This is how SEBI plans to boost startup industry

SEBI, the regulator for security markets in India, is likely to show green signal to more relaxed listing norms aimed at emboldening the booming startup industry to tap the proposed institutional trading platform (ITP).

These measures would be discussed by SEBI at its meeting on June 23, as per a PTI report.

A regulatory official familiar with the matter stated that these will apply to the knowledge-based sector, nanotechnology, biotech or any other industry in which at least 50% of pre-issue capital is held by qualified institutional investors such as private equity funds and venture capitalists.

The institutional trading platform will seek to put India at par with other developed countries such as the US, which facilitates easier fundraising options. Technology companies are a small part of stock market capitalisation in India.

The domestic technology companies are a small part of stock market capitalisation as compared to such companies in the US, the UK and Hong Kong. Seeing this, the market regulator feels that issue can be solved if homegrown technology companies list in India. And as founders typically have a lower holding in these companies because a larger proportion is held by venture capitalists, SEBI is also ready to waive the 'promoter' requirement for startups.
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