Drivers and Patterns in Venture Capital Valuation of Start Ups In India

Abstract

New ventures operate in volatile environments. While new ventures newlinehave great growth potential, they also have high-risk probabilities. newlineInnovative entrepreneurial ventures face problems due to limited internal newlinefinancial resources and need external funding for scaling up. Previous newlinestudies show that a new venture may specifically undergo difficulties newlinefrom a financial gap. It is known that continual financing can ensure high newlinelevels of growth and facilitate the survival of ventures while a lack of newlinefinancing can result in low levels of growth and higher chances of failure. newlineVenture capital (VC) firms are a familiar source of equity financing with newlineprecise interest in high-growth start-up firms which have debt-financing newlineconstraints. VC firms play a key role in promoting entrepreneurship by newlinesupporting innovative products and the development of new businesses. newlineAs valuing start-ups and the factors determining the value of start-ups are newlineoften black boxes, owing to limited evidence on start-ups financial newlineperformance, venture capitalists and emerging entrepreneurs find it newlinedifficult to arrive at mutually beneficial valuation decisions. In this newlinecontext, researchers are interested in studying the VC decision-making newlineprocess and their assessment criteria for potential start-up deals. newline