In 2021, 11 Indian startups — EaseMyTrip, Nazara, Zomato, CarTrade, Freshworks, Nykaa, Fino, Policybazaar, Paytm, RateGain and MapMyIndia — went public
Only two of these IPOs — EaseMyTrip and CarTrade — were purely offers for sale, which saw existing investors offload their shares to get exits
Overall, startups raised more than $2.7 Bn through mega anchor investments and pre-IPO rounds
If there was one solid undercurrent that ran across 2021, it has to be the wave of public listings in the Indian startup ecosystem. The initial public offering or IPO is seen as the ultimate exit for startups and considered a vindication of the entrepreneur’s vision and a startup’s growth.
Undoubtedly, this was a watershed year in Indian startup history. In 2021, 11 Indian startups — EaseMyTrip, Nazara, Zomato, CarTrade, Freshworks, Nykaa, Fino, Policybazaar, Paytm, RateGain and MapMyIndia — went public and saw mixed results when it came to the listings.
Overall, these 11 startups raised over $7.36 Bn through the public markets through their IPOs. The median amount for IPO fundraise in 2021 was $409 Mn, with an average of $669 Mn raised through stock market listings.
Paytm grabbed the limelight with its $2.4 Bn IPO (at $20 Bn valuation) but its less-than-stellar listing performance and the volatility in the company’s share price has raised some alarms.
Two of the 11 tech IPOs — EaseMyTrip and CarTrade — were purely offers for sale, which saw existing investors offload their shares to get exits. Every other tech startup IPO this year involved a fresh issue, where companies raised funds.
The IPO rush in the second half of the year — post Zomato’s listing in July — was preceded by the successful public listings of gaming giant Nazara Technologies and online travel platform EaseMyTrip, which gave confidence to Indian retail and institutional investors.
Both these IPOs saw the highest oversubscription in 2021. Despite the risks or challenges associated with profitability and business focus for many of the companies that followed Nazara and EaseMyTrip, analysts and startup investors are bullish on the IPO potential of tech startups and new-age companies.
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IPO-Bound Startups Bank On Anchor Rounds
As is expected with IPOs, tech startups raised sizable capital through pre-IPO rounds and anchor investments. Overall, 10 startups — with the exception of Freshworks — raised more than $2.7 Bn through such rounds.
Anchor or pre-IPO deals tend to bring comfort to retail investors that a company’s valuation is valid and recent. It’s also about attracting new investors to the cap table to prove the pre-IPO health of the to-be-listed company.
Paytm led the way with its $1.1 Bn anchor round, followed by Zomato, which raised just over half of Paytm’s pre-IPO round.
Interestingly, Freshworks, the only Indian startup that chose to list overseas this year, decided against raising a pre-IPO round. The Nasdaq-listed company raised $1 Bn through its IPO in September.
IPO Rush In 2022
With the relative success of some of these listings, the mood in the ecosystem is turning more optimistic. The emergence of a record 40 new unicorns in 2021, and the massive user base for apps, and digital services and products is only adding to this feeling.
And while there is still a long way to go before a majority of startups achieve profitability and justify their high valuations, the successful listings of Zomato, Nykaa, Policybazaar have become guiding stars for more than two dozen startups that are about to IPO in 2022 and 2023.
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The list includes Indian giants such as Delhivery, BYJU’S, PharmEasy, Ola, OYO, Pine Labs, Swiggy, Flipkart and others. With this cream of the ecosystem, looking to go public, the next couple of years will be the biggest litmus test for Indian startups.
