Policy Reforms and Managerial Practices in India's Venture Capital Ecosystem: A Conceptual Perspective

Abstract

The rapid expansion of India’s startup ecosystem has significantly increased the importance of venture capital (VC) as a source of entrepreneurial finance. While previous studies have primarily examined the influence of policy reforms or VC management independently, limited attention has been given to understanding their combined role in shaping VC investment. Drawing on Institutional Theory and Resource-Based View, the study proposes that supportive policy reforms create an enabling institutional environment, whereas venture capital firms’ effective managerial practices enhance investment quality and long-term portfolio performance. This study adopts a qualitative conceptual approach grounded in the constructivist research paradigm. It employs qualitative document analysis of secondary data, including SEBI, RBI regulations and circulars, Government of India policy documents, DPIIT, IVCA, IVCR & industry reports, and peer-reviewed academic literature. These documentary sources are synthesized to develop three theoretical propositions explaining how policy reforms and managerial practices influence VC investment in India’s VC ecosystem. The findings show that policy reforms have strengthened India’s VC ecosystem, while managerial capabilities have become equally important for improving investment decisions and outcomes. Together, supportive policies and effective management provide a stronger foundation for India’s sustainable VC growth. By combining these two perspectives, the proposed framework adds to the entrepreneurial finance literature and offers practical insights for policymakers, venture capital firms, entrepreneurs, and future researchers seeking to strengthen India’s startup and innovation ecosystem.