Title: Challenges in entrepreneurial growth: exploring informal financing decisions of early-stage start-ups

Authors: Vikku Agrawal; Jaykumar Padmanabhan

Addresses: Research and Faculty of Management, St. Josephs Institute of Management, Bangalore, India ' Faculty of Management Studies, CMS Business School, Jain University, Bangalore, India

Abstract: Informal financing is a major source of funding for start-ups in emerging economies. Using primary data from 319 early-stage entrepreneurs in India, the study examines the respondents' choice of informal financing for their start-ups based on two key dimensions: entrepreneurs' experience in employment before entrepreneurship and their perception of institutional support. It draws motivation from cognition theory and analyses the data using regression analysis to examine the relationship. The findings suggest a significant relationship between the proposed determinants and entrepreneurs' decision-making. The study has crucial theoretical and practical implications. It probes into the hitherto under-researched segments of early-stage entrepreneurs, informal financing as entrepreneurs' first choice, and role of entrepreneurs' perceptions in decision-making. The study provides insights to policymakers to restructure entrepreneurial financing options and prompts practitioners to uplift entrepreneurship through mentoring, training and upskilling to develop a mutually conducive institutional environment.

Keywords: entrepreneurial challenges; economic growth; emerging economy; start-up funding; informal financing; early-stage; entrepreneur behaviour; early-stage entrepreneurship.

DOI: 10.1504/IJBCG.2024.144376

International Journal of Business Competition and Growth, 2024 Vol.9 No.3/4, pp.244 - 262

Received: 21 Sep 2023
Accepted: 15 Sep 2024
Published online: 10 Feb 2025 *

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