Promising to make it simpler for India’s top start-ups to raise funds by listing in India, minister of state for finance Jayant Sinha said the country’s equity markets would get a big boost if firms like Flipkart and Inmobi got listed on local bourses.
“If some of our unicorns are prepared to list in India, we will work with you to find out how to make it possible. SEBI has recently simplified listing norms, but more issues could be examined. Having companies like Inmobi and Sachin’s (Flipkart) list in the market would give a booster shot to our equities market,” Mr. Sinha said at the Start Up India workshop in the capital.
Referring to the preference of successful start-ups to relocate out of India, Mr. Sinha asked if they would list their businesses in India or other markets like New York and Singapore.
“One of the factors you would think of – if you would list at India is … the largest listed Indian internet company is Info Edge, with a market capitalisation of $2 billion to $3 billion? Right now, for our market, to absorb a $25 billion valuation internet company is the question,” Mr. Sinha said
“The answer to our current account issues could be to list a Flipkart and attract 5-10 billion dollars of foreign capital. This would be a very big positive for India,” Mr Sinha said, pointing to Flipkart founder Sachin Bansal who was part of the panel being moderated by the minister.
Inmobi founder and CEO Naveen Tiwari said, “The way things stand today, its impossible to list in India. I think the market is ready (but) I don’t think it will be able to absorb number of internet companies for four-five years.”
Flipkart’s Sachin Bansal said, “We would love to raise funds in India from the market, because we are in India and the retail investors here would understand the value of our business better. India is our top choice.”
Silicon Valley-based July Systems’ Indian origin CEO B.J. Arun warned about the excessive funding available for start-ups and said it was a bubble that could burst soon.
“When people get too much funding, it’s a recipe for disaster as we have seen in the Silicon Valley during the dotcom boom in 1999-200. I would like to caution my fellow entrepreneurs that not everybody should become an unicorn. It’s fine if you make 5 crore a year and are not valued at $2 billion,” Mr. Arun said, adding that India is seeing a bubble in start-up funding and valuations, that it would find harder to recover from than the US in 2000.
The minister, who was himself a venture capitalist before joining the NDA government, also had a piece of advice for new entrepreneurs not to burn up the funding they receive too fast.
“Funding comes and funding goes. Those who are able to raise capital and run a frugal business model, survive when times get tough. One day, when the funding diminishes, if you don’t have cash, it will be difficult,” Mr. Sinha said.