A New Model of Rating to Evaluate Start-ups in Emerging Indian Market

Abstract

Conceptualization of an idea to a well framed model is emerging with need of generating wealth at national base. Entrepreneurship is the crucial base of an economy measuring the wealth base thereby contributing to national income. The need for evaluation of these start- ups with some criteria is a pressing priority. The rating criterion has risen these days as the expressional value for an individual assessment for a company or a firm. There is a need to widen the range for rating to full fledge rating model considering financials and non-financial aspects by opening its arms towards the most important segment of economy i.e. start-ups. In consideration of this, the need to launch a well specified rating agency for start-up is need of the hour. Since there is no particular study defining its focus towards such need on national and international level, we want to explore this area of research so as to contribute to existing literature (which is very limited). Considering India, although there is much effort by government to boost start-ups initiatives like Atma Nirbhar Bharat, Start-up India, Make in India and relaxations in budgets etc. but there is no criterion to evaluate these start-ups in order to gain visibility. In this research paper we made an effort to frame a rating model considering the important factors affecting the start-up which can satisfy the need for the model. The model is framed by us considering all financial factors like sources of funds, working capital, financial performance, idle funds etc. and non-financial factors like founder details, descriptive, market variable and future aspects etc. which are essential for a start-up to evaluate and henceforth benefits in longer run-in terms of getting easy funding, financial support and more visibility. An extant literature review is done in order to cover all parameters focusing the evaluation of start-ups with a longer perspective by adding to existing literature and helping policy makers, entrepreneurs, venture capitalists who can use the model to assess the start-ups and henceforth can benefit the economy.