Guest editorial

Citation

Annamalai, T.R. and Rajeev, P.N. (2022), "Guest editorial", Journal of Indian Business Research, Vol. 14 No. 1, pp. 1-3. https://doi.org/10.1108/JIBR-03-2022-365

Since the time the Prime Minister of India, Narendra Modi, coined the popular “Start-up India, Stand-up India” slogan in his Independence Day address on 15 August 2015 (Business Standard, 2015), there has been a significant policy impetus to encourage start-ups and develop a supportive ecosystem for start-ups and innovation in India. The supportive stance of the national government has also influenced the various state governments to enact similar policies. The accommodative policy environment along with a convergence of various factors has resulted in India emerging as the World’s third-largest start-up ecosystem (InvestIndia, 2022). Underlining this was the declaration made by the Prime Minister of India to mark 16 January as the National Start-up Day to percolate the start-up culture at the grassroots level (The Hindu, 2022). A recent publication (Thillai Rajan et al., 2021) provides a comprehensive overview of the evolution of the Indian start-up ecosystem.

In tandem, the rapid growth in the number of start-ups and investment flow has garnered the interest of research scholars and academia. From setting up purely action and implementation-oriented centres such as incubators and innovation labs, the Indian universities have also started to focus on academic research and knowledge creation in the areas of start-ups and venture capital. The Centre for Research on Start-ups and Risk Financing (CREST) set up at the Indian Institute of Technology Madras is an example. The growing interest on academic research in this area has also led to the formation of a Pan India academic consortium, namely, the innovation, venturing and entrepreneurship in India network (iVEIN). This special issue on “Start-ups, Innovation and Venturing” is, therefore, not only relevant but also timely.

The special issue consists of four papers, encompassing different, but very pertinent topics to the Indian start-up ecosystem. Most start-ups need external capital, and more often than not, early source of funding is provided by angel investors. The first paper by Niroopa Rani Annamalaisami focuses on the differences between angel investors who invest in pre-seed and seed-stage funding rounds. Based on an analysis of 732 angel investments made by 405 investors during 2014–2018, the author finds that angels with more industry-specific experience made a higher proportion of investment in seed-stage ventures. Seed-stage ventures attracted investors from larger cities, whereas the pre-seed stage had higher investors from smaller cities. Though the investment size was smaller, the extent of syndication was greater in pre-seed stage investments.

The second paper by Navaneetha Krishnan, Ganesh and Rajendran focuses on start-up success. It is well known that mortality rates of start-ups are high. Increasing the success rates of start-ups, therefore, has been a topic of interest for both researchers and practitioners. Based on a survey of 51 specialists, the authors analyse various failures that start-ups in India were exposed to and propose interventions based on management accounting tools (MAT) to address these risks. The authors also go on to conclude that failures of start-ups can be addressed by implementing a combination of MAT. Furthermore, the most effective combination of MAT for a start-up was contingent upon various factors such as the firm’s size, culture, leadership style, the operating sector, funding stage, valuation and preferred growth model.

The third paper by James Dominic and Arun Kumar Gopalaswamy focuses on a subject that has immense practical importance, namely, venture exits and returns. The authors analyse the various factors that affect venture exits and returns, such as investment duration, industry to which the investee firm belongs to, and the overall capital market cycles – the bull and bear phases. Using data from 210 venture exits in the Indian VC market over the period 2004–2017, the authors highlight four major findings from their research. One, investment duration had a negative impact on VC returns up to a point. Returns from quick exits have been substantially higher as compared with those ventures where the investment duration was about four to five years. However, returns were higher if the investment duration exceeded eight to nine years. Two, VC returns were not correlated with the market conditions. Three, investment returns were not affected by the industry in which the investments were made. Four, the trends in different variables demonstrated a high degree of persistence.

The fourth paper by Sapna Poti and Simy Joy is focused on the agriculture sector, an important sector for the Indian economy. Agriculture sector is the largest employer of workforce and accounted for 18.8% in gross value added of the country (Economic Survey, 2022). Agriculture is also a major source of income for 58% of the Indian population (Indian Agriculture and Allied Industries Report, 2021). Using participatory action research, authors highlight that the digital platforms were as much relevant for sectors like agriculture as that for high-tech industries. Using the case study of Kisan Mitr, the authors highlight that the digital platforms can effectively integrate the innovation, business and entrepreneurial and extension ecosystems by removing the bottlenecks in information flows. In this paper, the authors focus on how an Agtech platform can address two types of disconnects: one, that prevents the successful transformation of scientific research to commercial products, and the second, that impedes technology adoption by farmers.

The range of submissions received in response to the call for papers for this special issue makes us believe that the Indian start-up ecosystem has a strong potential to become the subject for several ground-breaking research projects. However, a major hindrance faced by many researchers is the availability of high-quality data sets on Indian start-ups. Fortunately, we are happy to let you know that a solution is now available that addresses the data constraints for researchers on Indian start-ups. YNOS, an information and intelligence platform on Indian start-ups developed with the support of CREST, Indian Institute of Technology Madras is a resource that scholars and researchers can consider accessing. As of February 2022, YNOS provided detailed information on 105,000 start-ups, 1,800 VCs, 620 incubators, 125,000 founders and 5,900 angel investors in India (YNOS, 2022) indicating the breadth of data availability. The mapping of connections between the key entities in the ecosystem, start-ups, angels, investors, incubators, founders and the availability of multiple data categories – incorporation, business, finance, technology and demographic gives ample scope for studying interesting research questions.

As Editors, we were privileged to have been involved in editing this special issue. We are thankful for the support of the Journal’s Editorial and Production teams. We hope you would enjoy reading the papers that appear in this special issue and benefit from their findings.