India has over 125,000 startups and more than 110 super-successful companies called “unicorns” in 2025, making it one of the world’s top startup hubs. A big part of this growth is because of Initial Public Offerings (IPOs), where startups sell shares to the public to raise money. IPOs are shaking up how startups in India get funding, bringing in new opportunities but also some challenges. This article explains in simple words how IPOs are changing India’s startup funding scene, what they mean for new businesses, and what’s next.

What Is an IPO?

An IPO, or Initial Public Offering, is when a startup “goes public” by selling shares of its company on the stock market, like the Bombay Stock Exchange (BSE). This lets them raise a lot of money to grow, pay off debts, or start new projects. It also allows early investors, like founders or venture capitalists, to sell their shares and make a profit. In India, the government’s Securities and Exchange Board of India (SEBI) makes sure IPOs follow rules to protect investors. Going public makes a startup more visible but also means they have to share financial details regularly.

Why Are IPOs Booming in India?

IPOs are becoming a big deal for Indian startups, especially in 2024 and 2025. In 2024, 13 tech startups, like Swiggy and MobiKwik, raised huge amounts through IPOs, and 23 more are planning to go public in 2025. This is a jump from just six IPOs in early 2023. Here’s why IPOs are so popular:

Excited Stock Market: India’s stock market was strong in 2023 and 2024, thanks to stable politics and good economic policies, making it a great time for startups to go public.
Investors Want In: People in India and around the world want to invest in startups, especially in tech, online shopping, and finance apps, because they see big growth potential.
Government Help: Programs like Startup India, started in 2016, make it easier for startups to get ready for IPOs with simpler rules and tax breaks.

How IPOs Are Changing Startup Funding

1. Lots of Money to Grow

IPOs let startups raise way more money than they could from private investors. For example, Zepto, a fast-delivery startup, plans to raise $800 million to $1 billion through an IPO in 2025. Moneyview, a finance app, is aiming for over $400 million. This money helps startups grow bigger, build new products, or expand to new places.

Why It Matters: Big IPOs mean startups don’t have to depend only on private investors, giving them more freedom to grow fast.
Bigger Impact: When startups raise tons of money, it shows India’s startup scene is strong, encouraging more investors to put money into new businesses.

2. Helping Early Investors Cash Out

IPOs let early investors, like angel investors or venture capitalists, sell their shares and make money. In 2024, 68% of investor exits (when they sell their shares) came from IPOs. For example, Zomato’s stock is worth 102% more than when it went public, giving early investors big profits.

Why It Matters: When investors make money from IPOs, they’re more likely to invest in new startups, helping small businesses get seed funding (early money).
Bigger Impact: The chance to make big profits through IPOs brings more investors to India, increasing funding for startups at all stages.

3. Making Startups Look Trustworthy

Going public makes a startup seem more reliable and successful. Companies like Zomato and Zaggle, whose shares trade higher than their IPO price, show that people trust them. Public companies have to share their financial details, which builds confidence among customers and investors.

Why It Matters: Being a public company helps startups get better loans and hire great workers, as people see them as a big deal.
Bigger Impact: Successful IPOs inspire other startups to aim for the stock market, pushing more businesses to grow and plan for IPOs.

4. Focusing on Strong Businesses

IPOs are making startups focus on being profitable and well-run. After a tough “funding winter” in 2022–2023, investors want startups that make money and have clear plans. Companies like Moneyview, managing INR 15,000 crores in assets, show they’re ready for IPOs by being financially smart.

Why It Matters: Startups work harder to make money early, which helps them get ready for IPOs and other funding.
Bigger Impact: This focus on strong businesses makes India’s startup world more stable and less risky for investors.

5. Boosting Hot Industries

IPOs are super popular in areas like finance apps (fintech), fast delivery (quick commerce), and healthcare tech (healthtech). Healthtech startups raised over $7 billion from 2014 to mid-2024, thanks to new tech like AI. Companies like MobiKwik and Zepto used IPOs to grow in these exciting fields.

Why It Matters: Industries with lots of IPOs get more funding from investors who see a chance to make money later.
Bigger Impact: More money in these fields leads to new ideas and growth, helping India’s economy.

Challenges of IPOs for Startups’

1. Risky Stock Market

IPOs don’t always work out. Of 23 startup IPOs in the last three years, 16 are worth less than their starting price, losing about 35% on average. For example, IdeaForge’s stock dropped 69%. Market ups and downs can hurt a startup’s share price.

Why It Matters: A bad IPO can hurt a startup’s reputation and make it harder to get more money.
Bigger Impact: If IPOs fail, fewer startups might try going public, slowing down the trend.

2. Tough Rules

SEBI has strict rules for IPOs, like requiring startups to share detailed financial reports and ensuring founders keep at least 20% of the shares. These rules can be expensive and time-consuming for startups.

Why It Matters: Getting ready for an IPO takes time and money away from running the business.
Bigger Impact: Complicated rules might scare smaller startups from trying for an IPO.

3. Hard to Get Earlier Funding

Many startups struggle to move from seed funding (first money) to Series A (next big step), with only about one in three making it because investors are picky. IPOs make this harder by setting high expectations early.

Why It Matters: Startups need to grow fast to be ready for an IPO, which can be tough without enough earlier funding.
Bigger Impact: Fewer startups reaching IPO-readiness can limit the number of public listings.

4. Risk of Overpricing

Some startups set their IPO price too high, like during the 2021 tech boom. If the price is too high, the stock can crash later, making investors lose trust.

Why It Matters: Startups have to keep proving they’re worth their price, which is stressful.
Bigger Impact: Worries about high prices can make investors careful, reducing money for new startups.

Opportunities for Startups

1. More Kinds of Investors

IPOs let startups get money from regular people and big investment groups, not just venture capitalists. This is great for startups in smaller cities, where 51% of startups now come from.

2. World Fame

Big IPOs, like Zomato’s, make Indian startups known worldwide, bringing in global investors and partners.

3. Government Help

Programs like Startup India and a special fund with INR 10,000 crores help startups get early money and easier rules. In 2025, the government also got rid of the angel tax, making it easier for local investors to help startups.

4. Growing Stronger

The IPO boom shows India’s startup scene is getting stronger, encouraging more businesses to aim big and attract global money.

How Startups Can Get Ready for IPOs

Build a Strong Business: Focus on making money, growing customers, and having a plan to keep growing.
Hire Experts: Work with banks like Axis Capital to handle the IPO process, like Moneyview did.
Follow Rules: Start sharing financial details early to meet SEBI’s standards.
Show Success: Have solid sales (like INR 15–20 crores a year) and lots of customers to prove your value.
Use Networks: Join programs like Startup India or BHASKAR to meet investors and get advice.

What’s Next for IPOs in India

IPOs will likely keep growing in 2025, especially for tech, finance, and healthcare startups, as the stock market stays strong. Some startups might wait until after the 2024 elections for clearer market conditions. New fields like AI and spacetech will see more IPOs, and government support will make it easier for startups to go public.

Conclusion

IPOs are changing how Indian startups get money by bringing in huge funds, letting early investors profit, and making businesses look trustworthy. They’re helping new startups get funding and pushing companies to be stronger and more profitable. But challenges like risky markets, tough rules, and the need for early success mean startups have to plan carefully. By building solid businesses and using India’s support systems, startups can use IPOs to grow big and help make India a global leader in entrepreneurship.

Last Updated on Saturday, July 12, 2025 10:55 am by Chandini Naidu

About The Author

Chandini Naidu

See author's posts

The Impact of IPOs on India’s Startup Funding Landscape