scorecardAs Zomato, Paytm and new-age start-ups struggle at bourses, their unlisted peers stare at funding winter
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As Zomato, Paytm and new-age start-ups struggle at bourses, their unlisted peers stare at funding winter

As Zomato, Paytm and new-age start-ups struggle at bourses, their unlisted peers stare at funding winter
Stock Market5 min read
  • Share prices of most new-age start-ups have been battered since the start of this year due to market corrections.
  • A recent report by investment bank DC Advisory notes that these market corrections are likely to reverse by next year.
  • A strong listing can even bring back the enthusiasm quicker
It has been a tough year for India’s new-age start-ups as shares of recently listed companies like Zomato, PolicyBazaar, Nykaa and Paytm take a beating at the bourses while funding dries up for private firms. Global market corrections due to the Russian-Ukraine conflict and weak business fundamentals are being blamed for the current situation

Zomato — which crossed $13 billion in market capitalisation last year — is now valued less than its unlisted rival Swiggy at $5.5 billion. Paytm — which was the highest valued start-up in India at one point at $18 billion — is now barely at $5.9 billion at the moment.

A recent report by investment bank DC Advisory noted that these “market corrections are not sticky” and were likely to come down as early as the first half of 2023. A strong stock market listing could help bring back the cheer.

“A few positive events in the near future such as a strong listing for a digital-first company could have a domino effect and bring enthusiasm back to the market quicker than we all anticipate,” the investment bank said, while adding that the current market scenario has been a deterrent to companies planning to go public.

Companies go slow on IPO plans

The year 2021 saw India’s young start-up ecosystem mature as ten tech companies — namely EaseMyTrip, Zomato, CarTrade, Nykaa, Fino, PolicyBazaar, Paytm, Nazara, RateGain and MapMyIndia — made their public debut.

One of the highlights of 2021 was the listing of software-as-a-service (SaaS) company Freshworks which had a stellar debut on the Nasdaq, turning 500 of its employees into millionaires.

% change since listing

















Nazara Technologies






Fino Payments Bank


Veranda Learning


Date: As of 11:14 am, July 14, 2022

However, most of these companies, including Freshworks, have lost their spark in the stock market mainly due to market correction, business performance and the ongoing Russia-Ukraine crisis.

The disappointing market debut of Life Insurance Corporation, one of the most anticipated IPOs, and its continued underperformance, down 18 percent since its debut in May, has made more companies wary of going ahead with an IPO this year.

“Tech IPOs, which saw a frenzy of activity last year, have delivered a disappointing performance for investors. We expect limited movement in IPO markets in the near term as investors try to rebuild conviction on digital stocks,” DC Advisory added.

Companies like OYO, ixigo, Droom, Mobikwik, PharmEasy and SnapDeal were planning to go for a public listing this year and have already filed their papers with the Securities and Exchange Board of India (SEBI). Mobikwik and ixigo have also received an approval.

Mobikwik, in a previous conversation with Business Insider, has said that it will wait for the right market conditions to go public.

Prepping for a funding winter

Several stakeholders, investors and entrepreneurs have been girding for a funding winter that is expected to last anywhere between 12-24 months. The start-ups have already started laying off people, impacting at least 11,695 employees this year alone.

According to several experts Business Insider has spoken to, investors have a limited capital to invest and that is making them even more choosy. Industry’s biggest players, who already have heavy backing, may not face many hurdles in raising funds but smaller players may struggle.

Investors have also become strict about valuing businesses. Media reports suggest that e-commerce company Meesho has been trying to close another funding round at a valuation of around $8 billion but has not been able to find investors.

This tightening of the funding from venture capitalists (VC) and private equity (PE) is likely to spur a lot more mergers and acquisitions in the tech sector, the report added.

”We believe a shakeout within PE/VC deals in the tech sector was long overdue and expect a lot more consolidation in the market going forward,” the report said.


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