Title: Entrepreneurs' self-selection of informal funds for early-stage start-ups: empirical study using evidence from India

Authors: Vikku Agrawal; Jaykumar Padmanabhan

Addresses: CMS Business School, Jain (Deemed-to-be University), Bangalore, India ' CMS Business School, Jain (Deemed-to-be University), Bangalore, India

Abstract: The objective of the study is to analyse entrepreneurial funding from a demand-side perspective, focussing on the connection between personal characteristics of entrepreneurs and their inclination towards seeking informal funds for their early-stage venture. The research employs binary logistic regression on a purposive sample of 319 India-based entrepreneurs within the first five years of venture existence, to examine the relationship. Findings suggest that entrepreneurs' choice of informal funds is significantly impacted by the category of personal net-worth that they classify themselves into. Their formal education in business management does not significantly decide if they would choose informal external funds for business in early stages. Focus on early-stage entrepreneurs mitigates survivorship bias in entrepreneurship studies. Emphasis on informal funds in emerging economies suggests a potential for yielding unique insights. These findings can be used by policymakers to tailor initiatives, while other developing economies can adapt the insights to their own contexts.

Keywords: start-up finance; informal funds; entrepreneur choice; early-stage venture; demand-side perspective; emerging economy; funding challenge; entrepreneur characteristics; entrepreneurship in India.

DOI: 10.1504/IJICBM.2025.148922

International Journal of Indian Culture and Business Management, 2025 Vol.36 No.2, pp.145 - 160

Received: 21 Aug 2023
Accepted: 24 Aug 2023
Published online: 03 Oct 2025 *

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