Tracxn Listing Day | Goal is to build an iconic data providing company from India, like how Infosys is an iconic software company from India: Founders Abhishek Goyal and Neha Singh

Tracxn, a SaaS platform that offers customers private company data for deal sourcing, identifying M&A (mergers and acquisition) targets, deal diligence, analysis and tracking emerging themes across industries and markets, among others, had got an approval from the Securities and Exchange Board of India (Sebi) to list on the stock exchanges in December last year.

The company, founded by Abhishek Goyal and Neha Singh in 2013, competes with global private market data providers such as PitchBook, Crunchbase, VCCEdge, CB Insights, and Privco, and ranks among the top five. Tracxn will be the first company among the five to get publicly listed.

It’s public issue, an offer for sale (OFS) of 38.67 million shares by its promoters Singh and Goyal and shareholders that include Flipkart founders Sachin Bansal and Binny Bansal, and VC firms like Sequoia Capital and Accel, sailed through on the final day of bidding. The IPO (initial public offering) was subscribed 2.01 times. On a fully-diluted basis, if Tracxn lists at the upper end of its price band of Rs 75-80, it will command a valuation of about Rs 900 crore.

In an hour-long chat with Moneycontrol, Goyal and Singh shared their journey from starting out as investor-turned entrepreneurs in 2013 to becoming founders of a publicly listed company. The two founders also talked about challenges, advantages of listing publicly, and why they chose the option of listing in India. Edited excerpts:

How was the journey from starting out in 2013 as a private company to getting publicly listed in India now?

Singh: It’s an awesome feeling to have finally gone through the whole process and list on the stock exchanges. People often ask me when we thought of listing in India versus anywhere else in the world. Interestingly, we had thought of listing in India when we started 10 years back.

At that time, we had an option of setting up the team in the US or here. But we eventually thought of setting up the HQ (headquarters) here and started hiring in India. We felt if we are building a business like this, then getting listed is the goal and India would provide a good opportunity for that because ours was going to be a profitable business given the model and the structure and Indian markets do provide a reasonable opportunity to such businesses.

Obviously, we didn’t have so much clarity back then but we actually started thinking of getting listed in December 2020 when we achieved positive cashflow and the markets back then looked decent. Thankfully in June we achieved bottom line profitability and that’s when we decided to go ahead with listing.

For you two as founders of a now publicly listed company, what changes and what does not?

Singh: I think for us, personally, nothing changes. We are in the office two days before listing, we will be in the office the next day, so I think that keeps going on. One thing that founders keep asking me is whether to consider listing as an option or not and I would say you should list only when building a business for the next 30 years, and not for M&A. Because for publicly listed businesses, it’s not a step, it’s a new phase. Our aspiration is to build a global financial data platform out of India.

Goyal: The other thing about getting publicly listed is, when you start as a publicly listed company, you are thinking about four decades of growth and as founders you should look to participate in that. You must look at it as a new commitment to build it for 40 years. So, you have to take a lot of long-term decisions. Having said that, we have always built this company thinking long term and hopefully we can build on that vision.

What changes is that we will have to be more disciplined in the future, but I think we were already very disciplined. Being public becomes sort of an anchor, so you become more stable as a company, the inorganic path opens up, currency will now be liquid, so inorganic acquisitions route opens up. The goal is to build an iconic data providing company from India, how Infosys is an iconic software company from India.

How are you currently looking at the markets and how do you see people responding to the IPO?

Singh: We are one of the very few venture-backed companies that are going for a listing this year. So we had to also actually open demat accounts for some of our investors because we were the first company to get listed in their portfolio. We are also one of the first VC-backed companies from Bengaluru to get listed. Usually, the hubs are Mumbai and Delhi.

If you would have asked me two months back about my view on the market, it would have been anyone’s guess. I, as a founder, have honestly never followed macros so much as I have over the last few months. Honestly, these macros weren’t impacting our business internally.

Two months back, it was looking like the markets may not recover anytime soon but thankfully there was a good phase in the last two months. Markets are just down 5-6 percent from their peak. Indian markets are still much better than the western markets and so we feel there’s an opportunity to get listed.

Goyal: There’s some momentum in the Indian market when you compare it globally. It is a tough market, but I feel we have a good opportunity. Last year so many companies applied for an IPO and got approvals. This year there’s little liquidity so naturally there’s so much competition for that dollar. I think we find ourselves lucky because we got an opportunity to list in this phase because if the approval had expired, we would have had to do the entire process again and filing DRHP (draft papers for IPO) again is easily a Rs 3-5 crore expense!

During roadshows when we were meeting investors, two things stood out for me. One is, ours is an EBITDA (core profit) expanding business and second, it is a free cash flow positive business. A lot of expenses are non-cash. Indian markets treat profitable businesses well so we hope to make the most of it.

How will you sell the story of Tracxn to retail investors, especially as the business is a B2B SaaS model?

Goyal: It’s very simple. If you look at it globally, people have made tonnes of money by selling data. Investors need high quality data to make business decisions as these are large financial decisions. In public markets we know platforms that have made billions of dollars of revenue by providing data to investors, so these are high cash generating machines.

Now the private market is becoming large. Earlier if you put together valuations of all publicly traded companies, that could somewhere be around $90 trillion. Private market valuations are now close to $9 trillion and that is increasing. So eventually as the market grows in size, the infrastructure or the entire ecosystem of that market increases in size.

When we spoke about these numbers during our roadshows, there was a lot of excitement shown by investors. So that was the philosophy institutions bought, we expect the retail investors to buy the same.

Now Tracxn will be a publicly listed company. Public scrutiny will be much higher. How are you mentally preparing yourselves for it?

Goyal: We are looking forward to it. If you don’t want scrutiny you should never go public. The way I explain this internally is if you are a cricketer, playing for your national team is the ultimate goal for you. If you do something wrong then, there will be a lot of comments on your performance, etc, but you are practically achieving your ultimate target right?

So running a company and taking it public is like playing for your national team. We feel the same as a cricketer debuting for their national side and we really are looking forward to it and are mentally ready to take on all the scrutiny, all the challenges.

Your Europe and US operations constitute 70 percent of your revenues. Do you see that mix changing and how do you see India business growing?

Goyal: India business is an interesting case study. If you look at public markets globally, cumulative valuation is about $100 trillion and India’s public market valuation is about $3 trillion, so we are probably 3 percent of the market. But in private markets, India already constitutes 10 percent of all the unicorns and only trails China and the US.

So, in this particular economy, we have a higher market share, and that is the reason we believe India continues to be a very large part of our business because the nation is generally ahead of any large economy like Japan and Germany.

Having said that, we will also continue to capture revenue from global markets also fairly quickly as we go deeper. I think the US itself is a very deep market and a very large market, so that revenue will also keep growing for us.

You achieved profitability recently in the June quarter. How do you see that number growing, going forward?

Singh: If you look at our last three-year trajectory, topline (revenue) and bottomline (profit) have been fairly linear. Our revenue, across the years, has grown faster than our costs. Our revenue grew 30 percent, costs grew only about 4 percent. So the EBITDA (earnings before interest, tax, depreciation and amortisation) margin has expanded on a year-on-year basis. So achieving profitability was not a one-off event, we expected it to happen on a regular basis always.

The reason we raised venture capital was to have the initial upfront investment to build the platform. In the first five-six years, we wanted to build a strong team across departments--tech, product, analysts, data operations--so that we have a good product ready with us.

We are now expanding the sales functions team. So in the last 12 months, we hired 150 people and the bulk of it was for the sales team. So we wanted to build a strong product first and then focus on sales. So that’s what has happened. It has been fairly linear and we don’t see a reason for it to change. We expect that will continue happening going forward.

What challenges have you faced in the process of building a private market data provider from India?

Goyal: For us, to build a data platform, from day one, we knew the competition is not going to be local, it’s going to be global. You have to build a company that is globally competitive and for me that was the most challenging aspect but also very interesting and exciting at the same time.

Singh: Yeah, I think that’s what we looked at always. We never thought of launching the product in a specific county or anything. We always heavily invested in building the product right. When we were building a product for sector-specific coverage, we never built it for a specific country, we always wanted it to build globally. So that was challenging initially but we knew there were very good ways to monetise it later on, if we build it right first.

Last question. If you have to describe your feelings in one word or phrase when you ring the bell at the NSE on October 21, how would you do that?

Goyal: It’s surreal. It’s a new beginning. As I said, it’s like playing your debut international match.