Tech startup unicorns line up for IPOs

It’s raining IPOs in unicorn land. As if a supercharged valuations fuelling a gold rush in India’s startup scene was not good enough, the 'techie-go-luckys' are now taking it to the next level, by hitting the markets for an encore.

And it’s not just good news for the booming tech scene. Analysts believe it could well be an inflection point for India’s financial markets, a redemption from the unending stories of slowdown and pandemic woes the economy has been saddled with for the last few years.

Scores of successful companies from India’s fertile tech startup scene will be going in for an initial public offering (IPO) starting this week, listing themselves at the stock markets for the next stage in their fundraising journey. These include the food delivery aggregator Zomato’s mega IPO which aims to raise more than Rs 9,000 crore, which will open on Wednesday.

The flurry of tech startups going for public issue of shares is set to pick up pace after that. Even more curious as all the action till now was in stratospheric valuations by lavish venture capitalists and equity investors with loose purse strings, with startups being adjudged unicorns, or those with valuations of a billion dollars or more (roughly Rs 7,500 crore), after some of the rounds. Since InMobi became India’s first unicorn back in 2011, the pace of Indian startups entering this hallowed club has only picked up pace—the total now stands at 40, with 15 of these becoming unicorns just in the last few months.

So, Zomato’s IPO will be closely followed by Falguni Nayak’s breakthrough beauty startup Nykaa filing its draft prospectus, likely coming weekend itself. Next in line would be the likes of insurance aggregator PolicyBazaar as well as fintech player MobiKwik. There are many others in the pipeline, including the likes of travel portal Ixigo, grocery marketplace Grofers, logistics star Delhivery and online drug seller PharmEasy.

Zomato’s 9,000 plus crore size of its IPO makes it one of the largest IPOs in recent years, second only to SBI Cards. However, it would just be a matter of time before the mother of all IPOs takes over—‘deca’corn (a unicorn with a valuation of more than 10 billion dollars) Paytm is headed to the bourses, and could apply as early as next week, once internal approvals are in tomorrow. The size of the IPO would be a whopping Rs 16,000 crore, making it the biggest among new economy companies, and third biggest overall (after Coal India in 2010 and Reliance Power in 2008).

The pandemic has been a boon to tech startups, as their businesses burgeoned as more and more people and businesses looked for digital solutions. Stimulus measures by western democracies also brought in lot of extra cash into the money markets, with VCs and fund managers rushing to invest them in India’s tech economy, thus spawning the unicorn revolution.

"The pandemic (has been) an accelerant of existing trends, supercharging growth…. increased comfort and confidence in using tech is a powerful behavioural accelerant that has benefited tech-enabled businesses,” explains Kunal Shah, founder, CRED. He should know, for the startup just entered the unicorn club in April this year.

Paytm’s announcement of its mega-IPO back in May, followed by the immense interest Zomato received in the run-up to the IPO (the Gurgaon firm was energised enough to advance the opening of its IPO), seemed to have spurred a spate of fellow unicorns to test the waters of the financial markets. And if you go by the adage that the proof of the pudding is in the eating, the appetite of the small investor, to be revealed later this week, will be more than indicative. Hungry kya?