More tech startups plan to go public in the following couple of decades.
Bengaluru: At least half-a-dozen tech startups, such as unicorns such as Freshworks, Ola and Oyo, are taking a look at going public within the next couple of years, based on four people conscious of the growth.
The development comes amid a number of the world’s leading tech startups-including ride-hailing companies Uber and Lyft-experiencing disappointing debuts on stock exchanges, followed by WeWork’s choice to withdraw its IPO. Indian startups are, however, certain of pulling off successful public offerings.
The botched WeWork IPO and the underwhelming investor response to Uber and Lyft’s reveal sales have sowed doubts among investors regarding the lofty valuations delegated to those startups and could potentially threaten the IPO prospects of their Indian counterparts.
Some state Indian startups announcing their intention to go public has more to do with their investors seeking exits.
“There will be a spate of IPOs starting two years from now. Globally, funding is gradually starting to dry up-as that affects, entrepreneurs will realize that it is crucial to elect for an IPO also as a source of funding,” said Niren Shah, managing director at Norwest Venture Partners, India. “Also, venture capitalists are seeking exits that don’t come that easily via a merger and acquisition, which explains why IPOs would grow to be a way for investors to exit.”
As unit economics improve and Indian startups become profitable, increasingly more of these would turn to public markets for financing, he added.
For instance, furniture vendor Pepperfry hopes to record an IPO in the next 15 months, co-founder Ambareesh Murty explained. This, he stated, is potential because Pepperfry includes a”differentiated business with high margins”.
“We are a high-growth company with large margins and expect to get profitable over the next 12 weeks or so,” said Murty. “We will have a compelling proposition for the public markets.”
Ola, which has maintained its bigger investor SoftBank in bay also has been increasing tranches of capital from different investors, might be looking at an IPO as a source of financing.
Mint lately reported that SoftBank-backed Oyo is also looking to go public in the next 3 years. On the other hand, the company that’s perhaps closest to getting recorded is Chennai-based software product firm Freshworks, that will begin preparing for an IPO in the US prior to the end of 2019, as mentioned by Us.