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

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

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Venture Financing, Start-Up Firms, Predatory Competition, Capital Dumping
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M1 - Business Administration > M13 - New Firms ; Startups

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