With an eye on IPO, 5 startups in process of reverse-flipping: Bay Capital

Metrics such as customer acquisition cost (CAC), lifetime value (LTV) and retention rates are now well understood, making it easier for startups to communicate their value propositions

A growing trend is emerging in the Indian startup ecosystem, with several companies planning to reverse-flip and list on stock exchanges. According to a recent report by Bay Capital, around five startups, including InMobi, KreditBee, and Meesho, are in the process of shifting their base from jurisdictions such as Singapore and the US to India, with the goal of going public.

 

This strategic move is seen as a structural signal of the Indian market's depth and credibility, bolstered by reforms from the Securities and Exchange Board of India (Sebi). These reforms have enabled the listing of loss-making firms, making it an attractive option for startups, according to Bay Capital.

 

 

RazorPay recently completed its migration to India from the US, while PineLabs and Udaan are in the process of reverse-flipping from Singapore. Earlier this year, Zepto and Flipkart also flipped back to India from Singapore. Stock broking platform Groww, which migrated last year, has filed its draft red herring prospectus with Sebi through the confidential route.

 

The Bay Capital report highlights that investors in India, both retail and institutional, have become more sophisticated in their understanding of digital businesses. Metrics such as customer acquisition cost, lifetime value, and retention rates are now well-understood, making it easier for startups to communicate their value propositions. 

 

This growth has been supported by the increasing availability of "patient capital" from family offices, sovereign wealth funds, and mutual funds, which align with the long-term goals of these startups.

 

The report also notes significant growth in India's deep tech sector, with substantial funding and deal activity between 2020 and 2024. This growth has been driven by advancements in artificial intelligence, space technology, and enterprise software.

 

In 2020, around $300 million was raised through 100 deals in the deep tech space. By 2024, this figure surged to $1.6 billion through 310 deals, with AI-driven platforms dominating the funding rounds.