Conventionally, an IPO launch makes for a landmark moment for most startups. From an unassuming and sometimes even a shabby offices to a blockbuster IPO launch in the capital market encapsulates the dream that probably every startup nurtures. It is not merely profit seeking investors or easy reach out to huge capital but also the fame and glory that public listing brings makes it an all the more irresistible.
And In the next two to three years, there is every likelihood that more and more Indian startups may get to fulfill their dream to list their companies in India’s top stock markets – Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
Techpluto has been tipped by various sources and this has also been confirmed by reports published by other media platforms that many high profile Indian startups may go for a public listing in next two-three years. This includes unicorn startups like Ola, Oyo, Freshworks, Delhivery and Druva. Even non-unicorn startups like Pepperfry and Smaaash are expected to try their luck in India’s capital market.
Not to mention unconfirmed reports claim that Flipkart – the original poster boy of Indian startup ecosystem – is also vying to take a dive in the American capital market in next few years. This may obviously help Walmart to make a partial exit and book a good return from its Indian subsidiary company.
But with Indian markets increasingly turning bearish, there is every chance that some startups may be forced to tread their path towards IPO little bit more cautiously. Even the profit seeking existing investors may force their portfolio companies to delay their IPO launch if the mood in Indian markets continues to remain dull in the coming years.
However, IRCTC’s impressive IPO launch this week has lend a much needed hope to Indian startups. IRCTC’s good debut at the Dalal Street may have served yet another reminder that companies with strong fundamentals and robust revenue model will get a good response even during bearish market conditions.
There is a lesson for Indian startups in WeWork’s IPO Botch
WeWork IPO botch probably could not have come at more right time as Indian startups steadily start warming up for making a grand debut in India’s capital market. Last week, the U.S co-working giant was forced to postponed its ill-fated IPO indefinitely after investors decided to give a cold shoulder.
American investors refused to buy the idea that a company that is currently saddled with $2 Bn annual loss can turn profitable even in the long run. Of course, the absence of a sustainable and robust revenue generating model only made matters worse for the co-working giant.
Months before WeWork’s IPO fiasco, U.S. investors decided to give a luck warm response to Uber and Lyft’s public listing. The fact that even Uber’s IPO, which was supposed to be the most anticipated IPO of this year, fared badly amply demonstrates that investors are refusing to fall prey to the startup bubble; just like they had fallen prey to the tech bubble during 1990s and eventually lost millions of dollars after the bubble crashed.
The one sure lesson that Indian startups can derive from string of bad IPO launches in the US market is that it is all about ‘balance sheet.’ That only those Indian startups with manageable debts & losses and sustainable revenue model can convince investors to take a gamble in their market issues.
It is highly unlikely that investors will buy into supposedly high market valuations boosted by most unicorn Indian startups unless they are backed by good balance sheets. Many industry experts claim that a good part of Indian startup ecosystem have already started their journey towards maturity and as a result today are more realistic about achieving profitability.
If this is indeed the case then this should augur well for startups that want to try their luck in India’s capital market in the coming years.