Startups with upcoming IPOs in the next 2-3 years

By : |September 11, 2020 0

Although most large Indian startups are far from an IPO, there are some we expect to go public in the next few years. Many of these have already achieved Unicorn status. But, with the current economic slowdown, there is every chance that some startups may retreat on their path towards IPO.

And even though startups have received private funding, the ecosystem is still not steady. Thus, Indian startups have yet not been able to mop up funds through the IPO route. But as I said, this could be changing. For example, take Zomato for instance. Recently, Zomato secured over $250 Million funding. The CEO of the company, in a letter to employees, stated that they are planning to take Zomato to an IPO next year.

This could be true for others as well. We expect some such as Freshworks, Policybazaar, and Nykaa to go public in the next few years. There are undisputed reports of Lenskart, Byju’s, Paytm, Ola, and grocery giants Bigbasket and Grofers to go for an IPO within the next 5 years. Even non-unicorn startups, like Pepperfry and Milkbasket, may try their luck in India’s capital market.

Not only that, but they will have government support as well. For example, BSE has launched its startup listing platform in December 2018. It facilitates funding for deserving startups by enabling them to raise capital from the market. The facility received its first listing after 8 months.

What has stopped them still?

While we have heard talks of IPOs all through 2019, and 2020, none of India’s unicorns meet public listing guidelines in India. They have to return profits for at least three years.

For example, Paytm is struggling to maintain its market leadership with rivals Google Pay and PhonePe in the market. It had 165% losses in the last financial year while revenue increased marginally at just 8.2%. Paytm’s parent One97 Communications posted Rs 3,959.6 crore in net losses for the fiscal year ending March 31, 2019, against Rs 1,490 crore for the same period in the previous year.

On the other hand, food-tech startups, Swiggy and Zomato are locked in an expensive market share battle. Why expensive? Because their competition has resulted in higher losses. Zomato reported a loss of $294 million (Rs 2,058 crores) in the last financial year. Alternatively, Swiggy reported that its loss widened six-fold to Rs 2,345 crore in the FY 2019.

Ride-hailing unicorn Ola is facing similar problems. Similar story for Oyo as it still has to prove that its business model is profitable.

Secondly, for a direct listing, the exchanges require that the promoters should contribute at least 20% of the total PUC of the company. And as this is not the case for most of the Indian unicorns, the IPOs are a pipe-dream for most startups.

What startups may go for an IPO in the next few years?

CompanySectorValuation ($B)Major Investors
UnacademyEdtech1.5Blume Ventures, Nexus Venture Partners, Sequoia Capital India, SAIF, General Atlantic, SoftBank
NykaaE-Commerce1.2Techpro Ventures, TVS Capital, Sharrp Ventures, TPG Growth
Pine LabsPayments1.5Sequoia Capital India, New Atlantic Ventures, Altimeter Capital, Temasek, Mastercard
LenskartEyewear1.5SoftBank Corp, Kedaara Capital, TPG, Chiratae Ventures, TR Capital
Ola ElectricMobility1.1SoftBank Corp, Tiger Global, Matrix Partners
BigBasketGroceries1Ascent Capital, Helion Ventures, Bessemer, IFC, Alibaba
Dream11Gaming1.1Kalaari Capital, Tencent, Multiples PE, Steadview
DelhiveryLogistics Services1.6Nexus Ventures, Multiples PE, Tiger Global, Carlyle, SoftBank Corp, Fosun Group
BillDeskPayments (B2B)1.5SIDBI VC, TA Associates, General Atlantic
FreshworksSaaS - CRM3.5Accel, Tiger Global, Google, Sequoia Capital
Oyo RoomsBudget Hotels10Lightspeed Ventures, Sequoia Capital, SoftBank
PolicyBazaarInsurance Tech1Info Edge, Intel, Inventus Capital, Tiger Global, SoftBank, Tencent
SwiggyFoodtech3.6Accel, SAIF, Norwest, Naspers, Tencent
Byju'sEdtech10Aarin Capital, Sequoia Capital, Lightspeed Ventures, Tencent, General Atlantic, Tiger Global
ShopcluesE-Commerce1.1Nexus Ventures, Helion Ventures, Beenos, Tiger Global, Others
ZomatoFoodtech3.1Info Edge, Sequoia Capital, Vy Capital, Alibaba, Tiger Global, Kora Capital, others
QuikrClassifieds1.6Matrix Partners, Omidyar Network, Norwest, Kinnevik
PaytmPayments16Saama Capital, SAIF, Alibaba, Berkshire Hathway
OlaRide Hailing6.4Tiger Global, Matrix Partners, Steadview, SoftBank, Tencent
SnapdealE-Commerce6.5Kalaari Capital, Nexus Ventures, Bessemer, SoftBank, Alibaba
FlipkartE-Commerce21Accel, Tiger Global, Naspers, SoftBank, Tencent
PepperfryFurniture E-Commerce0.3Bertelsmann, State Street Global, Pidilite, Norwest Venture Partners Goldman Sachs and others
ZerodhaOnline stock trading 3Zerodha has never raised money
PhonePePayments7Flipkart
MilkbasketDairy<1Inflection Point, Mayfield Fund, Unilever others
GrofersGroceries3.2Bennett Coleman and Co Ltd, Softbank, Sequoia, Grofers Int, others

Looking at their net losses, the losses of the top tech unicorns paints a worrying picture when it comes to their financial health. But this perhaps will resolve in 2-3 years as markets blossom again. Nevertheless, IPO would let these startups’ founders retain back their ownership.

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