The Indian startup ecosystem is changing at a rapid pace and simultaneously are the ways the investors are exiting their investments. Private equity (PE) and venture capital (VC) firms relied heavily on corporate buyouts to make returns for years. Initial public offerings (IPOs) and new market structures now are taking the center stage.
Indian stock markets were once seen as a space for large and established companies. They are now becoming a launchpad for startups to tap into public funding. Bain & Company report reveals that 2023 was a standout year for the Indian exits and the total value of exits was up by 15% to $29 billion. Public market sales including the block trades accounted for half of these exits by value.
Block trades are gaining popularity as a simple and quick way for early investors. These are large transactions that take place privately and often between institutional investors. These avoid the lengthy and expensive process of traditional IPOs. It is a win-win for the startups as they get liquidity without a full-fledged public listing.
Dhruv Dhanraj Bahl of Eternal Capital believes that this is a new era for the ecosystem. He highlighted the way MSME IPOs, startup exchanges and aggressive mergers and acquisitions (M&As) are changing the game.
Retail investors are also playing a bigger role in the exit phase. Archana Jahagirdar of Rukam Capital said that today’s retail investors are agile and actively looking for value in the public markets.
There is also buzz around innovative exit methods. Direct listings and SPACs (Special Purpose Acquisition Companies) are being explored as alternatives.
Block trades and bulk deals are currently limited to well-known startups, but there is a growing interest in secondary platforms that connect smaller investors with opportunities to sell their stakes.
The Indian public markets are maturing and are driven by strong domestic demand as well as the growth of digital economy. The country is proving its potential as a global hub for entrepreneurial innovation as more startups embrace IPOs and new exit models.
The Indian startup story is just getting started now and it is clear that the IPOs are becoming a major part of the exciting journey.
