The Determinants and Phases of Tech Startup Emergence: An Empirical Analysis of Hardware-Based Tech Startups in India

Abstract

Given the distinctive features of hardware-based tech startups that produce physically embodied systems (including electronics, electrical, electromechanical, mechanical, molecules, formulation, Biotech/Meditech devices, and Agritech) and their high economic potential, it is appropriate to ascertain the determinants and understand the entrepreneurial activity antecedents to hardware-based tech startups' successful emergence. This research introduces a conceptual framework designed to scientifically ground the empirical analysis of venture creation processes, particularly in hardware-based tech startups. The research examines the temporal dynamics associated with the gestation phase of startups, referred to as pre-emergence in this context. This phase is categorized into two main stages: pre-incubation, which encompasses intentionality and boundary-setting (planning activities), and incubation, which involves resource allocation and exchange (operational activities). Each stage comprises interdependent phases and determinants. This thorough analysis of the pre-emergence phase aims to elucidate the specific activities necessary before and during incubation, ultimately facilitating the emergence of hardware-focused technology startups. The framework emphasises the significant impact of the founding team's size, composition, background, and networks on the time required for opportunity identification and ideation quality. The ideation process varies depending on whether it is based on an existing patent or a new, self-conceived idea. Patented ideas typically expedite the ideation phase due to their established foundation. After successful ideation, it results in PoC creation, which can be developed in-house by the founding team, with support from Technology Business Incubators (TBIs), or through collaboration with large industrial enterprises. The effectiveness and speed of demonstrating PoCs determine the subsequent progress towards prototype development. Product Development (PD) materializes the PoCs into an innovative solution or product, resulting in an MVP. The viability of new products or services depends on their utility to consumers, necessitating early testing with target markets and adopters, thus setting the stage for startup emergence. Further, the suggested framework emphasizes significant sequential phase transitions initiated by particular events or incidents, which are vital for the timeline and quality of a startup. It highlights the critical nature of decisions made in each phase that facilitate progression to subsequent stages of the early-stage hardware-based tech startups. This analogy draws parallels between the startup formation process and prenatal development, where the well-being of a newborn is contingent upon the quality of prenatal care. While some empirical research exists on the stages of startup formation in developed nations, the phenomenon in emerging economies such as India is still inadequately examined. The study has not considered any distinctions within the ecosystems. This research aims to ensure broad applicability by incorporating geographical and environmental variations, thereby allowing the data to reflect the landscape of hardware-based technology startups throughout the diverse regions of India. This investigation centres on hardware-based startups across various ecosystems, deliberately avoiding any differentiation among them. The emphasis is placed on the emergence and development of these hardware-based tech startups rather than on the characteristics of their founders. This study seeks to shed light on these early stages, phases and transitions to the next phase by pivotal incidents that contribute to the emergence of hardware-based tech startups, which also includes hardware-based deep tech startups within the Indian context, thereby providing valuable insights into the relatively nascent and less researched hardware-based tech startup ecosystem.