India’s Start-Up Boom: IPOs Overtake M&As as the Top Exit Strategy

Domestic initial public offering (IPO) has continued to be the preferred exit strategy by start-up founders amidst the booming start-up economy in India. In 2024, 73% of start-up founders chose domestic IPO as their most preferred exit strategy, the Economic Times reported citing the 10th edition of the India Startup Outlook report by Innoven Capital.

As per the report, in 2020 just 30% of the Indian start-ups chose domestic IPOs as their preferred exit strategy. This preference gradually increased to 58% in 2021, 63% in 2022 and 64% in 2023, demonstrating India’s flourishing start-up ecosystem.

Mergers and Acquisitions have been the second most preferred exit strategy by start-up founders. However, with growing optimism in the start-up ecosystem, choosing M&A as an exit strategy preference has declined over the years. 28% of Indian start-up founders preferred M&A as their preferred exit strategy in 2020, the figure declined to 25% in 2021, 28% in 2022, 22% in 2023 and just 19% in 2024.

Also Read: Dalal Street Awaits Start-Up Frenzy, Over 25 IPOs Set for 2025 Debut

IPOs in 2025

Around 25 startups are expected to launch their IPOs in 2025. These include start-ups like Ather Energy, ArisInfra, boAt, Avanse, Aye Finance, Bluestone, Cardekho, Captain Fresh, DevX, Ecom Express and Fractal.

Other firms that might go public this year include Infra.market, a construction and supply chain platform; Shadowfax, a logistic company; Trailblazer, an online jewellery business; Innoviti, Indiqube, Incred and Physics Wallah.

Quick commerce start-up Zepto has recently successfully reverse-flipped back to India, eyeing a possible IPO by the end of 2025.

Last year, nearly 13 start-ups went public and raised together over Rs 29,000 crore. These included Swiggy, Mobikwik, Ola Electric, FirstCry and others. Food and grocery delivery platform Swiggy was the biggest start-up IPO last year of Rs 11,327 crore. The company's shares debuted with a premium of 7.69% and have soared an impressive 26% since listing.

Also Read: Zepto's Homecoming Gets NCLT Nod: How Indian Start-Ups' Reverse Flipping Concept Works

Key Report Points

As per the report, 63% of the start-ups that attempted to raise funds in 2024 had a favourable experience, as compared to 68% in 2023.

Founders had shown a higher bias for profitability compared to growth for the third consecutive time. However, the report states that, as the funding environment recovers, the focus on growth has gained momentum in 2024 compared to 2023.

The report notes that 28% of the founders believe that artificial intelligence (AI) will have a significant impact on their business models over the next 2-3 years, primarily in the fintech and software-as-a-service (SaaS) sectors.