Business relationship analysis of startup ecosystem in Kerala

Abstract

A startup ecosystem is an entrepreneurial ecosystem that consists of different actors functioning together to make the ecosystem advantageous for startups to grow and survive. Among these actors, startups and incubators are closely associated with one another. Startups are business enterprises and incubators guide them in solving their problems and prospering. Business relationships developed by startups and incubators are crucial for the development and survival of startups. Understanding these business relationships gives insight about the suitability of the startup ecosystem for different categories of startups. Kerala is one of the leading startup ecosystems in India, with more than 30 active incubators assisting different startups in their success. The strength of business relationships among startups and incubators in Kerala is studied using Actor-Resource-Activity model. Data from thirty eight active incubators in the state and 288 startups associated with them are considered for the study. Business relationships are analysed at two levels: company analysis and relationship analysis. Activity structure, organisation structure and resource collection of individual actors are analysed in company analysis. Activity links, actor bonds and resource ties between two actors are analysed in relationship analysis. The business relationships of startups with other startups and incubators, as well as those of incubators with other incubators and startups are considered for relationship analysis. The perspective of startups and incubators about other supporting actors in the ecosystem, like the state government, investors/funding organisations, universities/ educational institutions and mentors, has also been analysed. The Chi-square test, Fisher’s Exact test, Kruskal-Wallis H test, Mann-Whitney U test, Spearman’s Rank Correlation and multiple regression analysis using PLS-SEM models are the various statistical tests used for analysis. Following the analysis, it can be understood that the startup ecosystem in Kerala is suitable for startups that use technology and are product oriented. Most technology startups in the state are IT/software based. Service oriented startups and non-technology startups have few opportunities in the state. Bootstrapping is the major source of funding for startups and even today, funding is one of the major problems faced by startups. Actor bonds and resource ties of startups are dependent on one another. Incubators that provide incubation facilities to all categories of startups are few in the state. Incubators have a low level of coordination with each other while performing different activities, but they coordinate well with startups in various incubation activities. Kerala has a great startup ecosystem, but it also has many flaws that need to be addressed to make the ecosystem suitable for all the different categories of startups.