The much-anticipated move by the Securities and Exchange Board of India to facilitate listing terms for India’s fastest mushroom start-ups is to expand the primary markets and give small investors the opportunity to participate in the business sector growth that existed 20 years ago. . Many Indian startups have now reached their evolutionary stage, in which the primary market list is the logical next step, to give early stage investors the opportunity to give cash, but also to take their story to a wider audience.
It may not be all Hunky-Dory, because a list of the successes of these companies can serve as a test based on a set of parameters that are far more rigorous and demanding than they have ever been used to. Angel investors, private equity funds and venture capitalists are very kind to their wards. Because, in the early stages of their investors, they seek growth rather than return. What’s more, the numbers they see only come from exponential progress. That’s why we’ve seen terms like gross value added (GVA) used as a yardstick for digital commerce growth. Unfortunately, profitability in the ecosystem of most startups has not yet been recognized.
Since the average investor wants to see his money make a profit, and also wants to see it in the short term, this is a listing yardstick to implement. This is a reason why experienced business leaders with years of scrutiny of quarterly and annual results are still apprehensive.
By creating a special boardwalk called the Innovators Growth Platform on the National Stock Exchange, SEBI has tried to make some difference to these new types of IPOs. Some other discounts, such as simplifying open offer trigger requirements and adjusting delisting rules, are also intended to make life easier for startups.
But in the end, India’s newest listed companies will have to play by the rules that govern all businesses. It’s not easy. Market researcher Renaissance Capital estimates that 50% of IPO registrations in the US will eventually be withdrawn. Even with those listed, investors are disappointed in the store. McAfee, a cybersecurity firm, for example, has strong credentials to go on its 2020 list. At $ 20 per share, it fell on the opening day and rose six months later.
For inspiration, startups should only look at the Infosys IPO in February 1993. Its success started the $ 200 billion industry with companies, role models for how to grow profitably today.
(Sandeep Khanna Azim Premji: The Man Beyond The Billionaires)