Startups IPO: Soon get a piece of startup wealth as young companies turn to stock exchange listings

Indian stock exchanges are likely to see a spurt in startup listings as nearly 58 per cent of Indian startups are planning to list on domestic bourses in the coming five years, according to a Reserve Bank of India (RBI) survey of 1,246 startups held between November 2018 and April 2019. The survey was released earlier this week. Majority of these startups aiming for listing belonged to healthcare, software development, and IT consulting sectors and were started less than three years back. Some of the Indian startups from the past two decades, which evolved into large tech organisations, and are listed in India included Infoedge, JustDial, InfiBeam, Bharat Matrimony, IndiaMART etc. while the likes of MakeMyTrip and Yatra are listed on Nasdaq.

Prominent Indian startups including few unicorns and soonicorns over the past few years have shifted their registered offices outside India — primarily Singapore for ease of doing business, raising capital, and future IPO prospects. Flipkart, InMobi, Grofers, Droom, Grey Orange, Crayon Data etc. are companies belonging to this lot.

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Among the other key findings from the RBI survey was the participation of female entrepreneurs in the ecosystem. 55.5 per cent of the surveyed startups had only male founders while only 5.9 per cent of the startups were founded by females. Moreover, according to another study by venture debt provider InnoVen Capital, the number of funded startups with at least one female co-founder had declined in 2019 to 12 per cent from 17 per cent in 2018. The total number of women-run businesses overall continued to remain small — only 14 per cent according to the Sixth Economic Census (2014) while according to Mastercard Index of Women Entrepreneurs 2018, women entrepreneurs were only 11 per cent of the total business owners in India.

The source of capital for the majority — 42.9 per cent startups in India was family and friends followed by angel investors, incubator funding, PE/VC that were source of funding to 11.3 per cent, 9.7 per cent, and 7 per cent of the startups surveyed. 2019 was another good year for startups with respect to the amount of funding raised. 2019 saw 887 startups getting $14.5 billion in funding — around 26 per cent increase from around $11.5 billion in 2018, showed data from Tracxn.