Infosys cofounder Kris Gopalakrishnan, sharing the journey of the tech giant, cautioned startups from taking too much risky money from external sources. He advised such businesses to take up the initial public offering (IPO) way and be independent to make choices.
Talking to the Rotary Club of Madras, Gopalakrishnan said external funding comes with the loss of authority of decision making. With such funding, the external investor decided the direction of the company. He suggested startups should think about the brand, institution and the company while setting up new firms. “Stay bootstrapped, ensure zero debt and be profitable,” the Infosys cofounder added.
Building a great business takes time, said Gopalakrishnan, likening it to a marathon.
“Entrepreneurs are not thinking about IPOs. They only want to be private. When they go for external funding, the funds come from overseas. So, most of the Indian start-ups today are owned by foreigners.”
He also asked Indian entrepreneurs to invest in Indian startups, focussing on the emerging opportunities in the next two to three decades in the ecosystem. Gopalakrishnan has himself invested INR 300 Cr in various startups through Axilor Ventures.
The Government’s Push For IPOs By Tech Startups
The government allowed startups to launch IPOs in 2015 through the Institutionalised Trading Platform (ITP). However, after a lukewarm response, the market regulator relaxed norms in December 2018 in the hope of boosting startup listings. SEBI had also renamed ITP to ‘Innovators Growth Platform’ and new guidelines were put in place.
Since then, two startups — Pune-based software consulting firm Alphalogic Techsys and Mumbai-based healthtech startup Transpact Enterprises — have been listed in IPO.
The Securities and Exchange Board of India (SEBI) has also allowed startups to switch from IGP to main board trading. Last week, the body further simplified the process of listing on the main board trading for startups.