Abstract:
The global financial crisis emerged from the muddled financial
system of the USA that exacerbated the global recession of 2008–09. The
effects of the crisis have rippled all over the world’s economies. This paper
empirically probes the role of these crises on Indian VC firms. With the help of
regression analysis, empirical evidence is provided to the prevailing theories
that a financial crisis negatively affects the VC market. To carry out this
analysis, the amount of investment is taken as a dependent variable; whereas
the financial crisis, firm’s age, syndication, and type of industry are considered
as independent variables. It has been demonstrated through analytical results
that there exists a statistically significant difference between two time frames:
pre-crisis and post-crisis. The amount of investment decreased 12% owing to
the effect of the financial crisis. Further, it has been exposed that a significant
difference exists in terms of stage funding between the two time frames. This
study examines the various prospects related to the statistical association of the
financial crisis and the VC market.
