Prashanth Prakash, partner at Accel India, which has backed startups such as Flipkart, Freshworks and Zetwerk, said India’s public markets are one of the best things that the country has to offer to the new economy space, but the ecosystem “lost sight of what it is to practically build a company for the public market”.
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“The whole valuation ladder that builds up builds in a little bit of misalignment between the investor and the entrepreneur because right there are these opportunities for secondaries, and investors can keep talking about markups…and I think there is a misalignment,” Prakash said.
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In 2021 and early 2022, leveraging the boom in public markets, several new-age tech companies such as Zomato, Paytm, Nykaa, PB Fintech, Delhivery and CarTrade launched their initial public offerings (IPOs). While some of them were unable to retain their valuations post-listing, others also got a reality check from the markets in due course.
“Companies compound after IPO, and IPO should not be the end event of when you think a company’s value is determined. The first round was about maximising value pre-IPO, I think that’s not a sustainable aligned way,” Prakash added.
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“Ultimately I think we all have to be aligned towards building these multi-decadal enduring companies. Nobody was planning for even five years or 10 years…people were planning for two years. One of the best things that India has is its public markets. We lost sight of what it is to practically build a company for the public market… nobody put that right and center,” he said.Zepto cofounder and chief executive Aadit Palicha – also a panelist – indicated that the company is making efforts towards becoming a venture that goes public early in its lifecycle.
Speaking about the company’s recent $200 million fundraise that saw the quick commerce platform entering the unicorn club, Palicha said, “We raised this capital because we thought the business had reached an inflection point where there was really a strong use case for growth equity to accelerate value creation. Otherwise, we wouldn’t have raised the capital. Hopefully, we are trying to be a company that goes public early in our lifecycle. We want to be public in the next 18-24 months.”
Prakash and Palicha were joined on the panel by Harshil Mathur, cofounder and CEO, Razorpay; Rashi Narang, founder, Heads Up for Tails; and Lalit Keshre, cofounder and CEO, Groww.
Notably, Asish Mohapatra, cofounder and CEO of business-to-business ecommerce platform OfBusiness – ETSA 2023’s Startup of the Year winner – had told ET earlier that its aim of going public is something that drives good corporate governance in the company. “The belief is that we have to list…in listing, if your corporate governance is good, you will get a premium of 10-15%. If I take a shortcut, then I won’t get money or people won’t come. So, there is that inherent belief that you get a premium…so why take that risk? It doesn’t make sense,” he had said.