Financing technology startups: an entrepreneur's dilemma

Abstract

Subject area

Entrepreneurship, finance, technology and innovation, general management.

Study level/applicability

This case is suitable for students in finance, entrepreneurship and general management. The case seeks to understand the challenges of funding in technology startups and how they vary from product to service areas.

Case overview

Availability of capital, short term and long term, is a major constraint faced by entrepreneurs. In India, in the technology sector, services companies have been able to innovate and grow whereas product-based companies that survived the challenges of funding have been scarce. Aluru Karthik Prasanth is presented in the case as a young entrepreneur with passion and drive to pursue the commercialization of an idea he developed during his undergraduate studies in engineering. Leaving behind the beaten paths ofMTech and employment, he decides to pursue MS entrepreneurship at IIT Madras. As he starts with his program, he analyses the challenges faced by previous technology start ups, Karthik has a dilemma – deciding whether to follow a product idea or change his plans to a technology service.

Expected learning outcomes

A detailed analysis of the case would help students address the following questions in entrepreneurial decision making: should an entrepreneur in technology in India pursue a product idea or service idea?. What are the pros and cons of each choice in financing? How can an entrepreneur pursue a product idea and minimize his/her risks? How does an entrepreneur's personal attributes influence his/her course? (e.g. family background, need for control) What are the challenges and opportunities in each kind of funding: debt, venture, angel, etc. in the Indian context?

Supplementary materials

Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Citation

Gopalaswamy, A.K. and Mathew, S.K. (2012), "Financing technology startups: an entrepreneur's dilemma", , Vol. 2 No. 8. https://doi.org/10.1108/20450621211311560