In his recent interview, Zerodha’s Nithin Kamath spoke on precisely this point.
One major concern for me is that a lot of these startups are growing quickly now because of being nimble. But the moment you get listed you cannot go into whatever you want because you are answerable to a million investors. So potentially, you might lose a bit of your risk-taking ability, which was the reason for your growth initially.
Do you think startups understand the amount of regulatory scrutiny they will be under once they go public? Do you think these companies are ready?
Running a startup and running a listed business is very different, it takes a lot of management bandwidth to manage board meetings, analyst calls, presentations. So it will be interesting to see how founders manage to deal with that. But again we cannot paint every company with the same brush.
Look at Burger King’s recent IPO; it is a loss-making company but its share price has done well.
Let us see what the retail part of all these IPOs are. For most companies, the prices are set by institutional players. If Paytm or any one of them are planning to go IPO, that means there is enough institutional demand. And institutions are smart. They are probably trying to change their way of valuing companies too. But then, the risk is that after going public if growth disappears, it might be a problem