The Impact of Startup Funding on Revenue Generation: Evidence from DPIIT-Registered Startups in Himachal Pradesh

The early-stage startup funding is crucial for enabling innovation, market ready product for expansion and business scalability. The relationship and direct impact of various funding on revenue generation at various stages remains unclear especially in new emerging startup ecosystems. The current study examines the relationship between startup raised funding and their revenue generation among DPIIT registered startups in Himachal Pradesh using structural equation modelling (SEM). The data was collected for 172 DPIIT registered innovation driven startups. The study evaluates the direct and indirect effects of funding through mediating constructs such as financial resource capability, innovation capability, and market expansion capability. The analysis results shows that mostly startup funding has a positive direct effect on revenue generation, the indirect effect is higher through capability development. The analysis and findings support and provides important policy and ecosystem level implications for improving funding effectiveness in regions with emerging startup ecosystems.