Indian Software Product Industry Round Table (iSpirt) has played a key role in articulating the regulatory requirements of tech start-ups. On December 19, U K Sinha, chairman and Securities and Exchange Board of India (Sebi), and his management team heard the stories of eight Indian software product start-ups in an event organised by iSpirt. This triggered a set of events that have culminated in the announcement of a new start-up IPO regime on Tuesday. Sharad Sharma, co-founder of iSpirt, talks to N Sundaresha Subramanian about the significance of the new regime. Edited excerpts: What is the significance of Sebi’s announcement? This is the big first step in stopping the exodus of tech start-ups from India. The availability of exit options will increase liquidity in the system, which in turn will draw more investors toward India. Through IPOs, Indian companies will now not only create value but also keep it in the country. Are you happy with the relaxation given under the new regime such as removal of cap on general corporate purposes, lock-in, disclosure, etc? Yes! What do you think about the Rs 10 lakh minimum investment requirement? Having this cap protects small retail investors.
By offering this protection, ITP (institutional trading platform) is able to relax the listing norms. This is a good way to move forward. How soon do you expect the first start-up listing under these rules? We will see the first tech start-up file for an IPO under ITP by the end of the year. Do you think the pre-issue QIB (qualified institutional buyer) shareholding requirement be a dampener? No, this is not an issue. We provided a detailed analysis to Sebi on this issue and we think the QIB norms will work fine. How many PE funds would qualify as QIB? Quite a few. I don't have a number handy. Are there any other concerns for start-ups, which the new regime does not address? It’s an excellent start. Sebi has demonstrated alacrity in resolving this issue. The whole process started only on December 19 and it is amazing how much has been achieved since then.