Bikhchandani, who
Still owns over 15% in Zomato after its initial public offering (IPO), his company said,
, will continue to be a long-term investor in the startups it supports.
He said that Info Edge was the first to invest in Policybazaar India More than a decade ago and still remains a shareholder in the company who has applied for Rs 6,017 crore IPO.
Bikhchandani’s comments on the profitability aspects come at a time when a growing number of tech startups are going public, even as skeptics are critical of their ability to turn a profit.
“While the public markets are publicly accepting loss making companies, I don’t think they will support a company that is making loss for the next five or 10 years. They will believe that the path to profit is, He told ET in an interview.
According to him, going public is not an option for all startups. “You are going to move to a place where there is some visibility of profit (next two-three years). I don’t know all the data but the ones I do know – definitely (they have a path to profitability).
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heroMost of the top tier startups like
Paytm,
Policybazaar India Those filing to go public are making losses, but are being seen as high-growth companies, some of which are rapidly recovering from the second wave of the COVID-19 pandemic.
Bikhchandani said the current trend of IPOs by local startups will also play an important role for investors to believe that an exit from here is possible. The Padma Shri awardee also believes that there hasn’t been a big enough exit for investors through strategic sales or M&A, apart from Flipkart, which was acquired by Walmart in 2018 for $16 billion.
“For the longest time, the tech space had just three-four exits – Info Edge, MakeMyTrip, Just Dial, Matrimony… They took 15 years. Now, if 15-20 IPOs in two years (both in India and abroad) and they are successful, it becomes a case to be demonstrated that investors can get huge exits from the public market in India,” Bikhchandani said,
Whose first check for Zomato was worth Rs 4.7 crore in 2010. Info Edge share price today
Its price is over Rs 16,357 crore (at Monday’s closing price of Rs 139 per share on BSE). Info Edge holds 15.23% stake in Zomato.
This will also lead to more strategic selling, he said, especially as Indian conglomerates such as the Tata Group and Reliance Industries have entered the digital economy with big plans. “Some valuations may not have been paid five to 10 years ago. Hence, the market is maturing for strategic selling as well,” he said.
On the abundance of liquidity in the market, he said that India will continue to attract more capital, but it also means that it is becoming more cautious and should be selective in taking new bets as more startups emerged than a decade ago. There are more investors following them. He also said that the ongoing regulatory technology will focus more on India, but that India’s own growth trajectory as a market will be different from that of China, contrary to earlier predictions. He also talked about the reversal of Indian startups and the need to address this issue.
Record capital for startups
In a year when startups have pumped record capital into India due to the abundance of liquidity globally, he said capital is a “heat-seeking missile” and will smell and smell where the return is and it will go there. He added that with IPOs of more good quality startups, investors will infuse more capital into the startup economy.
According to him, the additional availability of liquidity has been created by the move by the US Federal Reserve to infuse nearly $4 trillion into the economy, which has found its way into India as well. “What is different this time is that companies are going public, which means they are facing scrutiny from the public markets. They now have limited goals to go public and hence are tackling strategies accordingly. Public markets enforce discipline and business discretion is required,” Bikhchandani said.
The acceleration in valuations for startups, sometimes up to 12-18 months in advance, is fine as long as the underlying growth sustains, he said.
He said the ongoing regulatory protests in China against tech companies would also help India garner more investor interest.
ET reported in August that
Global investors looking to infuse more capital in India Since the situation in China remains uncertain.
Info edge, strategy persists long term
While Bichchandani’s initial bets are going public, generating huge value on the original investment, his strategy is akin to finding the next Zomatos or Policybazaar. “Our investment strategy remains the same: go early, find the right founders, the right strategies and invest in them and support them and be there for the long haul.” He said that Info Edge has been an investor in Zomato for 11 years and Policy Bazaar for 13 years.
“It is important to be patient in India. The first check for an IPO takes 12-15 years,” Bikhchandani said.
He highlighted that despite being in Policybazaar for 13 years, there is “massive growth yet to be done” and it will serve Info Edge shareholders well.