An Empirical Investigation on Financing Choice Descendants of Indian Start-ups

The primary goal of the study is to examine the factors affecting the financial leverage of unicorn start-ups in India. In order to achieve this goal, the study has employed the panel data techniques on the financial data of 25 start-ups unicorn of India from 2017 to 2021. The study has employed three proxies to measure the financial leverage namely short-run, long-run, and total debt ratio. The result of the study indicates that firm size and profitability are significantly negatively correlated with debt ratios, whilst tangibility, business risk, and firm age are positively and significantly associated. Moreover, short-term debt is found to be more prevalent in unicorn firms when we bifurcate total debt into short and long-term debt. As per the best of author’s knowledge, this is the first research that identified the financial choice of startups. Furthermore, this study provides a pathway for conducting future study in this domain on startup firms’ capital structure decisions. This study has major implications for unicorn managements in taking decisions regarding their finance choice that may lead them to plan adequately their capital structure more efficiently and effectively.