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Why Are Indian Startups Shy of Going Public Is it larger scrutiny, or just the non-willingness to take a risk?

By Agamoni Ghosh

Opinions expressed by Entrepreneur contributors are their own.

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Facebook, born out a college dorm room in Harvard, has changed the way people communicate and interact online and through mobile devices. A startup which has become one of the most talked about success stories in recent times, was already being valued at $83bn, when it decided to take the plunge and go public.

Why? Well that's how most of the world's biggest companies have scaled heights and consequently valuation. Post the opening offer, the company gained a market valuation of $104.2bn, an inspiring route for any startup to look up to.

So what's stopping Indian startups from taking the listing decision, especially when some of them are valued over a billion dollars already. Let's find out.


Startups, especially in their growth stage already face scrutiny from their investors on various fronts, and its worse for consumer-focused businesses who find it challenging to keep the brand reputation intact with limited resources. It's but obvious that before listing, a company has to be ready to be able to face scrutiny both from regulators as SEBI, and from investors. Many startups may also feel they will not have the liberty to operate the way they do, as getting shareholders approval for every major decision may seem a lot tedious for them.

"The decision to list is not an easy one. It brings a lot of scrutiny especially from the public eye and the investors," said Vikram Limaye, MD and CEO of NSE, who wants to encourage startups to take the dive. "But the advantages are also high and in the long run it is the way to create wealth and value through the company," he added.

He encourages entrepreneurs to come forward and hold dialogues with SEBI and other stakeholders, to devise a way for startups to commence the trend of listing on bourses. He also hopes that if Unicorns decide to list in future, they should do it in India, and not other countries, by taking advantage of the stock exchanges here.

Safer To Merge or Sell?

Although some big startups have hit the billion dollar mark, despite red balance sheets in the past and tough times, most medium sized ones have given up mid-way or find it safer to opt for an M&A deal.

"As the markets don't run deep for certain sectors, most ventures see it in their interest to sell their venture at the right time," said Vikram Chopra, co-founder of FabFurnish who sold his company to the Future Group.

While M&A may not be the real issue here, as acquisitions are a natural part of business cycles, the mentality to not expand may be problematic. Willing to expand their thinking beyond the usual startup mentality, BigBasket founder Hari Menon feels the phenomenon of exiting should be restricted to investors and not founders.

"You don't start a company to exit. Do you? Moreover, valuation is as mythical as exit is in the startup ecosystem," he said recently at an event in Bengaluru. "I feel the public markets have a solution for this, to give the right kind of reflection on valuation and in future we may want to explore that option if required," he added.

Startups May Need An Alternative Perspective

Given that most startups, barring the bigger ones, may not qualify for the minimum requirements set by SEBI to list, CB Bhave, Ex-Chairman of SEBI, feels they need to be looked at differently.

"I didn't know much about capital markets when I entered SEBI, and all I could see back in the early 1990's were only problems. But we have worked over the years to systematically deal with them as a whole. And now as the world is changing, the capital markets need to change as well and need to look at startups in a different perspective," he said. "If they need a different avenue for trading I urge that all parties sit together and find a solution," he added.

Agamoni Ghosh

Former Staff, Entrepreneur India

She was generating stories out of Bengaluru for Entrepreneur India. She has worked with leading national and international business publications, including Newsweek, Business Standard, and CNBC in the past. 

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