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May the new year be that of startup IPOs

With all the disclaimers that apply to predictions for a year that’s coming after a year of Coronavirus, here’s wishing that 2021 will be the year when Indian startups will finally go public. 

December 30, 2020 / 12:44 PM IST

It’s that time of the year. You make resolutions. Break them. Make new ones and break them. It’s that time when columnists like me try to predict trends. Some of them come true. Some of them go horribly wrong — like the 1995 Newsweek article that tried to reason ‘Why the Web won’t Be Nirvana’.

The article sarcastically noted in 1995: “We're told that multimedia will make schoolwork easy and fun. Students will happily learn from animated characters while taught by expertly tailored software. Who needs teachers when you've got computer-aided education? Bah.”

It goes on: “We're promised instant catalog shopping—just point and click for great deals. We'll order airline tickets over the network, make restaurant reservations, and negotiate sales contracts. Stores will become obsolete. So how come my local mall does more business in an afternoon than the entire Internet handles in a month?”

All this and more has happened in the last 20 years. A lot of teaching has moved online — democratizing access to quality of education. Amazon’s is the world’s largest store. And there are local variants like Flipkart. Malls and local stores are dying. Sure we don’t have flying cars yet. But drones are close.

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So with all the disclaimers that apply to predictions for a year that’s coming after a year that threw everything out of whack, this columnist is going to take a stab at predicting the top tech trend of 2021: Indian startups will finally go public. It’s really more of a wish than a prediction.

Here’s a party trick: ask a venture capitalist about exits. You’ll see exuberance leave their face through the straw and slink back into the Koolaid glass that they were drinking from. I don’t blame them for drinking the Koolaid. In fact, they should be blamed if they don’t. The job of a venture capitalist is to make extraordinary bets on entrepreneurs and startups.

When it comes to venture capital, investors often have to keep some of that cold rationale aside, drink some of that Koolaid and bet on the underdogs, the misfits, and the crazy ones. And that’s how many legendary companies that change industries get built.

The logic is simple. It’s okay to fail ten times but if you get that one startup that gives them an outsized exit, everybody makes money. All is good. Facebook, Google, and several other startups that have made outsized returns for their investors are great examples of how venture capital works.

But when that outsized exit becomes elusive, venture capitalists get jittery. Their investors start asking uncomfortable questions. And that is what has happened for many years in India. Barring a few exits like that of Flipkart to Walmart, or more recently Whitehat Jr to Byju’s, exits have been far and few in India. The key problem was that startups haven’t been able to go public in India. But that’s likely to change in 2021 if we go by what several Indian founders are saying.

At least six startups have said or hinted that they plan to go public in 2021. This includes Delhivery, Policybazaar, Zomato, Nykaa, and Walmart owned Flipkart. In their previous private financing round they were valued as follows: Zomato at $3.9 billion, Policybazaar at $1.5 billion, Nykaa at $1 billion, Flipkart at $24.9 billion, Delivery at $1.5 billion. At the time of listing, these startups will have to have a market cap of at least that much. Most likely, that would mean listing overseas where investors have deeper pockets.

As I’d written in this column in September, the government's announcement to relax listing norms will clear the path for Indian startups to list their shares in overseas markets. Also, recent public offerings like that of Happiest Minds have been very successful in India. If the government relaxes listing norms (like the regulation that prevents unprofitable companies from listing), startups may yet list in India too.

Given all this momentum, I won’t be too surprised if this prediction comes true. But I wouldn’t be too surprised if it doesn’t. Because in the corridors of power, these things move in slow motion (priorities, you see). Unlike in the startup world, where founders are okay to move fast and maybe break a few things.
Jayadevan PK is a former technology journalist and recovering startup founder. He now works with Freshworks Inc as an evangelist, focusing on efforts around brand building. He’s also a commissioned author at HarperCollins.
first published: Dec 30, 2020 12:33 pm
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