An Empirical Investigation of Startup Challenges: A Modeling Approach using Exploratory Factor Analysis

Abstract

Startups are important drivers of innovation, employment generation, and economic development; however, they encounter numerous challenges that affect their growth and sustainability. This study aims to investigate the major challenges faced by Department for Promotion of Industry and Internal Trade (DPIIT)-recognized startups in Haryana using a modeling approach based on Exploratory Factor Analysis (EFA). A cross-sectional research design was adopted, and primary data were collected from 55 startup founders and Chief Executive Officers (CEOs) through a structured questionnaire using purposive sampling. Data were analyzed using IBM SPSS Statistics 26. The Kaiser–Meyer–Olkin (KMO) value (0.766), significant Bartlett's Test of Sphericity (p < 0.001), and Cronbach's alpha (0.965) confirmed the adequacy and reliability of the measurement scale. EFA identified five key dimensions of startup challenges—financial, regulatory, human resource, managerial, and market-related—which explained 87.094% of the total variance. The findings provide valuable insights for policymakers, incubators, investors, and entrepreneurs to formulate strategies that enhance startup sustainability and strengthen the entrepreneurial ecosystem.