Listed startups to account for 4-5% of India’s market cap: The Rainmaker Group report
The cohort of late-stage startups, most of which are slated to go public, is the largest group of startups to go public in a two-year window, both in terms of numbers as well as value, the report found.
India’s startup ecosystem has churned out the largest number of late-stage startups in the past two years, with most planning to list on public bourses, finds The Rainmaker Group’s RainGauge Private Pulse report.
The list, which consists of 38 startups, includes companies across consumer internet, fintech, business-to-business (B2B), and edtech.
As investors and public markets turn their focus to profitability, companies are ramping up steps to scale up businesses sustainably.
The first cohort of RainGuage Private Pulse, which includes Zepto, Groww, Ather, among others, has the healthiest pre-listing performances thus far on both, growth and profitability front, the report noted.
Historically, Indian software companies have been a major economic driver, placing the country on the global map as an IT hub. However, in a marked shift, homegrown non-software businesses are now going public.
Interestingly, for non-software companies like e-eyewear ecommerce platform Lenskart and hospitality platform OYO, 40% and 80% of their sales, respectively, are coming from overseas markets like Japan and Europe.
The 38 companies featured in the first cohort have managed to bag $35 billion in total funding, with the entire group’s valuation being over $100 billion.
These companies, when compared to public peers, are also growing faster while improving profitability, the report found. For instance, RainGuage Private Pulse Cohort recorded a 39.1% rise in year-on-year revenue growth in FY24 while the S&P BSE MidCap Index recorded only 12.3% growth in the same period.
The first wave and second wave of IPOs, which included around 30 VC-backed startups to list in the past four years, have seen high valuations and less focus on profitability.
According to the report, the first wave of IPOs, which included companies like Zomato and Nykaa, saw “high growth, questionable profitability.”
In the second round of IPOs, which included Swiggy and FirstCry, almost all companies were listed below their expected valuations, several below their last private round price. Many companies adjusted their IPO valuations to better reflect market realities.
As these trends play out in the ecosystem, the third wave of startups looks fundamentally healthier than what the 2021 and 2024 cohorts looked like two to three years before their public listing. Many of these startups have already delivered operating profitability in the run-up to their listing.
With Zomato’s recent addition to the NIFTY50, the report noted that we are likely to see more VC-backed companies joining the ranks of benchmark indices, making them younger, faster-growing and more reflective of the country’s new economy.
Edited by Kanishk Singh