Why Are Startups Shifting Their Bases Back To India Eruditus is the latest unicorn to plan a reverse flip, according to a news report

By S Shanthi

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Edtech unicorn Eruditus has planned to return to India and list itself on the India Stock Exchange – BSE or NSE in the coming years, according to a recent news report.

With this, the company has joined the list of many startups that have been talking about shifting their domicile back to India. According to the ET report, the SoftBank-backed startup is in talks with two of the four big firms, including Deloitte, Ernst & Young, KPMG and PwC, to streamline shifting its base.

"No such decision has been made. Given that many startups are evaluating a reverse flip, we too are evaluating," said Ashwin Damera, CEO and co-founder, Eruditus said in a statement, shared with us.

Eruditus is backed by marquee investors such as Accel, PeakXV, Softbank, Prosus, CPPIB, Bertlesmann and Chan Zuckerberg Initiative. The company has raised US$585 million in primary capital till date. Notably, the edtech company's revenue as per IFRS audited financials grew from INR 1,900 Crores in FY22 to INR 3,320 in FY23 representing a growth rate of 75% YoY.

The Reverse Flipping Saga Continues

The reverse flipping news comes less than a week after LivSpace reportedly said that it is planning to return to India within the next 9-12 months. Many have expressed the same in the past, including Meesho, Groww and Razorpay.

The trend started in October 2022 when PhonePe announced moving its registered entity from Singapore to India. In January last year, Sameer Nigam, co-founder and CEO, PhonePe even said that at least 20 existing unicorns want to come back to India and domicile here. "They have reached out to us, if regulations get much easier," Nigam said during a YouTube Live organized by the digital payments giant.

Experts say that by establishing their main offices in India, the leading startups can access the vast consumer base and leverage the potential for expansion. "Additionally, having a presence in India allows these companies to gain a deeper understanding of the local market dynamics, consumer preferences, and cultural significance, which can greatly enhance their strategic planning and improve their products and services," said Kavit Sutariya, general partner, CapFort Ventures, in an earlier interview.

The Economic Survey 2023 also said that Indian startups are exploring 'reverse flipping', or shifting their domicile back to India, with easy access to capital from private equity and venture capital, changes in rules regarding round-tripping, and the growing maturity of India's capital market. The Survey said many Indian companies have been getting headquartered overseas, especially in destinations with favorable environments and taxation policies, where it is technically denoted as 'flipping'.

According to investors, the move to other countries was to benefit from the foreign tax policies. However, the Indian government working on offering a better business environment and ease of doing business has led to reverse flipping. Furthermore, the Indian IPO market is opening up and the Indian public markets are beginning to become more accessible.

S Shanthi

Senior Assistant Editor

Shanthi specializes in writing sector-specific trends, interviews and startup profiles. She has worked as a feature writer for over a decade in several print and digital media companies. 

 

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