Why are most Indian Startups suddenly going Public in 2021?

Mahenoor Mansuri Mahenoor Mansuri
Sep 22, 2021 5 min read
Why are most Indian Startups suddenly going Public in 2021?

At one point while growing a startup, every startup founder must have dreamed of is applying for an IPO. Who doesn't wants some extra funding to grow their startup?. The Indian startup industry is growing at a fast pace. And Many startups are buckling up to apply for the IPO. But why now? Why are so many startups going public in 2021?. Let's find out

If you are just as curious to know, follow the article

What is a Startup?
What is an IPO?
Following factors you can consider before going Public
Why are Startups going public in 2021?
Pros and Cons of Registering for an IPO
What happened When Zomato went public?
List of startups that have opted for IPOs in India
FAQ

What is a Startup?

So, you hear this word floating in and out of conversations, much to an extent these days.

  • Startups are usually founded by one or more entrepreneurs and their company is in its initial stages of business.
  • These entrepreneurs involved in building startups believe that there is a demand for a certain product or a service and want to make it better by developing it.
  • The funding for these usually involves getting money from family or friends.
  • Startups need capital, so they are also on a lookout for backers to invest in them.

What is an IPO?

IPO stands for Initial Public Offering

  • Companies need capital, so they raise it in the forms of IPO and shares from public investors.
  • People have a point of view that stock prices increase after an IPO.

Following factors you can consider before going Public

  • There is a buzz in the market about your Startup.
  • The company has been financially strong for the last three years and is making good profits.
  • You hear about your company quite often.
  • The company holds a strong vision.

We are observing a trend here. Not only Indian tech startups are going public, but almost every startup is getting in the waiting list to go public in 2021.


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Why are Startups going public in 2021?

Money circulation by Central Banks

The Central banks are pumping new money into circulation in the hopes of tackling the aftermath the pandemic has left the economy in.

Where is this cash ending up?

The way for this money is paved to the path of the financial markets, mainly stocks. Now that means many of the giant institutions have plenty of money floating in so that they can invest in. Which leads us to another question: Where? These institutions now have the power to invest in IPOs.

Startups like Zomato, Nykaa, PayTM, Delhivery, some of which have already been made public and some that are gearing to go public, have the intuition that they can catch the interest of these investors.

It is becoming, a regular thing now for public valuations to overtake the private ones. Many people chip in, thinking that what they invest in will see growth in the future. The shares are rapidly growing, so if your startup is waiting to go public. There is no better chance and time than now to grab the opportunity.

Possibilities of recovery

The other part of the story is that many say that with stocks going up to the skies. With the investors and the Indian public pooling in money for the vision, your startup holds even if you have landed into the mess of running into loss. There is a chance of new money coming in. And the value of your startup will be much more than you expected.

Registrations are easier than before thanks to SEBI (Securities and Exchange Board of India)

The days of waiting are over and long gone. There are many ways to get listed on the IPO list faster. SEBI (Securities and Exchange Board of India) has made it easy for the startups to list themselves in India, introducing the Innovators Growth Platform, also making changes for them to get listed domestically.

Delays due to the pandemic

One of the other reasons is none other than the pandemic itself. It really shook up the world, bringing everything to a halt and slowing down many aspects of our lives. Seeing the stability and growth, the other startups are sure in a hurry to get themselves listed as soon as the pandemic did put a stop to the process. And it would not hurt to take advantage of the situation and accelerate it.

Pros and Cons of Registering for an IPO

Pros of registering for an IPO

  1. It helps in fundraising.
  2. Creates credibility and publicity.
  3. Having stocks as a means of payment.
  4. Reduced overall cost of capital.

Cons of registering as an IPO

  1. There's market pressure.
  2. Needs additional regulatory requirements.
  3. Potential loss of control.
  4. Transaction costs.

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What happened When Zomato went public?

  • A big deal was made when Zomato went Public. It sent the internet into a frenzy.
  • The value of Zomato went from $5.4 billion, with the expected value of its stock to hit $7.5 billion.
  • People saw humongous potential in it as it is one of the fastest growing B2B segments in the food market.
  • It was backed by investors like the Ant Group, Info Edge, Ant Financial, Temasek, and more.
  • Tiger Global, Kora, Luxor, Fidelity (FMR), D1 Capital, Baillie Gifford, Mirae, and Stead view joined Zomato’s board.

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List of startups that have opted for IPOs in India

  • Zomato
  • BYJU’S
  • Delhivery
  • LIC
  • Policybazaar
  • Freshworks
  • Pepperfry
  • Flipkart
  • Nykaa
  • Bajaj Energy

FAQ

Which Indian startups went public in 2021?

Policy Bazaar, Delhivery, Nykaa, Paytm and Zomato are few startups that went or are preparing to go public in 2021.

How many unicorns are there in India in 2021?

There are 53 unicorns in India as of June 2021.

What is an IPO?

IPO is a fundraising method where companies list their stocks in public to raise capital from public investors.

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