequencies, trends, and categories. It is useful when not much is known yet about the topic or problem.
Before you can research why something happens, you need to understand how, when and where it
happens.

Descriptive research is usually defined as a type of quantitative research, though qualitative research can
also be used for descriptive purposes. The research design should be carefully developed to ensure that
the results are valid and reliable.

As the research topic deals with the question “A Study on customer-oriented awareness of insurance
products”, the research is classified into the descriptive type as the researcher finds answers by
collecting primary data and gets conclusive answers “WHAT” at the end

38
 2.7 SAMPLE DESIGN

A sample size of 30 respondents was covered. A random sampling procedure of survey was conducted
during the collection of primary data. Respondents were classified on the basis of their age, gender,
perception, etc. Respondents were consulted at the colleges, offices, etc.

The sample of 30 respondents was done via the questionnaire method in order to find out about the
actual ways to understand the research work well.

2.8 DATA COLLECTION

The data required for this research study would be collected through primary and secondary methods.

The task of data collection begins after a research problem has defined & Research design of plan

cooked out. There are 2 basis ways of data collection. Primary data would be

collected from the following sources.

1. Discussions and clarifications with the guide and other managers.

2. A detailed questionnaire was handed over to a chosen sample.
3. References from various books (Magazines)

Secondary Data would be collected from the following sources

1. Product broachers.
2. Previous annual report.
3. Magazines & journals.

4. Internet.

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2.9 SAMPLE SIZE

The researcher has targeted 30 people in the age group between 18 years till the age of 60 and above for
the purpose of the research. The target population influences the sample size. The target population
represents the entire India. The people were from different professional backgrounds such as employee,
professional, students, Housewife, etc.

The details of our sample are explained in the chapter named primary research where the divisions are
explained in the demographics section

Case Study: Startups in India

India has emerged as a hub for startups in recent years, with a large number of entrepreneurs launching
new ventures in various sectors. However, startups in India face significant challenges in terms of
financing, government policies, and infrastructure. Let’s take a look at a few case studies of startups in
India to understand these challenges and draw conclusions.

1. Ola Cabs:
Ola Cabs is one of India’s largest ride-hailing services, providing a convenient and affordable
transportation option to millions of customers across the country. However, the company has faced
several challenges, including intense competition from rivals such as Uber and government regulations
that have restricted its operations in some states.

Despite these challenges, Ola has managed to secure significant funding from investors and expand its
services to more cities in India. The company has also diversified into other areas, such as food delivery
and electric vehicles, to reduce its dependence on ride-hailing services.

Conclusions:
Startups in India need to be prepared to face intense competition and navigate complex government
regulations to succeed. Diversifying into other areas can also help startups reduce their dependence on a
single service or product.

40
 2. Flipkart:
Flipkart is India’s largest e-commerce company, offering a wide range of products to customers across
the country. The company has grown rapidly in recent years, but it has also faced significant challenges,
including increasing competition from Amazon and other rivals, and issues related to logistics.

Despite these challenges, Flipkart has managed to secure significant funding from investors and expand
its services to more cities in India. The company has also invested heavily in technology and logistics to
improve its operations and customer experience.

Conclusions:
E-commerce startups in India need to invest heavily in technology and logistics to compete with larger,
established players. Securing significant funding from investors can also help these startups scale their
operations and expand their services to new markets.

3. Zomato:
Zomato is a food delivery and restaurant discovery platform that has become one of India’s most popular
apps. The company has faced significant challenges, including intense competition from rivals such as
Swiggy and a slowdown in the restaurant industry due to the COVID-19 pandemic.

Despite these challenges, Zomato has managed to secure significant funding from investors and expand
its services to more cities in India. The company has also diversified into other areas, such as grocery
delivery and online events, to reduce its dependence on the restaurant industry.

Conclusions:
Startups in India need to be prepared to adapt to changing market conditions, such as the COVID19
pandemic, and diversify into other areas to reduce their dependence on a single industry. Securing
significant funding from investors can also help startups weather these challenges and scale their
operations.

Overall, startups in India face significant challenges but also have significant potential for growth and
success. By investing in technology and logistics, diversifying into other areas, and securing significant
funding from investors, startups in India can overcome these challenges and build sustainable businesses
that contribute to the country’s economy.

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 CHAPTER 3

LITERATURE REVIEW

1. As varadan mentioned in the article “problems faced by start-ups in India and solutions”, A
successful startup not only needs an idea and passion but also a lot of leadership skills, understand
the market need, and be dynamic to face various challenges.

2. According to the varnana Choudary, the biggest roadblocks faced by start-ups in India are lack of
mentorship, lack of good branding strategy, infrastructure deficit, struggle to reinvest constantly,
resource to continue long term and getting the right talent at the right time is the biggest challenge
faced by start-ups in India.

3. According to the article “challenges and opportunities for Indian start-ups” which is published in
financial express on Jan 27, 2017, the government of India is leaving no stone unturned to provide start-
ups with the best of opportunities to grow and shine in the market.

4. Prof. Archana Surywanshi (2013) In the Article “HR Challenges in Startup” states that today’s
managers are having many challenges in this competitive world due to globalization, privatization
and legal and forecast to recruit the right candidate at right time and right place. And they have to
adopt the change in their work environment and culture of the organization and should maintain the
low attrition, focus on organizational cost pressures, economic and job changes, talent management
and development, technology expansion etc.

Ashish Mittal (2014), according to him the challenges for the startups are cultures, mentoring,
policies, hiring, finding and the opportunities are demographic divided, large population, high mobile
penetration.

42
5. B.V.Naidu (2017), “challenges and achievements, how the Indian start up ecosystem fared in
2017” the pros and cons are huge growth of incubators and accelerators, technology as a boon,
increase government support, employee attrition, impact of GST on startup etc.

6. Christopher A Pissarides (2001) in his paper studied that the role of company starts up costs
for employment performance. This paper is a highly theoretical one. The conclusion is the factors
that can explain the differences in Labour Market performance are structural and should be sought in
the institutional structures of the countries.

7. Dr. Meenakshi Bindal ,Dr.Bhuwan Gupta and Sweety Dubey (2018) discussed about the role of
start-ups in Indian Economy. This paper highlights the awareness about Startups in the light of recent
changes announced by the Government. The government must help startups promote themselves, not
just in India but across the globe, as well as create policies that are start-up friendly so that Indian
start-ups get a major boost, and they can further create better employment opportunities for the youth
of the nation.

8. V. Ambika, K. Rajeswari R. Saranya (2019) highlighted about the startups on Indian Economic
Growth While in the country like India, government alone cannot fulfill the employment
opportunities. Individuals need to come forward to help themselves, given the viable business
atmosphere by the government. Adam Smith, an 18th century economist and author, in his book
Wealth of Nations has talked about the “Invisible Hand” that Individuals pursuing their best self
Interest would result in greater overall good to the society.

43
9. Dr.Gopaldas Pawan Kumar (2018) discussed about the Indian start-ups issues, challenges and
opportunities, the paper discusses few issues and challenges that an Indian startup must face and the
opportunities that the country can provide in the current ecosystem. The start-up area has lot of
challenges from finance to human resources and from launch to sustaining the growth with tenacity.
The country with a huge population has large of opportunities in many start-ups like food, IT, retail
and hygiene to solar.

10. Abhra Jit Sarkar Startup India- A New Paradigm for Young Entrepreneurs, A Conceptual study
discussed about Startup needs support and encouragement from various perspectives in initial phase
and subsequently the growth phase till establishment on firm footing. Technology based startup have
a significant importance in India. The limitation of this study is that it is a detailed conceptual
analysis about startup India based on secondary data. More Research can be done about its prospects
and benefits of startup to entrepreneurs by using primary data and other statistical tools.

11. According to Ensley, Hmieleski and Pearce(2006) the descriptive value of shared leadership goes
over the vertical leadership. This suggests that the high-profile cases of the reckless startups, whose
separate creativity and innovation has led to renown and destiny, are more folk tales than the
actuality.

12. Kumar (2015) has done a detailed comparative analysis of Indian start-up ecosystem with other
countries — USA, Israel, Singapore and New Zealand. Also he has studied the current online start-up
trends in India, start-up initiatives by other countries, and the industries where startups have gained
more interests. He concluded his study saying that with a gamut of online payment gateways — SaaS
model, micro financing, voice recognition, mass reach and mobile ad networks and a realistic
business plan with a “customer validation are the main factors to a successful start-up.

44
13. Wagh Madhura (2016) says in his study that Certification from inter-ministerial board set up by
DIPP will be required for startups. This can create another layer of registration and paperwork for
startups. DIPP may publish negative list of funds which are not eligible for this initiative. This can
limit the number of ftmds available for startups. Incentives like tax benefit also can prove artificial
for startups as very few numbers of startups are able to book profits for first five years. As usual
ideas are very good but problem is the implementation. Government has long history of good paper
work and little implementation. If initiative is implemented properly, it will become big success story
for Modi Government and bring ‘achhe din’ for entrepreneurship.

14. Datta (2016) has put some light on the start-ups and the initiative taken by the Indian govt in her
study where she studied various govt policies, plans, schemes and strategies related to startups. The
start-ups are the kind of companies which are innovative in their course of development, analysis,
evaluation, research for the target segment.

15. Goel (2018) cited some Challenges and Issues, such as culture and awareness, Social issues,
Technology infrastructure, Financial Issues, Sustainability Issues, Regulatory Issues.

16. Madhva Paty& Rajesh (2018) addressed the Challenges of HR Tech Startups such as failure to lay
groundwork for adoption by employees. While there are diverse products and technologies in the
market, the core challenge is to find the right product-market fit.

17. Sunanda (2017) argued about managing the Startups to avoid failures through case study on Zomato
and redbus. Thoroton (2016) explained the challenges like Culture and Awareness, Social,
Technology infrastructure, Financial, Sustainability, Regulatory Issues, Multi window clearances.
Jain (2016) stated Problems in Indian markets are that they are unorganized and fragmented. There is
a lack of unambiguous and transparent policy motives, lack of communications sources, lack of
knowledge and exposure.

18. Sarangi (2015) provided Reasons of why do most Indian Startups fail? To make Indian Startups
work, it is necessary to add more constraints to the money supply. An unbridled supply of money is
not exactly the best way to go forward.

45
19. Ravi (2015) explained that a combination of increasing population, growing internet usage and
mobile penetration, growing economy, being a major mobile market and exponentially increasing
online retailing set the stage for India to be one of the biggest Startup destinations.

20. Sharifi & Hossain (2015) stated the various financial challenges faced by the Startups in India. It also
depicts the difficulties faced by the Startups at the initial stage. The major findings are major leap in
technology have led investors to raise the bar Keeping in mind the importance of the subject and the
research gaps therein, we have undertaken this study with the main aim to Address the important
issue of understanding the challenges and issues faced by Startup companies in India.

46
 CHAPTER 4

DATA ANALYSIS, INTERPRETATION AND PRESENTATION

1.1 PRIMARY DATA

QUESTION 1 AGE
TABLE 1.1
AGE NO OF RESPONDENT PERCENTAGE
18 – 25 22 75.9%
26 – 35 7 24.1%
36 – 45 0 0%
46 and above 0 0%
FIGURE 1.1

INTERPRETATION: -

Age Groups and Counts:

The 18-25 age group has the highest count, 22, which accounts for 75.9% of the total.

The 26-35 age group has 7 individuals, making up 24.1%.

The 36-45 and 46 and above age groups have 0 individuals (0%).

Graph Interpretation:
The 18-25 age group dominates the dataset.

There are significantly fewer individuals in the 26-35 group.

There are no individuals in the older age groups.

47
 QUESTION 2 GENDER
TABLE 1.2
GENDER NO OF RESPONDENT PERCENTAGE
Male 15 51.7%
Female 14 48.3%
Prefer to not say 0 0%
FIGURE 1.2

INTERPRETATION: -
Gender Counts and Percentages:
Male: 15 individuals, which is 51.7% of the total.
Female: 14 individuals, making up 48.3%.

Graph Interpretation:
The dataset has a nearly equal distribution of males and females, with a slight majority of males (by one
person).
The difference is small, indicating a balanced gender representation.

48
QUESTION 3 OCCUPATION
TABLE 1.3
OCCUPATION NO OF RESPONDENT PERCENTAGE
Student 19 65.5%
Businessman 1 3.4%
Housewife 1 3.4%
Self employed 6 20%
Professional 2 6.9%
FIGURE 1.3

INTERPRETATION: -

Observations:

1. Students make up the majority of the dataset, with 19 individuals (65.5%).

2. Self-employed individuals are the second-largest group, with 6 people (20.7%).
3. Employees account for 2 people (6.9%).
4. Businessmen and housewives are the smallest groups, with 1 person each (3.4%).

Graph Interpretation:

 The dataset is dominated by students, indicating that most respondents are in an academic phase.
 A smaller proportion of individuals are working (self-employed or employees).
 Businesspeople and housewives form a very small portion of the dataset.

49
QUESTION 4 MONTHLY

INCOME
TABLE 1.4
INCOME NO OF RESPONDENT PERCENTAGE
Below 10,000 13 44.8%
10,001 – 50,000 12 12%
50,001 – 1,00,000 4 13.8%
Above 1,00,001 3 10.3%
FIGURE 1.4

INTERPRETATION: -

1. Below 10,000: The largest group, 13 individuals (44.8%), falls into this income category.
2. 10,001 – 50,000: The second-largest category, with 12 people (41.4%).
3. 50,001 – 1,00,000: A smaller group, 4 individuals (13.8%), earns within this range.
4. Above 1,00,001: The smallest group, 3 people (10.3%), earns in this high-income bracket.
Graph Interpretation:

 The majority (about 86%) of individuals earn below 50,000, indicating that most respondents belong
to a lower-income or early-career bracket.
 Only 24.1% of the population earns above 50,000, showing fewer high-income earners.
 This distribution could be influenced by factors like age, education, or employment type.
 between 50,001 to 1, 00,000, 13% respondents have income above 1,00,001.

50
 QUESTION 5

HAVE YOU EVER HAD TO PIVOT YOUR BUSINESS MODEL DUE TO FINANCIAL
CHALLENGES?

TABLE 1.5
FINANCIAL NO OF RESPONDENT PERCENTAGE
Yes 23 72.4%
No 6 27.6%
FIGURE 1.5

INTERPRETATION: -

 "Yes" responses (Blue): 72.4% of the total responses.

 "No" responses (Red): 27.6% of the total responses.
Graph Interpretation:
 The majority of respondents (nearly three-fourths) selected "Yes".
 A smaller portion (just over one-fourth) chose "No".
 This suggests a strong preference toward the "Yes" option, which could indicate a positive attitude or
a higher tendency toward the measured characteristic.

51
QUESTION 6
WHICH OF THE FOLLOWING IS NOT A COMMON SOURCE OF FUNDING FOR STARTUPS
TABLE 1.6
FUNDING NO OF RESPONDENT PERCENTAGE
Personal Savings 3 10.3%
Bank Loans 11 37.9%
Grants 8 27.6%
Government bonds 7 24.1%
FIGURE 1.6

INTERPRETATION: -

 Bank Loan (Red): The most common funding source, accounting for 37.9%.
 Grant (Orange): The second most used funding source, at 27.6%.
 Government Bonds (Green): Contribute 24.1% to the total.
 Personal Savings (Blue): The least used funding source, making up 10.3%.
Graph Interpretation:

 Bank loans dominate, suggesting that many individuals or businesses rely on external financial
support.
 Grants and government bonds also play a significant role, indicating access to non-repayable or low-
risk funding.
 Personal savings are the least common, possibly due to limited financial resources or preference for
external funding options.

52
QUESTION 7

HAVE YOU BEEN ABLE TO RAISE ENOUGH FUNDS FOR YOUR STARTUPS
TABLE 1.7
FUNDS NO OF RESPONDENT PERCENTAGE
Yes 13 48.8%
No 16 55.2%
FIGURE 1.7

INTERPRETATION: -
 "No" responses (Red): 55.2% of the total responses.

 "Yes" responses (Blue): 44.8% of the total responses.

Graph Interpretation:
 The majority (55.2%) selected "No", indicating that more respondents disagreed or did not
participate in the measured factor.
 The minority (44.8%) chose "Yes", meaning a significant portion still agrees but is outnumbered.
 This near-even split suggests a moderate division in opinions or experiences among the
respondents.

53
 QUESTION 8

HAVE YOU FACED ANY DIFFICULTIES IN OBTAINING FUNDING FOR YOUR STARTUPS
TABLE 1.8
STARTUPS NO OF RESPONDENT PERCENTAGE
Yes 22 75.9%
No 7 24.1%
FIGURE 1.8

INTERPRETATION: -
 "Yes" responses: 22 counts (75.9%)

 "No" responses: 7 counts (24.1%)

Graph Interpretation:
 A significant majority (75.9%) chose "Yes", indicating a strong preference or agreement.
 Only 24.1% responded "No", showing a much smaller opposing group.
 The large gap between Yes and No suggests that the question posed had a clear inclination toward
a positive response.

54
QUESTION 9
HOW DID YOU FUND YOUR STARTUP INITIALLY?
TABLE 1.9
FUNDS NO OF RESPONDENT PERCENTAGE
Personal Savings 11 37.9%
Family and Friends 9 31%
Bank Loans 7 24.1%
Others 2 6.9%
FIGURE 1.9

INTERPRETATION: -

 Personal Savings (Blue): 37.9% – The most common source of funding.

 Family/Friends (Red): 31% – The second-largest source.
 Bank Loan (Orange): 24.1% – A significant portion relies on loans.
 Others (Green): 6.9% – A minor portion uses other means.

Graph Interpretation:

 Personal savings and support from family/friends together make up 68.9%, indicating that most
funding comes from informal sources.
 Bank loans account for a quarter (24.1%), suggesting a reliance on formal financial institutions.
 Other funding sources (6.9%) have minimal impact in this dataset.

55
QUESTION 10

HAVE YOU EVER CONSIDERED ALTERNATIVE FINANCING OPTIONS, SUCH AS

CROWDFUNDING OR PEER-TO-PEER LEADING?
TABLE 1.10
ALTERNATIVE NO OF RESPONDENT PERCENTAGE
Yes 20 69%
No 9 31%
FIGURE 1.10

INTERPRETATION: -
 Yes: 20 responses (69%) – The majority.

 No: 9 responses (31%) – The minority.

 The majority (69%) agree or confirm the statement in question.
 A significant minority (31%) disagrees, showing some level of division.
 The result suggests a general preference or agreement with the "Yes" response.

56
 QUESTION 11

HOW IMPORTANT IS FINANCIAL PLANNING TO THE SUCCESS OF A STARTUPS

TABLE 1.11
PLANNING NO OF RESPONDENT PERCENTAGE
Important 23 723%
Not important 5 17.2%
No 1 3.4%
FIGURE 1.11

SOURCE: - SURVEY 2023

INTERPRETATION: -
 "IMPORTANT" received 23 responses (79.3%), indicating a strong majority.

 "NOT IMPORTANT" got 5 responses (17.2%), showing a small group that disagrees.
 "No" received 1 response (3.4%), suggesting a negligible number of respondents who may not have
an opinion.
 A large majority (79.3%) believe the factor in question is important.
 A minority (17.2%) consider it not important, while a very small percentage (3.4%) are neutral or
uninterested.
 The results suggest that this factor is widely recognized as significant.
Would you like any comparisons or deeper insights?

57
QUESTION 12

HAVE YOU EVER USED DEBT FINANCING TO FUND YOUR STARTUPS

TABLE 1.12
DEBT FINANCING NO OF RESPONDENT PERCENTAGE
Yes 19 65.5%
No 10 34.5%
FIGURE 1.12

INTERPRETATION: -
 "Yes" received 19 responses (65.5%), indicating a majority in favor.

 "No" received 10 responses (34.5%), representing a significant minority.

 The results show that a majority (65.5%) support or agree with the given factor.
 However, a notable minority (34.5%) disagree, which suggests some level of division or differing
opinions on the matter.
 The difference is not overwhelming but still shows a clear leaning toward the "Yes" side.

58
 CHAPTER 5

FINDINGS AND CONCLUSION

5.1 FINDINGS OF THE STUDY

In order to sum, we can conclude that: -

Lack of Adequate Funding: A majority of startups struggle to raise enough capital. Most rely on
personal savings (37.9%) and support from family and friends (31%), while only a small percentage
receive bank loans (24.1%).

Cash Flow Management Issues: 75.9% of startup founders reported difficulties in managing cash
flow. Poor financial planning and unexpected expenses contribute to financial instability.

Challenges in Raising Funds: 55.2% of respondents mentioned they were unable to secure sufficient
investment for their startups. Venture capital and angel investments remain difficult to access.

High Burn Rate & Profitability Issues: Many startups operate at a high burn rate—spending more
money than they earn. Achieving profitability takes years, and in some cases, startups shut down before they
break even.

Limited Awareness of Alternative Funding Sources: While 69% of respondents have considered
alternative financing options like crowdfunding and peer-to-peer lending, most still lack proper
knowledge on how to access such funds.

Regulatory and Tax Compliance Issues: Many startups struggle with legal and tax compliance,
leading to unnecessary penalties and financial losses.

Inconsistent Revenue Generation: Unpredictable customer demand, pricing challenges, and

competition from larger firms create revenue instability for startups.

Lack of Financial Literacy & Business Planning: Many startup founders lack expertise in financial
management, leading to poor decision-making in budgeting, investment, and scaling

59
strategies.

Impact of External Factors: Economic downturns, policy changes, and unforeseen crises (like the
COVID-19 pandemic) have affected startup survival rates significantly.

5.2 Suggestions

Strengthening Financial Planning:

 Startups must adopt robust financial planning and forecasting tools to track income, expenses, and
profitability.

 Hiring financial advisors or consultants can help avoid poor financial decisions.
 Exploring Diverse Funding Sources:

 Entrepreneurs should apply for government grants and subsidies under schemes like Startup India
and MSME support programs.

 Encouraging partnerships with venture capitalists, angel investors, and crowdfunding platforms can
ease funding struggles.

Enhancing Financial Literacy & Training:

Organizing financial literacy programs, mentorship initiatives, and workshops will help startups understand
cash flow management and tax compliance.
Business incubators and startup accelerators should include financial management as a core module.

Developing Sustainable Revenue Models:

Startups should diversify their income sources rather than relying on a single revenue stream.
Adopting subscription-based models, licensing, or affiliate partnerships can help improve financial stability.

Implementing Cost-Cutting Strategies:

60
Avoiding unnecessary operational expenses, optimizing hiring, and focusing on cost-effective marketing
techniques (such as digital marketing) can reduce overhead costs.
Encouraging Government & Private Sector Support:
More tax benefits and regulatory relaxations should be introduced for startups in their initial years.
Government should facilitate easier loan approvals with lower interest rates for promising startups.

Management & Emergency Planning:

Startups should maintain a financial reserve to manage unexpected downturns.

Developing exit strategies or backup plans can prevent total business failure.

5.3 Conclusion
This study highlights the significant financial problems faced by startups, including difficulty in securing
funding, cash flow issues, and financial mismanagement. Despite government initiatives like Startup India,
many entrepreneurs still struggle with fundraising, tax compliance, and financial planning.

To enhance startup survival rates, a multi-faceted approach is necessary:

✅ Startups must focus on financial literacy, diverse revenue streams, and cost control.

✅ Investors and financial institutions should create more accessible funding options.

✅ The government should strengthen policies, tax reliefs, and mentorship programs.

With proper financial strategies and external support, startups can thrive in India's evolving business
ecosystem, drive innovation, and contribute to economic growth
In addition to the factors mentioned in the previous response, several other issues can contribute to the
financial problems faced by start-ups. These include:

61
1. Market competition:
Start-ups often face intense competition from established players in their respective industries.
The competition can make it difficult for them to attract customers and generate revenue, leading
to financial problems.

2. Lack of business experience:

Many start-ups are launched by first-time entrepreneurs who may lack the necessary business
experience to navigate the financial challenges they face. This can lead to poor financial
decisions and mismanagement, which can harm their finances.

3. Economic conditions:
Start-ups may face challenges due to changes in economic conditions, such as a recession or
inflation. These changes can lead to reduced demand for their products or services, increased
costs, and difficulty in obtaining funding, all of which can affect their financial stability.

4. Legal and regulatory compliance:

Start-ups must comply with various legal and regulatory requirements, which can be costly and
time-consuming. Failure to comply with these requirements can lead to fines and legal issues that
can harm their finances.
In conclusion, addressing the financial problems faced by start-ups requires a combination of
factors, including investing in experienced financial managers, developing clear financial plans,
diversifying revenue streams, securing funding, creating a supportive environment for
entrepreneurship, and complying with legal and regulatory requirements. By addressing these
challenges, start-ups can build sustainable businesses and contribute to economic growth.

62
 BIBLIOGRAPHY

Here are some references that you may find useful in further exploring financial problems faced by
start-ups:

1. Al-Tit, A. A., & Yousif, E. A. (2021). Financial challenges facing start-ups: A literature review.
International Journal of Management, Accounting and Economics, 8(2), 84-97.

2. Kim, S. M., & Lai, J. (2018). Financial management challenges facing young entrepreneurs.
Journal of Accounting and Finance, 18(1), 49-57.

3. Lin, Y., & Liu, H. (2019). Financial challenges facing start-ups in the digital age: A case study of
China. International Journal of Entrepreneurial Behavior & Research, 25(4), 754769.

4. Manzano, R., & Ayala, J. C. (2017). The impact of financial management practices and financial
characteristics on profitability: A study of small and medium-sized enterprises in Spain. Journal
of Small Business Management, 55(2), 271-290.

5. Sullivan, D. (2020). Financial management for start-ups: An overview. Investopedia.

Retrieved from
https://forms.gle/FjYVDAW9pYrL3D9i9

6. Azouz, M., & Jarboui, A. (2019). Financial challenges faced by Tunisian start- ups:
Empirical study. Journal of Innovation and Entrepreneurship, 8(1), 1-20.

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7. Khajavi, S. H., Zarei, M. H., & Ebrahimi, A. M. (2021). An analysis of the financial problems of
start-ups in Iran: A mixed-methods approach. Journal of Small Business and Entrepreneurship
Development, 8(1), 1-18.

8. Ongori, H., & Megaro, S. O. (2010). An assessment of the challenges facing small and medium
enterprises in accessing credit in Kisii town, Kenya. African Journal of Business Management,
4(5), 729-736.

9. Raza, A., & Pervaiz, Z. (2019). Financial constraints and business growth: An empirical study of
small and medium-sized enterprises in Pakistan. International Journal of Entrepreneurial
Behavior & Research, 25(4), 696-715.

10. World Bank Group. (2021). World Bank Group Entrepreneurship Database. Retrieved from
https://datacatalog.worldbank.org/dataset/entrepreneurship-database

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 ANNEXURE

QUESTION 1 AGE
□ 18 - 25
□ 26 - 35
□ 36 - 45
□ 46 AND ABOVE

QUESTION 2 GENDER
□ MALE
□ FEMALE
□ PREFER TO NOT SAY

QUESTION 3 OCCUPATION
□ STUDENT
□ BUSINESSMAN
□ HOUSEWIFE
□ SELF EMPLOYED
□ PROFESSIONAL

QUESTION 4 MONTHLY INCOME

□ BELOW 10,000
□ 10,001 – 50,000
□ 50,001 – 1,00,000
□ ABOVE 1,00,001

65
QUESTION 5
HAVE YOU EVER HAD TO PIVOT YOUR BUSINESS MODEL DUE TO FINANCIAL
CHALLENGES?
□ YES
□ NO

QUESTION 6 WHICH OF THE FOLLOWING IS NOT A COMMON SOURCE OF FUNDING

FOR STARTUPS
□ PERSONAL SAVINGS
□ BANK LOAN
□ GRANT
□ GOVERNMENT BONDS

QUESTION 7 HAVE YOU BEEN ABLE TO RAISE ENOUGH FUNDS FOR YOUR STARTUPS
□ YES
□ NO

QUESTION 8
HAVE YOU FACED ANY DIFFICULTIES IN OBTAINING FUNDING FOR YOUR
STARTUPS
□ YES
□ NO

QUESTION 9
HOW DID YOU FUND YOUR STARTUP INITIALLY?
□ PERSONAL SAVINGS
□ FAMILYS/ FRIENDS
□ BANK LOAN
□ OTHERS

66
 QUESTION 10
HAVE YOU EVER CONSIDERED ALTERNATIVE FINANCING OPTIONS, SUCH AS
CROWDFUNDING OR PEER-TO-PEER LEADING?
□ YES

□ NO

QUESTION 11 HOW IMPORTANT IS FINANCIAL PLANNING TO THE SUCCESS OF A

STARTUPS
□ IMPORTANT
□ NOT IMPORTANT

QUESTION 12 HAVE YOU EVER USED DEBT FINANCING TO FUND YOUR STARTUPS
□ YES
□ NO

67
68