THE ECONOMICS OF STARTUP BUSINESS FINANCE: AN INVESTIGATION THROUGH THE LENS OF FINANCIAL GROWTH CYCLE THEORY

Abstract

The provision of finance is the key to the survival and success of new firms. The current paper examines the startup firms’ finance acquisition through the viewpoint of financial growth cycle theory. We used chi-square and Mann-Whitney U tests to examine our hypotheses. Our study uses data from 386 Indian startup entrepreneurs over the period 2019 – 2021. Our results show that the startups access angel finance significantly in the initial years and the venture capital, banks and NBFCs in their later stage of life. Our findings argue that Indian startups partially follow the financing patterns proposed by the financial growth cycle theory.