Everywhere you look today, in community groups, investor forums, even casual dinner conversations, people are talking about making quick money from the next big IPO.
Someone knows someone who made a few lakhs on Zomato’s listing day. Another friend says Mamaearth is the next Nykaa. In WhatsApp groups, everyone has an opinion on which start-up is “going to the moon” next. It has become a kind of national pastime: guessing which new-age company will give the best listing gains.
But is it really worth it?
That question has been on my mind for a while. Because when I look at this start-up frenzy, I keep thinking of Warren Buffett.
By the way, even Warren Buffett, whose Berkshire Hathaway once owned a stake in Paytm, would probably say no.
The man who built his fortune not by chasing hype or hot trends, but by staying inside what he calls his “circle of competence.” The man who taught generations of investors that understanding a business matters more than excitement around it.
Would Warren Buffett ever invest in these new-age Indian unicorns, such as the Zomatos, Paytms, or Mamaearths of the world? Probably not. And maybe that is exactly what Indian investors need to think about right now.
The illusion of easy money
The idea of easy money is powerful.
A few years ago, it was crypto. Today, it is start-up IPOs. Every time a new-age company lists, social media explodes with screenshots of profits, listing gains, and overnight success stories. The story is always the same: “If you had bought on Day 1, you would have doubled your money.”
But no one talks about what happens next. Zomato listed at ₹76 and fell to ₹46 within a year. Paytm’s ₹2,150 IPO price collapsed to ₹740. Mamaearth, once called a “D2C miracle,” is down almost 40 percent from its issue price. These are not isolated cases. They are reminders that hype does not last long in markets that eventually demand earnings.
Buffett has seen this movie before. For decades, he has warned investors that excitement and speculation are the enemies of rational investing. His rule is simple: “Never invest in a business you do not understand.” Yet, in India today, people are buying companies with business models they cannot explain, valuations they cannot justify, and profits they cannot find.
The truth is that most start-up IPOs are designed for insiders to exit, not for retail investors to enter. Early investors and founders are selling their shares at the peak of optimism. It is the perfect time for them to cash out and often the worst time for small investors to buy in. Buffett once said, “An IPO is like a negotiated deal as the seller picks the time, and it is rarely a time that favors the buyer.” The recent listings in India prove that point again and again.
What Buffett would look for instead
Buffett’s investing style looks almost boring next to today’s start-up excitement. He does not chase stories. He looks for clarity. Before buying any company, he asks himself a few simple questions:
Does this business make money today? Can I understand how it makes that money? And does it have something that protects it from endless competition on what he calls a “moat”?
This moat could be a strong brand, cost advantage, customer loyalty, or a network effect that keeps rivals at bay. It is what allows a business to keep making profits for years, not just one good quarter.
Now look at India’s start-up stars through that lens. Zomato delivers food, but so does Swiggy. Paytm handles payments, but so does Google Pay, PhonePe, and every other UPI app. Mamaearth sells skincare, but so do hundreds of D2C brands and legacy FMCG giants. Their products may be popular, but none have a moat that guarantees survival, let alone dominance.
That is why Buffett would have stayed away (one of his fund managers, though, had PayTM in the portfolio for a while). Not because he dislikes technology or new businesses, but because he buys only when he can see lasting value and not hope. His philosophy is simple: “It is better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
In India’s new-age IPOs, many companies are not yet wonderful. They are still trying to prove that they can earn more than they spend. Until that happens, the valuations are built on dreams. And dreams do not compound like earnings do.
Lessons for Indian investors
We are not Warren Buffett. But we can learn from the way he thinks. His biggest strength is not stock picking. It is patience. He knows that wealth in markets is built quietly, over time, by understanding what you own and why you own it.
Many Indian investors today are doing the opposite. They want speed. They want action. They want to double money in a week through IPOs, start-up stocks, and new listings. But if there is one lesson from Buffett’s career, it is that time in the market beats timing the market. The investors who bought Zomato, Paytm, or Mamaearth for quick listing gains did not lose because the companies were bad. They lost because they confused speculation for investing.
Before putting money in any stock, Buffett would ask, “Would I still be happy holding this business if the stock market shut down for ten years?” Most people cannot say yes to that about start-up IPOs. That is the problem.
Investing is not about excitement. It is about endurance. It is about buying businesses that can survive the test of time, not the noise of the moment. India’s start-up boom will produce great companies someday but they will be the ones that build real moats, steady profits, and trust, not just headlines.
If you are a retail investor chasing the next listing, pause for a moment. Ask yourself if you truly understand what the company does and how it makes money. Ask if it has something unique that others cannot easily copy. And finally, ask if you would be comfortable holding it for ten years even if no one else was talking about it.
That is how Buffett would think. And that is how investors protect themselves from hype.
Because in the end, it is not the hottest IPO that makes you rich. It is the discipline to say no when everyone else is saying yes.
Author Note
Note: This article relies on data from fund reports, index history, and public disclosures. We have used our own assumptions for analysis and illustrations.
The purpose of this article is to share insights, data points, and thought-provoking perspectives on investing. It is not investment advice. If you wish to act on any investment idea, you are strongly advised to consult a qualified advisor. This article is strictly for educational purposes. The views expressed are personal and do not reflect those of my current or past employers.
Parth Parikh has over a decade of experience in finance and research. He currently heads growth and content strategy at Finsire, where he works on investor education initiatives and products like Loan Against Mutual Funds (LAMF) and financial data solutions for banks and fintechs.