Stock market veteran Shankar Sharma has quite a reputation for making poignant remarks every now and then. His latest volley, when Zomato scrip plunged heavily in the last week of July, was in such a league. He equated the continuous plunge in the share prices of one of the best known start-ups with a famous dialogue of Amitabh Bachchan in 1975 flick Deewar. “Mar to woh bees saal pehle gaya tha. Aaj to sirf ussey jalaya ja raha hai. It was game over on listing itself,” he tweeted. The promoters and investors in the company may not take this comment kindly but it definitely raises a larger point pertaining to the fundamental flaws in the startup eco-systems driven by the valuation driven methodology. It also raises doubts about the resilience of start-ups, when judged by the usual parameters applied on brick and mortar entities for decades. Zomato, a popular food delivery and a front line start-up, backed by a line of prestigious investors, had made it to the bourses with much fanfare, with its IPO oversubscribed by 38.25 times in July 2021. The shares, which were offered in the Rs72-76 band, had opened at Rs115 at the bourses. It later shot up to Rs169, its 52 week high. But since then, Zomato shares consistently lost its sheen crashing to a little above Rs40 around this August beginning. Its current market cap is in the range of $5.5 billion, which had touched a peak of over $16 billion last November. But Zomato is not alone in the start-up powerhouse bracket that is finding it difficult to bear the hard-nosed evaluation mechanism of market pundits. PayTm, another big name, has been at the receiving end as well since its enlisting last November with share price now trading in the Rs700-800 range, as against the opening band of Rs2,000-2,150. Needless to say, the drubbing of the leading new age players in the stock market has created nervousness all around. But, as an expert points out, start-ups all over the world including India, which has emerged as a commercial hotbed, are now in a serious transitional phase, where the successful ones will have to leave behind their cash burning attitude and show similar deftness in cash earning capabilities. As far as ecosystem goes, the start-up growth story still has many interesting chapters, which are waiting to be added. Expanding stage Thanks to its expertise in technology and the resultant ease in the advent of the digital era, start-ups in India have come into prominence in the last decade, as they introduced new solutions to the stakeholders in key business value chains. The country, in fact, emerged as one of the leading startup turfs in the world. “Major economic reforms and the rise of the technology industry has set the foundation for the surge of entrepreneurship in the country,” says Sujeet Kumar, co-founder, udaan. “With proven tech prowess, the start-ups entrepreneurs identified and took advantage of the huge opportunity that a country like India offers -- both in terms of size and young population”. Adds Rahul Garg, founder, Moglix, “The Economic Survey of 2021-22 suggests that, following the US and China, India has become the third-largest start-up ecosystem in the world. Fintech, e-commerce, SaaS and marketplace players are giving established giants a run for their money”. According to Samson David, CEO & managing director, Soroco, the boom witnessed in the Indian start-up world has its roots in the late 1980s and early 1990s, when the first wave of IT behemoths such as Infosys, Wipro, HCL & TCS opened the doors to innovation. “Over the last 10 years, we have seen unprecedented growth, with 100+ active incubators fostering and nurturing the start-up ecosystem,” says he.
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Thanks to its expertise in technology start-ups in India have come into prominence in the last decade
