**Startups Eye Earlier IPOs Amid Changing Market Dynamics**
As domestic liquidity remains robust and private funding levels off, startups like Scripbox, MyGate, FabHotels, and ClassPlus are exploring opportunities to enter the public markets sooner than previous cycles would have indicated. This trend marks a significant shift from the post-pandemic landscape of 2021, where Indian startups opted to stay private for extended periods in pursuit of unicorn status.
The current environment reflects a growing emphasis on profitability and sustainable growth, even among early-stage startups, as opposed to the previous focus on aggressive capital expenditure. Companies reaching a scale of ₹300–400 crore and demonstrating consistent performance are increasingly looking to public markets to enhance brand credibility, attract talent, and facilitate shareholder exits.
According to sources familiar with the situation, these startups are in various stages of discussions regarding potential listings on Dalal Street. The motivation behind this shift includes favorable valuations, ample domestic liquidity, and a desire among founders to avoid the lengthy wait for additional private funding rounds. Mukul Rustagi, co-founder and CEO of ClassPlus, noted that the current appeal of public markets significantly influences the decision-making process for many early- to mid-stage startups.
While Rustagi refrained from commenting on the specific size of their initial public offering (IPO), he indicated that startups are contemplating a dilution of approximately 10-15% of their market capitalization through public issues. ClassPlus is expected to finalize its listing plans after the conclusion of the current financial year.
In terms of fundraising, these startups are projected to raise between ₹400-600 crore through their IPOs. A source revealed that many companies are leaning towards the IPO route instead of seeking growth capital, as they observe peers achieving substantial valuations. An earlier IPO allows founders to minimize dilution, reset investor expectations, and alleviate the pressures associated with repeated private market exit cycles. The current trade-off favors predictable capital and liquidity over the pursuit of inflated private valuations.
These companies are actively engaging with advisors and bankers to assess the feasibility of an IPO. MyGate has not responded to inquiries regarding its plans, while FabHotels, operating under Travelstack Tech Ltd, recently filed its draft red herring prospectus to raise ₹250 crore.
In conclusion, the evolving landscape of startup funding in India indicates a shift towards earlier public listings, driven by a focus on sustainable growth and favorable market conditions. This trend could reshape the future of how startups approach capital raising and market entry strategies.
**FAQ**
**Q: Why are startups opting for earlier IPOs now?**
A: Startups are choosing earlier IPOs due to strong domestic liquidity, favorable valuations, and a desire to minimize dilution while resetting investor expectations.