The euphoria is palpable. Every news headline, every TV interview, every viral tweet this week in India has been about one topic and one topic alone—the much-awaited public market debut of foodtech startup Zomato. Starting 14 July, Zomato’s initial public offering (IPO) is set to raise more than Rs 9,300 crore ($1.2 billion) for the food delivery aggregator. With the price band of Rs 72-76 (~$1) per share, this effectively values the company at Rs 60,000 crore—nearly $8 billion.

This euphoria is playing out in two parts.

First, the jubilation around a unicorn startup going public in India for the first time. A “watershed moment”, it signals the coming of age of Zomato specifically and of the entire Indian startup ecosystem in general.

There is little doubt that this jubilation is well-deserved. Every startup journey is a battle against overwhelming odds. Founders start with meagre resources and large ambitions and continuously tilt at the windmills to turn their dreams into reality. Zomato’s 14-year journey from restaurant listing to public listing is a glorious credit to its founders, team members, and investors.

The other point of euphoria falls in a grey area.

A set of vociferous debates and impassioned questions around Zomato.

Is the valuation ask too high? How will public markets receive a company that has never made profits and is a long way from ever making one? Isn’t Zomato’s price-multiple price-multiple A price multiple is any ratio that uses the share price of a company in conjunction with some specific per-share financial metric for a snapshot on valuation. The share price is typically divided by a chosen per-share metric to form a ratio. too expensive compared to global peers like DoorDash and Meituan? Should retail investors buy the stock at this price or wait?

These are all good questions but they are the wrong ones to consider at this point.

Not because these aspects aren’t important but because there is another aspect that is more so but hasn’t received any attention so far.

The real question is not how public markets in India will evaluate Zomato, but how Zomato could change public markets in India.

For Zomato itself, this public listing might not be anywhere as significant as one might think. Contrary to what one might believe, this IPO is not really an exit opportunity for Zomato’s investors. In fact, many of them are doubling down and purchasing more shares in the listing.

It is not even a question of Zomato needing to tap public markets for more funding. The current funding climate is such that startups can raise more startups can raise more The Ken The tail of acquisitions wagging India's funding dog Read more money from private investors than they can from public markets, and quite possibly at cheaper rates and better terms.


Sumanth Raghavendra

Sumanth is a serial entrepreneur with more than eighteen years experience in running startups. He is currently the founder of Deck App Technologies, a Bangalore-based startup attempting to re-imagine productivity software for the Post-PC era. Sumanth’s columns appear regularly in leading publications. He holds MBA degrees from the Indian Institute of Management, Bangalore and Thunderbird, The American Graduate School of International Management, USA.

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