Most Startup Investors See IPO Mania Fuelling Reverse Flipping Trend In 2025

When the Indian government clamped down on the crypto sector’s freewheeling spirit in 2022, several homegrown startups flocked to foreign jurisdictions such as the US, the UAE, and Singapore for better access to capital and smaller tax bills.

However, this trend, known as ‘flipping’, first began in the 2000s, when many Indian companies packed their bags and moved abroad to list on foreign exchanges like the Nasdaq, seeking higher valuations and a wider base of investors.

For the last two decades, this has been a common practice among Indian unicorns. These companies transfer ownership to a foreign entity and set up a wholly-owned subsidiary in India, while their operations and market focus remain in India.

In recent times, however, the startup ecosystem has seen the emergence of a counter-trend, known as ‘reverse flipping’. An increasing number of new-age tech companies domiciled abroad are now queuing up to return home as they look to capitalise on the boom in India’s economy, access to a bigger pool of investors, better initial public offering (IPO) prospects, and favourable government policies.

In 2024, Groww was among the biggest names to move domicile to India. This trend is expected to further accelerate in 2025 as new-age tech ventures look to expedite ‘Desh Wapsi’ plans with an eye on public listing. 

Reverse Flipping: The New Startup Normal?

Last year, 13 new-age tech companies made their Dalal Street debuts, raising a record INR 29,000 Cr+ via the Indian public markets.

Inc42 predicts that this IPO wave will continue in 2025, with at least 20 homegrown startups eyeing a public listing, including omnichannel jewellery brand BlueStone, EV maker Ather Energy, edtech company Physics Wallah, Bhavish Aggarwal-led Ola Consumer, among others.

Amid this IPO boom, ecommerce giant Flipkart, fintech unicorn Razorpay, quick commerce unicorn Zepto and fintech company Pine Labs are eyeing a ‘desh wapsi’ in 2025 ahead of their eventual public listings.

Among other homegrown players looking to move their corporate headquarters back to India from foreign countries are ecommerce major Mensa Brands, B2B ecommerce unicorn Udaan, edtech firm Eruditus, customer engagement and retention startup CleverTap, and Peak XV Partners-backed digital banking startup Freo. Many of these plans are expected to be formalised this year.

It is pertinent to mention that Walmart-backed PhonePe became the first major new-age tech company to shift its domicile back to India in 2022. However, the reverse flip cost a fortune as PhonePe’s investors had to pay INR 8,000 Cr to the Indian government.

Similarly, investors of Groww suffered a tax hit of INR 1,340 Cr in the US when the fintech unicorn returned home last year.

Why Indian Startups Are Returning Home

So, the question is what is prompting new-age tech companies to move base to India despite the high costs? According to Inc42’s annual investor survey for 2024 “The Pulse Of Tech”, 78% of the over 75 surveyed investors said that access to the Indian public markets is the primary reason behind the ‘reverse flipping’ trend in the startup ecosystem.

New-age tech IPOs are receiving a warm response in the Indian stock market and the investor base has grown considerably over the past few years. The surge in activity in the broader IPO market and the positive performance of the already listed new-age tech companies has made India a natural choice for companies to go public.

Besides, 35% of surveyed investors said that startups are considering reverse flipping as it would give them better access to their Indian customer base.

Take, for example, IPO-bound fintech major PhonePe. The digital payments giant has its largest user base in India with over 575 Mn registered users and a network of more than 40 Mn merchants. So, it made sense when the company shifted its base back to India in 2022.

Similarly, quick commerce unicorn Zepto has an active user base of over 15 Mn in the country and earned all its revenue of INR 4,454 Cr from its India operations in FY24. 

Meanwhile, 33% of surveyed investors believe that lower operational costs are motivating startups to join the reverse flipping parade. 

The overall ease of doing business has also improved in the country over the last decade, helped by reforms across sectors such as infrastructure, finance, and manufacturing. 26% of investors surveyed by Inc42 said that this improvement in ease of doing business is driving homegrown startups to relocate their headquarters back to India.

15% of surveyed investors cited regulatory hurdles in foreign jurisdictions as an enabler of the reverse flipping trend. This comes at a time when the Indian government has also fast-tracked the approval process for the merger of a startup incorporated outside into its wholly owned Indian subsidiary.

While much more needs to be done, the work undertaken by authorities on easing the reverse flipping process seems to be showing results. As such, 2025 can be a watershed year when redomiciling back to the country reaches new heights.

[Edited By Vinaykumar Rai]