Do Startups and IPOs go together? Experts suggest difficulties

Startups are increasingly getting popular in India. They have been in the blooming stage for the last five years and now, during the Covid-19 pandemic, it has become even more popular.

But the increasing inclination towards IPOs may be hampering the growth of the startups. The boom in initial public offerings in India directly impacts the startup culture and it can be proved by how several high-profile startups tanked in the market after listing themselves as IPOS.

Learning from this, Oyo Hotels and logistics provider Delhivery are among the few startups who are pushing back their public debuts.

They are among the crowd which has been focusing on preparing to reappraise target valuations. These two startups are backed by SoftBank Group Corp and are among the most anticipated public offerings of the country.

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IPOS had one of the best years in terms of the spending companies did last year till now. But that has impacted startups in a way that investors have soured ahead of thinking to invest in new technologies.

Things are turning complicated for other prospective IPOs after the calamitous debut of fintech firms Paytm and Zomato, which was recently listed along with Nykaa.

Regulators are getting more cautious about what to choose and which companies should be listed further. They have toughened the scrutiny over IPO candidates as investors are not ready to pour down heavy amounts set to invest on startups. This further resulted in delaying the listing of these companies as IPOs. Anup Jain, a managing partner at early-stage investor Orios Venture Partners talks about it saying, “Investors are no longer enamored of the household name startups; they want a path to profitability and returns, not hype and hoopla.”