Factors Driving Venture Capital Investments in India

M. Tanzeem Raza and P. Natarajan

Journal of Entrepreneurship and Innovation in Emerging Economies, 2023, vol. 9, issue 1, 62-79

Abstract: This study aims to investigate what factors determine venture capital investments in India. The study selects the most relevant variables categorised as the Ease of Doing Business Index (EODBI), institutional indicators and macroeconomic variables. The EODBI has been introduced for the first time in the venture capital literature, intending to capture the business environment of India. Three regression models with three different dependent variables report the ambiguous results for domestic venture capital funds (DVCF), foreign venture capital investments and total venture capital investments. The individual measure EODB, representing the overall rating of doing business in India, is not favourable for domestic funds but favours foreign investors. Enforcing contracts and trading across borders respond positively to DVCF, while registered property moves differently. Resolving insolvency positively affects all three types of investments, benefiting young investors and young entrepreneurs by exploiting venture capital. This study can be refined in several ways in terms of future research, but the biggest challenge will be collecting enough data to derive meaningful results.

Keywords: Venture capital; ease of doing business; macroeconomic variables; World Wide Governance Indicators; HAC autocorrelation (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jouent:v:9:y:2023:i:1:p:62-79

DOI: 10.1177/23939575221139944

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