Public markets have a clear message for startup founders: climb down from lofty valuations and investors may back you. Zepto learnt this the hard way, shelving its initial public offering (IPO) after domestic institutional investors balked at its pricing expectations. Yet the record of listed startups suggests there is no shortage of appetite for the sector.
An FE analysis finds that nearly two-thirds trade above their issue price. The catch is that investors are becoming increasingly selective, rewarding companies that demonstrate execution and a credible path to profitability rather than those anchored to their last private funding round.
Of the 38 listed startups analysed, 24, or 63%, closed above their issue price on July 31. The finding challenges the narrative that took hold after the first wave of startup listings, led by Paytm, when steep post-listing declines raised doubts about public-market appetite for loss-making technology companies. Investors, it is now clear, no longer treat startups as a single asset class; they distinguish among them on the basis of business fundamentals, execution and valuation.
That distinction was at the heart of Zepto’s discussions with investors. Domestic mutual funds, sources said, were unwilling to value the quick-commerce firm at the level it sought, questioning both its continuing cash burn and its comparisons with listed peers Eternal and Swiggy.
Zepto has instead opted to raise more than ₹1,000 crore through a pre-IPO placement from existing investors and is expected to return to the market after improving its financial performance. The episode reflects a broader shift: startups seeking to list are now benchmarked against publicly traded peers, not merely against valuations achieved in private funding rounds.
The post-listing scorecard illustrates the divergence. Eternal has gained 298% over its issue price, Ather Energy 293%, Ixigo 112%, and BlackBuck and Sedemac Mechatronics 99% each. At the other end, FirstCry has fallen 54%, Ola Electric 49%, Paytm 38%, Pine Labs 37% and Wakefit 36%. The divide has reinforced investor caution towards companies that have yet to establish a credible route to profitability or are perceived to have listed at demanding valuations.
The divergence is visible within sectors as well. Quick commerce presents Zepto with a difficult benchmark: Eternal has nearly quadrupled from its issue price, while Swiggy remains below its offer price. Payments companies have struggled, with Paytm, Pine Labs, MobiKwik and Fino Payments Bank all trading below their issue prices.
Travel technology has fared better, with RateGain and Ixigo more than doubling, while deep-tech and manufacturing companies such as Sedemac and Aequs have also posted strong gains. In electric vehicles, Ather Energy has surged nearly threefold even as Ola Electric remains well below its issue price—showing that investors discriminate between companies within the same fashionable sector.
For founders eyeing the public markets, the message is blunt. In the years of abundant venture capital, successive private rounds often provided the anchor for IPO valuations; that anchor no longer holds. Institutional investors increasingly rely on listed-market comparisons and financial performance to decide what they are prepared to pay.
Zepto’s deferral does not suggest that the startup IPO window has closed. Rather, it shows that the door is open only at the right price—and for businesses capable of backing their ambitions with sustainable growth, sound execution and a credible path to profitability.