Munich Personal RePEc Archive

Capital structure and competitive intensity: Considerations for Start-Up Firms

Pandey, Ashish (2017): Capital structure and competitive intensity: Considerations for Start-Up Firms.

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Abstract

This short perspective article discusses the effect of a start-up firm's capital structure on the nature and degree of competition in the marketplace. Specifically, the article argues that the nature of financing availed by the start-up firms expose them to the risk of predatory price-based competition from a well-capitalized competitor. The staged model of capital infusion works best when tangible progress can be demonstrated at every new round of financing. Indian start-up firms need to acknowledge this fact, pursue innovations that complement the local realities and develop a distinct local model that justifies the need for additional capital.

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