Startups aren’t convinced by SEBI’s listing guidelines. There’s something else they want

The Securities and Exchange Board of India (Sebi) should encourage startups as they have raised over Rs 50,900 crore in venture funding since 2012, while mature companies have raised only Rs 13,462 crore through initial public offerings (IPOs) in the same period, reported the Economic Times.

Indian stock markets are not the first destination for most of these startups when they want to list. Most of them prefer to list abroad — London's Alternative Investment Market (AIM), New York's Nasdaq, and Singapore's SSX, which attract new age internet companies like magnets.

Recently, Sebi chairman UK Sinha spent several weeks meeting entrepreneurs before the regulator came up with a new set of relaxed norms for startups to list on a proposed Institutional Trading Platform (ITP). This, Sebi hopes, will help India compete better with global markets.

But startup founders and investors have different opinion about it. "ITP is a good step," Vijay Shekhar Sharma, founder, Paytm, told ET.

Paytm is a mobile wallet-cum-commerce startup.

"But the Indian environment (read investors) chases only profitable growth. Internet companies are in the early growth phase. Their businesses are disruptive — like changing user buying and selling behaviour. They need to be looked at with different mindsets," he said.

According to Indian Software Product Industry Roundtable (iSPIRIT), India has 3,100 startups. iSPIRIT is a group of software product companies, which interacted with the market regulator to push for the new platform. This is set to multiply to more than 11,000 in just the next five years.

Goldman Sachs sees eCommerce accounting for 2.5% of the country's Gross Domestic Product by 2030, growing 15 times to touch $300 billion, from $20 billion at present. Yet the current listing norms are unattractive for startups to list in India.

Global investors as diverse as New York based investment firm Tiger Global, China's Ant Financials, an arm of Alibaba Group and Japan's Softbank Corp have been bank rolling startups here. This is great for the entrepreneurial ecosystem. But the cycle is complete only when startups list locally offering wealth creation opportunities to Indian investors.

(Image: Indiatimes)