After a record year for startup listings in 2024, the momentum has slowed in 2025. Analysts FE spoke to attributed this to global volatility, investor caution and regulatory changes, which has tempered the enthusiasm for new-age IPOs.
Last year, as many as 13 startup IPOs raised nearly Rs 30,000 crore, a sharp jump from five in 2023 and just two in 2022. This year was expected to build on that surge. Instead, despite a healthy pipeline of around 25 startups that have filed draft red herring prospectuses (DRHP) with SEBI, including names like Meesho, Fractal, PhysicsWallah, Shadowfax, Lenskart and Turtlemint, only five IPOs have hit the market so far. These include Ather Energy, Smartworks, ArisInfra, IndiQube and BlueStone. Except for Smartworks, most saw muted debuts. The IPO of Urban Company opened on Wednesday and will close on September 12.
Global Headwinds and Market Caution
Market watchers point out that while regulatory changes have made it easier for startups to head to the bourses, the gap between DRHP filings and actual listings reflects the uncertainty of current conditions. “In private markets, enterprise value is often driven by future potential. In contrast, public markets involve a more complex process of price discovery, influenced by multiple dynamics beyond the price band set during listing,” Anil Joshi, managing partner, Unicorn India Ventures, told FE.
The shift is not just domestic; global headwinds are keeping founders cautious. Trade tensions, foreign investor outflows and volatile equities have forced many companies to hold back. “Filings went up, but execution slowed because investors weren’t biting at the same pace and companies didn’t want to risk poor debuts,” Somdutta Singh, serial entrepreneur and founder and CEO, Assiduus Global, said.
DRHP approval gives a company a 12-month window to list. With markets choppy, tariff concerns rising, and regulatory tweaks still settling in, many startups are opting to wait rather than expose themselves to weak post-listing performance.
A Market Correction, Not a Collapse
Secondary market trends are another dampener. “Recent listings trading below issue price and resulting in investor losses have also contributed to caution, with investors demanding lower valuations, something not always acceptable to existing shareholders,” Joshi added.
One reason behind last year’s stronger IPO run was that startups emphasised profitability and more realistic valuations. That trend continues, but only a handful such as Zomato and PolicyBazaar have showcased profitability robust enough to reassure retail investors. “Most startups are still in their early growth stages, limiting investor confidence in their ability to deliver sustainable returns post-listing,” Joshi said.
The slowdown is not limited to tech-driven startups. Over 85 traditional companies filed DRHPs in the first half of the year, the highest in more than a decade, but only about 24 mainboard IPOs materialised, compared with 36 in the same period last year. “Some months were almost dry; March had no IPOs at all, and April saw just one. The gap comes down to a mix of reasons like weak aftermarket performance where many new listings slipped below issue price, aggressive pricing that investors felt didn’t match fundamentals, and tighter rules from Sebi that added to delays,” Singh said.
Still, there is cautious optimism that activity may pick up in the coming months. Analysts highlight a robust pipeline worth Rs 2.6 lakh crore, with Rs 1.2 lakh crore already cleared by Sebi. Improved monsoon, GST rationalisation and potential foreign inflows are expected to help. But the mood remains watchful. “Retail investors are still wary, valuations are being priced more conservatively, and global jitters can easily slow things again. So, while the momentum may not suddenly bounce back to last year’s frenzy, there is a gradual recovery underway with a more measured pace of IPO launches,” Singh said.
For many experts, the current pause is a necessary market correction. “After the record run in 2024, valuations had overheated and speculative frenzy was common. Now, IPOs are being priced closer to fundamentals, and investor discipline is forcing companies to prepare stronger offers,” Singh added. Private equity is also stepping in as an alternative, giving startups breathing room to delay listings without derailing growth plans.