Zomato IPO a watershed moment for start-up ecosystem, say experts

Zomato IPO is a landmark public listing not only for the company but for the consumer-led start-up ecosystem in India. According to industry experts, it is a watershed event for the Indian VC and start-up ecosystem as a cohort of mature companies such as Nykaa, Delhivery, and Paytm are well on their way to access the capital markets.

India’s tech leaders have been strengthening their business models and realigning cost structures as they navigate tirelessly through the pandemic delivering higher margins, stronger unit economics, and exhibiting scale efficiencies.

“This could be the golden decade of exits for digital India and like all market participants, we are excited, with several of our founders are taking their companies public and beyond,” said Lavanya Ashok, partner at Trifecta Capital, which has invested in BigBasket, Rivigo, Cars24, and Urban Company. 

The much talked about Zomato IPO is an encouraging sign for the start-up community. The firm had filed its draft red herring prospectus with the Sebi in April, taking the first step towards becoming a public firm. A first listing by a home-grown start-up in the stock market, Zomato aims to raise Rs 9,375 crore via the IPO for organic and inorganic growth initiatives. 

“Technology companies, which have become household brands, are on the path to profitability as smartphone penetration and digitisation of commerce in every aspect of life has multiplied during the pandemic,” said Anup Jain, managing partner, Orios Venture Partners.

According to Rajesh Jain, a pioneer in Asia’s dotcom revolution, an IPO is essentially about rewarding the stakeholders who took the risk.  “Zomato’s current business model is probably very different from what it started off with. But the fact is that they persisted and there were investors willing to back them up in these changes,” he said.