India’s tech start-ups fire up public markets amid valuation concerns

Nikhil InamdarBBC Information, MumbaiBloomberg by way of Getty ImagesThe IPO of eyewear start-up Lenskart was offered out inside hours India’s start-up itemizing rush has proven no indicators of slowing down not too long ago – and this week has been no totally different. One unicorn – a tech start-up valued at greater than $1bn – has made its debut on the nation’s inventory markets, and two extra are within the offing.The $821m (£623m) share providing of eyewear options agency Lenskart, based by a flamboyant Shark Tank India choose, was offered out in lower than just a few hours regardless of mind-boggling valuations. It had a shaky market debut on Monday. The opposite large firm debuting on the exchanges on Wednesday is Groww – the nation’s largest retail brokerage backed by Microsoft CEO Satya Nadella. Its challenge acquired 17 instances extra demand from traders than the variety of shares obtainable on the market. Pine Labs, a fintech unicorn, will listing later within the week.These listings come amid an already hectic start-up IPO (preliminary public providing) season that is seen a various vary of as soon as fledgling tech companies – from residence companies platform City Firm to YouTube channel turned ed-tech unicorn Physics Wallah – tapping the inventory marketplace for investor {dollars}.The dizzying fundraising frenzy has raised a number of uncomfortable questions in regards to the costly valuations commanded by these often-unprofitable beginner firms. However specialists say it additionally indicators a maturing of India’s start-up ecosystem after a painful funding winter the place cash had all however dried up and early-stage enterprise capitalists have been discovering it troublesome to money out.Bloomberg by way of Getty ImagesMom-and-pop traders, mutual funds and insurers are pumping cash into India’s IPO marketThe new wave of IPOs is lastly giving many funds an opportunity to exit their early bets.”Exiting our investments was one of many outstanding issues once we have been elevating our fund in 2015-16, so these are actually encouraging instances for us,” Anil Joshi of Unicorn Ventures, which has funded round 100 early-stage startups, informed the BBC.Shailendra Singh, managing director of PeakXV Companions – a worldwide enterprise capital agency which has some $9bn invested throughout a number of high-profile Indian start-ups together with Groww and Pine Labs – attributes the strong demand for these IPOs to raised regulation and a wider range of contributors, together with small mom-and-pop traders, mutual funds and insurers, pumping cash into India’s fairness markets.”Traditionally there was no urge for food for these excessive progress firms. This has now modified,” Shailendra Singh mentioned. “As a result of with extra market contributors, a extra various set of firms are hitting the market.”A flush of cash from these new traders has fired up some 43 start-up IPOs this yr until the start of November. That is 5 instances the variety of start-ups that went public in 2020 and a doubling since 2023, in line with information shared by market intelligence agency Tracxn.However there’s rising concern that whereas many of those IPOs are delivering substantial earnings to early traders who’re cashing out, new traders – atypical folks shopping for the shares for the primary time – have little likelihood of creating a revenue afterward.Whereas admitting that valuations are “structurally excessive” in India, Shailendra Singh says tech firms with very excessive working margins are likely to commerce richly, not simply in India, however internationally.He believes start-up founders ought to be smart when pricing their shares for the general public, since they owe an obligation to guard small traders’ cash. However he would not suppose each start-up IPO is overpriced or unfair.A number of start-up IPOs like Zomato, Ixigo and others have generated terrific returns for traders, mentioned Shailendra Singh.What has additionally modified is that “at this time’s listings are grounded in profitability and good governance”, Anand Daniel, companion at enterprise capital agency Accel, informed the BBC.”Robust companies with clear fundamentals are going public, whereas some start-ups return to the drafting board and reassess the longer term.”Bloomberg by way of Getty ImagesIndian start-ups – from meals supply apps to ed-tech gamers – have tapped the general public markets recentlyAccording to Neha Singh, co-founder of Tracxn, whilst mature start-ups go public, fewer Indian start-ups general are having to wind up or return to the drafting board – an encouraging development. That is probably as extra founders more and more prioritise “sustainability, profitability, and disciplined capital use over aggressive enlargement”, mentioned Neha Singh. Tracxn information reveals simply 724 start-ups shut down thus far in 2025 a decline of 81% in comparison with over 3,900 startups downing the shutters throughout the identical interval in 2024, a determine which was itself down on earlier years within the decade.The sector is transitioning from “fast progress” to “strategic sustainability”, Neha Singh mentioned.However whilst extra founders increase cash by IPOs, non-public fairness and enterprise capital funding into new firms hasn’t returned to Covid-era highs.At $9.8bn, funds raised by India’s tech start-ups in 2025 are nonetheless a shadow of the $40bn raised in 2021, and marginally decrease than final yr’s $12.6bn.”We have moved from a section of exuberance to one in all considerate capital deployment. Deal volumes could also be decrease than the height years, however the high quality of firms being funded is increased,” says Mr Daniel.Whereas founders who’ve centered on high quality, profitability and governance will proceed to seek out capital, the market has change into extra discerning, provides Mr Daniel, “which is finally good for founders constructing for the long run”.However current coverage measures, such because the abolition of an angel tax, are anticipated to additional strengthen investor confidence in India.As for start-up IPOs, may the momentum proceed subsequent yr?”The capital markets are inherently cyclical and it’s inconceivable to say whether or not 2026 would be the similar,” says Shailendra Singh.For now, although, non-public traders are making hay as the general public markets lap up stakes within the start-ups they positioned early bets on.Comply with BBC Information India on Instagram, YouTube, X and Fb.