Away from the limelight of the press and the frenzy of fundraising, a tech startup in India has achieved a feat that few of its friends have managed: going public.
IndiaMART, the nation’s largest on-line platform for promoting merchandise on to companies, raised almost $70 million in a uncommon tech IPO for India this week.
The milestone for the 23-year-old agency is so unusual for India’s in any other case burgeoning startup ecosystem that, past being over-subscribed 36 instances, pent up demand for IndiaMART’s inventory noticed its share worth pop 40% on its first day of buying and selling on National Stock Exchange on Thursday — a momentum that it sustained on Friday.
The inventory ended Friday at Rs 1326 ($19.3), in comparison with its problem worth of Rs 973 ($14.2).
IndiaMART is the primary business-to-business e-commerce agency to go public in India. Its IPO additionally marks the primary itemizing for a agency following the May reelection of Narendra Modi because the nation’s Prime Minister and the months-long drought that led to it.
Accounting agency EY mentioned it expects extra corporations from India to observe go well with and file for IPO within the coming months.
“Now that national elections are over and favorable results secured, IPO activity is expected to gain momentum in H2 2019 (second half of the year). Companies that had filed their offer documents with the Indian stock markets regulator during H2 2018 and Q1 2019 may finally come to market in the months ahead,” it mentioned in an announcement (PDF).
IndiaMART’s origin
The fireworks of the IPO are simply as spectacular as IndiaMART’s journey.
The startup was based in 1996 and for the primary 13 years, it centered on exports to clients overseas, however it has since modernized its enterprise following the wave of the web.
“The thesis was, in 1996, there were no computers or internet in India. The information about India’s market to the West was very limited,” Dinesh Agarwal, co-founder and CEO of IndiaMART, instructed TechSwitch in an interview.
Until 2008, IndiaMART was totally bootstrapped and worthwhile with $10 million in income, Agarwal mentioned. But issues began to dramatically change in that 12 months.
“The Indian rupee became very strong against the dollar, which dwindled the exports business. This is also when the stock market was collapsing in the West, which further hurt the exports demand,” he defined.
Dinesh Agarwal, founder and CEO of, poses for a profile shot on July 29, 2015 in Noida, India.
By this time, tens of millions of individuals in India have been on the web and, with tens of tens of millions of individuals proudly owning a function cellphone, the circumstances of the market had begun to shift in direction of digital.
“This is when we decided to pursue a completely different path. We started to focus on the domestic market,” Agarwal mentioned.
Over the final 10 years, IndiaMART has change into the most important e-commerce platform for companies with about 60% market share, in accordance with analysis agency KPMG. It handles 97,000 product classes — starting from machine elements, medical gear and textile merchandise to cranes — and has amassed 83 million patrons and 5.5 million suppliers from 1000’s of cities and cities of India.
According to the latest information printed by the Indian authorities, there are about 50 to 60 million small and medium-sized companies in India, however solely round 10 million of them have any presence on the internet. Some 97% of the highest 50 corporations listed on National Stock Exchange use IndiaMART’s providers, Agarwal mentioned.
That’s to not say that the transition to the present day was an easy course of for the corporate. IndiaMART tried to capitalize on its early mover benefit with a stream of latest providers which finally didn’t reap the specified rewards.
In 2002, it launched a journey portal for companies. A 12 months later, it launched a enterprise verification service. It additionally unveiled a funds platform known as ABCPayments. None of those providers labored and the agency rapidly moved on.
Part of IndiaMART’s success story is its agency management and the way cautiously it has raised and spent its cash, Rajesh Sawhney, a serial angel investor who sits on IndiaMART’s board, instructed TechSwitch in an interview.
IndiaMART, which employs about 4,000 individuals, is operationally worthwhile as of the monetary 12 months that led to March this 12 months. It clocked some $82 million in income within the 12 months. It has raised about $32 million so far from Intel Capital, Amadeus Capital Partners and Quona Capital. (Notably, Agarwal mentioned that he rejected affords from VCs for a really very long time.)
The agency makes most of its income from subscriptions it sells to sellers. A subscription offers a vendor a variety of advantages together with getting featured on storefronts.

4/4. So many Indian small companies have a lot to thank @DineshAgarwal for. And after the long-lasting IPO, so many Indian entreprenuers could have a lot to thank him for – endlessly unlocking the Indian public markets to present & future era of Indian web corporations 🙏🏼
— Kunal Bahl (@1kunalbahl) July 4, 2019

Where the business stands
There are solely a handful of web corporations in India which have gone public within the final decade. Online journey service MakeMyTrip went public in 2010. Software agency Intellect Design Arena and e-commerce retailer Koovs listed in 2014, then journey portal Yatra and e-commerce agency Infibeam adopted two years later.
India has persistently attracted billions of {dollars} in funding lately and produced many unicorns. Those embody Flipkart, which was acquired by Walmart final 12 months for $16 billion, Paytm, which has raised greater than $2 billion so far, Swiggy, which has bagged $1.5 billion so far, Zomato, which has raised $750 million, and comparatively new entrant Byju’s — however few of them are nearing profitability and most definitely don’t see an IPO of their fast future.
In that context, IndiaMART could set a benchmark for others to observe.
“The fact that we have a homegrown digital commerce business, serving both the urban and smaller cities, and having struggled and been around for so long building a very difficult business and finally going public in the local exchange is a phenomenal story,” Ganesh Rengaswamy, a companion at Quona Capital, instructed TechSwitch in an interview. “It keeps the story of India tech, to the Western world, going.”

Generally, it’s agreed that there are too few IPOs in India and the business can profit from momentum and encouragement of excessive profile and profitable public listings.
“There is a firm consensus that in India, markets will prefer only the IPOs of companies that are profitable. And investors in India might not value those companies. Both of these issues are being addressed by IndiaMART,” mentioned Sawhney.
“We want 30 to 40 extra IPOs. This will even imply that the inventory market right here has matured and understands the tech shares and the way it’s completely different from different client shares they often deal with. More tech corporations going public would additionally pave the best way for a lot of to discover inventory exchanges outdoors of India.
“Indian market is ready for more tech stocks. We just need to get more companies to go out there,” Sawhney added, though he did predict that it’s going to take a couple of years earlier than the overwhelming majority of main startups are prepared for the general public market.

The Indian authorities, for its half, this week introduced a variety of incentives to uplift the “entrepreneurial spirit” within the nation.
Finance minister Nirmala Sitharaman mentioned the federal government would ease international direct funding guidelines for sure sectors — together with e-commerce, meals supply, grocery — and enhance the digital funds ecosystem. Sitharaman, who’s the primary girl to carry this place in India, mentioned the federal government would additionally launch a TV program to assist startups join with enterprise capitalists.
The path forward for IndiaMART
IndiaMART has managed to construct a sticky enterprise that compels greater than 55% of its clients to come back again to the platform and make one other transaction inside 90 days, Agarwal — its CEO — mentioned. With some 3,500 of its 4,000 workers labeled as gross sales executives, the corporate is aggressive in its pursuit of latest clients. Moving ahead, that can stay one in every of its greatest focuses, in accordance with Agarwal.
“Most of our time still goes into educating MSMEs on how to use the internet. That was a challenge 20 years ago and it remains a challenge today,” he instructed TechSwitch.
In latest years, IndiaMART has begun to develop its suite of choices to its enterprise clients in a bid to extend the worth they get from its platform and thus improve their reliance on its service.
IndiaMART has constructed a buyer relationship administration (CRM) instrument in order that clients needn’t depend on spreadsheets or different third-party providers.
“We will continue to explore more SaaS offerings and look into solving problems in accounting, invoice management and other areas,” mentioned Agarwal.
The agency additionally not too long ago began to supply cost facilitation between patrons and sellers by a PayPal -like escrow system.
“This will bridge the trust gap between the entities and improve an MSME’s ability to accept all kinds of payment options including the new age offerings.”
There’s an elephant within the room, nevertheless.
A much bigger problem that looms for IndiaMART is the rising curiosity of Amazon and Walmart within the business-to-business house. Several startups together with Udaan — which has raised north of $280 million from DST Global and Lightspeed Venture Partners — have risen up lately and are more and more increasing their operations. Agarwal didn’t appear a lot fearful, nevertheless, telling TechSwitch that he believes that his prime competitors is extra centered on B2C and serving area of interest audiences. Besides he has $100 million within the financial institution himself.
Indeed, as Quona Capital’s Rengaswamy astutely famous, competitors will not be new for IndiaMART — the corporate has survived and thrived greater than 20 years of it.
“Alibaba came and gave up,” he famous.
An vital — and unanswered query — that follows the profitable IPO is how IndiaMART’s inventory will fare over the approaching months. A look to the U.S. — the place hyped corporations like Uber, Lyft and others have seen costs taper off — reveals clearly that early demand and sustained inventory efficiency will not be one and the identical.
Nobody is aware of at this level, and the added complexity at play is that the idea of a tech IPO is so unusual in India that there isn’t any definitive reply to it… but. But IndiaMART’s greatest achievement could also be that it units the pathway that many others will observe.

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