Funding startegies of start-ups in Kerala

Abstract

The emergence of Start-ups has redefined global entrepreneurship by fostering innovation, job creation and economic dynamism. In India, particularly in Kerala, Start-ups have evolved as critical agents of technological and social transformation. Despite supportive state policies and initiatives under the Kerala Startup Mission (KSUM), many Start-ups continue to struggle with financial access, inadequate awareness of funding options and limited strategic management of financial resources. This study, entitled “Funding Strategies of Start-ups in Kerala,” examines how entrepreneurs in the state access, select and utilise various sources of finance to support growth and innovation of industries. It also analyses the choice of selecting funding strategies of Start-ups, evaluates their level of satisfaction towards Start-up finance and investigates the risks associated with availing different sources of Start- up finance. The research is descriptive and inferential in nature, focusing on Start-ups registered under KSUM. Using both primary and secondary data, the study investigates three key dimensions (i) The initiatives of Govt. of Kerala in providing financial and other facilities for promoting Start-ups, (ii) the choice of selecting funding strategies towards Start-up finance, (iii) the level of satisfaction of entrepreneurs towards Start- up finance and (iv) the multifaceted risks of availing Start-up funding. A structured questionnaire was administered to a randomly selected sample of 357 Start-ups drawn from the population of 4891 Start-ups registered in the state. The study employed statistical tools such as reliability analysis, descriptive statistics and hypothesis testing to validate findings. Even though people have sufficient awareness about different funding schemes of both government and other alternative sources, significant challenges remain regarding their accessibility, cost of capital and procedural delays. Entrepreneurs show moderate satisfaction with existing funding avenues, citing the need for more flexible, transparent and timely disbursement mechanisms. Financial and regulatory risks are found to be the most critical barriers to the effective utilisation of funds. The study underscores the importance of integrated financial literacy programs, simplified policy frameworks and diversified funding models such as crowdfunding and revenue-based financing. The findings are expected to aid policymakers, financial institutions and incubators in designing evidence-based interventions to strengthen the Kerala’s Start-up ecosystem of Kerala. By aligning funding mechanisms with the needs of entrepreneurs’, the state can enhance Start-up sustainability, innovation and long-term competitiveness.