Startups need to think of opting for IPO: Kris Gopalakrishnan
Infosys Co-founder and Axilor Ventures Chairman Kris Gopalakrishnan on Friday made a strong case for startups to think of Initial Public Offering (IPO) to tackle the fund crunch situation and provide longevity to their fledgeling enterprises.
"Startups are hesitant to do IPO, which is not difficult. My biggest issue with the startup ecosystem today is that they are not doing an IPO. Let the Indian public own these companies. They get the wealth being created," he said.
"India has $2 trillion of wealth in private hands. Less than one percent is invested in the startup ecosystem. We need High Networth Individuals (HNIs) money going into startups," he added.
Gopalakrishnan advised startups to take minimum funds from angel, friends, and families. They have to create a minimum viable product, and establish unit economics and profitable model, he underlined.
"To make a successful new business is one which employs people, creates jobs and employment, and it is a sustainable and profitable business which you can run it for a long time. Longevity is the best measure for a successful business. Society needs stable businesses that create good jobs and wealth for society. Our best late-stage startups are owned by non-Indian entities. More than 95 percent of funding comes from non-Indian entities," he said.
Noting that the Kerala community is innovative, entrepreneurial, and action-oriented, Gopalakrishnan said the startup ecosystem in the state is getting recognition for its innovation, ideas, and path-breaking initiatives.
"Studies have shown that the Micro, Small and Medium Enterprises (MSMEs) sector is the backbone of any economy. More than 60 percent of jobs are created through them," he said.
Interestingly, the maximum number of jobs are created in the first five years of the businesses of startups and there is a need for a large number of MSMEs, he added.
"New jobs are created only if new businesses are created. We need to have the best milieu for new business for maximum job creation. Among the companies with the largest market capital in the world today, except Amazon, rest of them employ very few people. There are significant opportunities today to disrupt any business," he said.
Gopalakrishnan said today, India has one of the most advanced fintech ecosystems, which even the US is also looking to implement.
He also suggested the creation of a database of viable businesses leveraging local strengths and ecosystem.
"We need to identify people passionate about starting a business and train them on business basics, including running business legally and ethically. They can select a business from the database and get trained on the business idea, followed by registering it," he explained.
Gopalakrishnan also interacted with 10 startup founders on the sidelines of the event.
M Sivasankar, Principal Secretary (Electronics and IT), Government of Kerala, who presided over the function, said, "One of the ways to address the scarcity of fund is to tap the funds from the alumni meet of engineering batches. Besides, we need to create networks of people, who believe in Kerala to invest."
In his welcome address, Saji Gopinath, CEO, KSUM, said India is the third-largest ecosystem for startups.
"We have close to around 28,000 startups registered in the Department for Promotion of Industry and Internal Trade (DPIIT), and 60 percent of them are located in three of four cities. This shows the high growth of non-Indian industries, which plays a pivotal role in growing such an ecosystem. But in Kerala, we have the most homogenous startups."
The investment summit brings together leading figures in the country's startup ecosystem besides senior government officials.
KSUM is the nodal agency of the Kerala government for entrepreneurship development and incubation activities in the state.
(Editing by Suman Singh)