In India, many startups, which have already reached the unicorn status are still a long way off the initial public offering (IPO) path for raising new funds. Highlighting the issues that come out of this, Infosys cofounder and Axilor Ventures chairman Kris Gopalakrishnan said that his biggest complaint is that startups in India are not looking at IPOs seriously, even as they grow.
Speaking on the sidelines of the 5th edition of the ‘Seeding Kerala’ event organised by Kerala Startup Mission (KSUM), Gopalakrishnan added that startups are hesitant to go public, which is not difficult if you have the right products and services. “Let the Indian public own these startups and in return, they will get the wealth being created,” he was quoted as saying by ET.
Longevity And Profitability
According to Gopalakrishnan, IPOs can help Indian startups to tackle the issue of capital crunch. It can also help startups look at longevity as a metric and work towards that, he added.
Advising startups to take fewer funds from angel investors and relatives, Gopalakrishnan said that they need to focus on unit economics and thereby make a profitable model first.
He further added that a successful business is one which employs people, creates jobs and employment. “To achieve this, startups need to have a sustainable and profitable business which can be run for a long time. Longevity is the best measure for a successful business,” Gopalakrishnan added.
Getting Indians To Invest
The fact that India has over 49K startups (as per DataLabs by Inc42) means that the market supports the creation of new businesses. But one of the growth challenges is the lack of adequate support in the form of capital or talent when scaling up.
The Infosys cofounder also urged India’s wealthy to look at startups as a serious investment opportunity and not just a trend. He also cautioned startups about the over-reliance on foreign investors.
“We need to flow the money of high net worth individuals (HNIs) money into startups. Our best late-stage startups are owned by non-Indian entities.”
According to Gopalakrishnan, startups create the most number of jobs within the first five years of incorporation. “We need to have the best environment for new business for maximum job creation,” he said.
“New jobs are created only if new businesses are created.”
Except for a few other large conglomerates, companies are not creating much job opportunities, Gopalakrishnan added. He also said that India needs to support the growth of MSMEs, which are also creating millions of job opportunities.