Comparative Study of Sources of Finance for Startups in Metro Cities

For the past few years, start-ups and budding entrepreneurs can be seen as flourishing in India due to the rise of digital technologies. India is now home to the third-largest startup ecosystem in the world with an increasing number of young entrepreneurs. Highly educated graduates coming from lesser known institutions usually fall short of meeting employers’ expectations, thereby being compelled to either take up jobs for which they are overqualified or being pushed into unsuccessful entrepreneurial pursuits The employability factor is inadequate to accommodate all skilled graduates; therefore, the Indian youth is motivated towards self-employment instead of relying on others. Rather, they start to take the initiatives to look for new challenges and innovations which encourage and promote a self-employment environment to create startup systems in India. The Indian Government initiated many new schemes by the Central and State Governments to foster and assist many innovative ideas into incubation. Due to the current pandemic, most start-ups face financial issues to grow their business. Some of them are doing the best in their business and some are struggling to find the milestones due to some problems. According to a recent study, over 94% of startups fail during the first year of operation and more than 50% of startups fail in their first 5 years out of which an estimated 38% of startups fail because they run out of cash and fail to raise new, necessary capital. The long painstaking yet exciting journey from the idea to revenue-generating business needs a fuel named capital. This paper aims to understand the sources of finance for startup companies and identify various options available to startups for appropriate funding.