**Indian Startups Showcase Wealth Generation Through IPOs and Acquisitions**
Indian startups are demonstrating their ability to create wealth through initial public offerings (IPOs) and acquisitions. Recent acquisitions of Minimalist and Wingify have proven lucrative for their founders, despite the smaller deal sizes and lower valuations compared to typical startup IPOs. As majority stakeholders, these founders will retain the majority of the financial benefits.
Last week, Wingify, a software-as-a-service (SaaS) company based in Delhi, was acquired by private equity firm Everstone Capital for $200 million. Founder Paras Chopra, who established the company in 2010 without external funding, held nearly 84% of the company as of March 2024. In a similar vein, Jaipur-based skincare brand Minimalist was acquired by Hindustan Unilever Ltd for approximately ₹3,000 crore. The founder-brothers, Mohit and Rahul Yadav, owned just over 61% of the company and had received some funding from external investors, including VC firm Peak XV and Unilever Ventures.
These acquisitions are significant as they highlight the potential for wealth generation in the Indian startup ecosystem. Recent IPOs of companies like Zomato, Swiggy, and Nazara have yielded substantial returns for founders, long-term employees with stock options, and external investors, including venture capital and private equity firms. For instance, Swiggy’s IPO created wealth for 500 individuals, while Zomato’s 2021 listing made 18 people dollar millionaires. The acquisitions of Minimalist and Wingify, while smaller in scale, still provided considerable financial rewards for their founders.
Many founders do not maintain a majority stake in their companies, often relying on banks or personal funds to establish and operate their businesses. Those who dilute equity typically seek investments from family, friends, or angel investors. However, without raising significant capital, many startups struggle to scale quickly. Most Indian unicorns, valued at $1 billion or more, have secured substantial funding from external investors.
There are exceptions, such as Zoho, a SaaS company valued at nearly $6 billion, which has not taken any external funding. Founder Sridhar Vembu and his siblings own over 80% of the company. Another example is Zerodha, a Bengaluru-based brokerage, where founder brothers Nikhil and Nithin Kamath, along with Nithin’s wife Seema Patil, collectively own more than 99% of the company. Zerodha reported profits of ₹4,700 crore in the financial year 2024.
This raises the question: is bootstrapping a more advantageous approach for startups?
