Start-UPS: Some reasons for shut down Adjunct Professor Parshuram Harishchandra B. Tech. (Hons) in Mech. Engg (IIT, Bombay); MBA (Opers); P.G.D. Ed. M.(NMIMS); D. Ed. (Cal), Anil Surendra Modi School of Commerce, Narsee Monjee Institute of Management Studies Online published on 11 October, 2019. Abstract The paper contains an empirical analysis of the strategy process that are followed by start-ups and improvements that may be necessary. Evidence gathered from secondary data sources indicates that start-ups who proactively use the principles of formal strategic planning, will possibly tend to perform better than those who prefer to follow a more ‘visionary ’or reactive approach to run the chosen business. The reason for hiccups in the case of business start-ups is because they (i) lack prior history about the start-up business(ii)face the possibility high failure risk of their business, and (iii)have highly concentrated ownership which can prove detrimental for the business. Start-ups also face initial hiccups in financial decisions because there are problems of receiving information and feedback and further, start-ups have an advantage (or, actually, a disadvantage) of entrepreneurial private benefits of control. This paper also simultaneously looks into the impact of these issues on leverage, debt mix and maturity. It has been observed that start-ups are tied up with high adverse selection and risk shifting problems. Hence, generally speaking, they contract less bank debt but compensate with other debt sources. This paper has attempted to examine the process and problems encountered by new business start-ups. An analytical overview, based on the available past as well as current literature in the field, explains and understands the process and problems of new ventures. It is well-known that the establishment of a new organization is not instantaneous, though the process is a largely complex one. The nature of this process-which is generally characterized by spontaneity and uncertainty-makes it more challenging and grueling to pin down an exact conclusion. As Gartner (1985) points out, entrepreneurial and start-up firms are too diverse to permit any sort of generalization, and therefore today, the process of starting up of a new business has become a multidimensional phenomenon. The different approaches which are suggested in literature, explaining the process of creation of a new venture, have attracted much academic controversy, given the lack of consistent empirical research on the process of new business creation. In this light, the paper suggests that a more holistic understanding of the process may be gained through the integrated theoretical frameworks of new venture creation which are presented in the literature and which aim to capture the most important variables and characteristics which are typical to the new venture creation process. The second part of the paper deals with the problems facing entrepreneurs in new venture creation. Many start-ups never reach establishment, and the majority close up within one year after they have become established. Embarking on a new business is one of adventure and challenge but it brings with it high risk and uncertainty. This paper does not seek to detail each and every industry-specific problem that start-ups experience, but aims to identify and examine the most common difficulties encountered by start-ups in the early stages of establishment, irrespective of sector or industry Top Keywords E-commerce, robotics, life cycle, Angel Funding, Venture Capital, Total Quality Management. Top |