Technological & Regulation Impact on IPO 2025
Sushanto has been working as the pioneer of early stage ecosystem in India for more than 15 years. He holds Master's degree from Lucknow University & bachelor's degree from St. Stephen's College, Delhi. He is a promising Angel investor and entrepreneur based in Mumbai. His most promising investments were made in the sectors of Software, Edu-Tech, Commerce and Shopping. He worked as an acclaimed faculty of IITs & IIMs and recently authored a book for startups.
IPO is a key for any company that wishes to offer their share in the public for the first time and by this process it gets the chance to list itself in the list of stock exchange. Whenever a startup starts to grow by escalating their profit percentage, it always dreams to issue their IPO at a certain price. IPO helps the startups to move forward a step by raising capital for their further growth. By issuing IPO it offers equity stakes to their investors which support the startups to accumulate their required fund, pay off debts, and expand their operational abilities further. IPOs are regarded as a significant milestone for any company which offers them wide investment opportunities and it increases the brand visibility. However, it brings regulatory scrutiny and market pressures.
Why startups are so inclined to IPOs?
Most of the technology based companies and startups are recently too inclined towards the IPOs due to various reasons. The first and foremost thing is that the retail investor sentiment is strong across the board and alongside the institutional investors and high-net-worth individuals show a particular interest in tech companies and startups due to their promising growth potential of 30-40% in revenue compared to the relative underperformance of key sectors like FMCG. Startups and tech based organizations gets a good opportunity for exit strategy to their VC & PE investors and it also offers a sound liquidity to the founders and owners by enabling them to raise required amount of fund for elevating and enhancing their growth in the market.
Another contributing factor is the maturity of regulations. Reforms by SEBI, including improved disclosure standards and flexible listing frameworks, have made public listings more attainable. This is especially significant for startups with robust revenue models aiming to transition from late-stage private investments to long-term public funding.
Assistance of Technology in IPO
Technology has extended its arms in all directions and proves to deliver the desired output with flying colors. In case of IPO, technology has not disappointed us at all. Blockchain technology has reduced the paperwork by transparent transactions and digital share issuance. Data Analytics helps to know about the market conditions investor’s behavior and work on the pricing strategies.
Cloud based firms and AI driven platforms helps in facilitating real time data access, offers ease in document sharing which helps in connecting multiple stakeholders including underwriters, legal teams, and regulatory bodies without confusion. Regulatory technology assures that it maintains compliance with securities regulations, automating reporting and monitoring processes to streamline IPO procedures. This amazing bunch of technologies surely helped in uplifting and enhancing security, compliance and security.
How Regulatory advancement shaped up IPO industry
Along with technology regulatory advancement has improved the IPO scenario. Digitalization has simplified the process of investor outreach, compliance procedures, and pricing mechanisms, which helps in preparing the company’s public listings.
Securities Exchange Board of India (SEBI) has implemented various initiatives to safeguard retail investors and streamline the process for companies wishing to go public. These measures include shortening the minimum lock-in period for pre-IPO investors, enhancing the T+3 listing procedure, and introducing ASBA (Application Supported by Blocked Amount). Together, these outstanding modifications have simplified the IPO process for investors by minimizing refund-related inefficiencies and boosting participation in public offerings.
Trailblazing IPOs of 2024
IPOs play significant role for startups which helps the budding startups to enter into broader economic sector of the industry. It offers access to large amounts of capital, offers opportunities for growth and expansion, and increases market visibility.
The year 2024 has witnessed a mix of high, low and average performing IPOs. In these IPOs few of the sectors have created a significant milestone.
Consumer Tech and Fintech Companies: As the digital economy expands, firms in fintech and direct-to-consumer (D2C) sectors have achieved strong market listings and maintained growth following their IPOs, driven by high rates of user adoption.
Specialty Manufacturing & Green Energy: with each passing the demand of sustainable energy sources is shooting up. IPOs in electric vehicle (EV) components, renewable energy, and semiconductor manufacturing have surpassed market expectations, demonstrating investor excitement for sustainable companies.
Top 3 IPOs of 2024 were Jyoti CNC Automation Limited, KRN Heat Exchanger & Refrigeration, Premier Energies. Jyoti’s issue price was 331/share and it approximately gained 276%. KRN’s issue price was 100/share and it gained 319% in total. On the other hand, Premier Energies’ issue price was 100/share and it gained 278% in total.
Possible Constraints of IPO market in 2025
• Economic Instability: Geopolitical uncertainties such as inflation, change in the interest rate can cause volatility in the market. If RBI rises the interest rate the business would swell up and it would help the companies to raise more funds.
• Fluctuation in Stock Market: IPOs broadly depends on stock market and if it experiences downturn in 2025 it can negatively impact the IPO market.
• Sunken Tech industry: If the tech market faces lower growth due to more regulatory pressures it can badly impact IPOs. Too much competition in this market can lead to decreasing the valuation of IPOs in the market.
• Post Pandemic Impact: Pandemic has devastated the Indian economy and these IPOs can bring economic recovery. If there is any lingering effect from the pandemic it will prove to be economic disruption that would be perilous for IPOs.
How IPOs can be traded above their price?
• Sensible Pricing: in order to get a good performance, the companies should set the pricing of their IPOs as per the market which aligns with all market demands and financial fundamentals.
• Regular communication: To perform well in the stock market you need to build trust and improve market stability rate is very important to shine. The companies should actively engage with institutional investors, analysts, and retail participants through transparent financial disclosures.
• Scalability & Profitability: Companies should have a well-defined path to maintain profitability, and scalability in the business. The IPOs needs to be sustainable having post-listing momentum.
• Anchor investors: If you have trustworthy and eminent anchor investors, it would offer you a wider confidence which would help you to stay afloat in the broader spectrum of IPO market and it would also ensure that your IPO would show a stabilized performance after the final listing.
Future of IPO in 2025
Challenges are part and parcel of any industry . Amidst turbulent challenges 2025 is proved to be promising which would offer several hopeful opportunities for IPOs, particularly in critical sectors like consumer internet, fintech, renewable energy, and deep-tech. With India's GDP growth projections staying robust and more companies reaching the stage of maturity suitable for an IPO, this momentum is expected to persist.
.jpg "Sushanto Mitra, Founder & CEO, Lead Invest")
IPO is a key for any company that wishes to offer their share in the public for the first time and by this process it gets the chance to list itself in the list of stock exchange. Whenever a startup starts to grow by escalating their profit percentage, it always dreams to issue their IPO at a certain price. IPO helps the startups to move forward a step by raising capital for their further growth. By issuing IPO it offers equity stakes to their investors which support the startups to accumulate their required fund, pay off debts, and expand their operational abilities further. IPOs are regarded as a significant milestone for any company which offers them wide investment opportunities and it increases the brand visibility. However, it brings regulatory scrutiny and market pressures.
Why startups are so inclined to IPOs?
Most of the technology based companies and startups are recently too inclined towards the IPOs due to various reasons. The first and foremost thing is that the retail investor sentiment is strong across the board and alongside the institutional investors and high-net-worth individuals show a particular interest in tech companies and startups due to their promising growth potential of 30-40% in revenue compared to the relative underperformance of key sectors like FMCG. Startups and tech based organizations gets a good opportunity for exit strategy to their VC & PE investors and it also offers a sound liquidity to the founders and owners by enabling them to raise required amount of fund for elevating and enhancing their growth in the market.
Another contributing factor is the maturity of regulations. Reforms by SEBI, including improved disclosure standards and flexible listing frameworks, have made public listings more attainable. This is especially significant for startups with robust revenue models aiming to transition from late-stage private investments to long-term public funding.
Assistance of Technology in IPO
Technology has extended its arms in all directions and proves to deliver the desired output with flying colors. In case of IPO, technology has not disappointed us at all. Blockchain technology has reduced the paperwork by transparent transactions and digital share issuance. Data Analytics helps to know about the market conditions investor’s behavior and work on the pricing strategies.
India’s IPO landscape is maturing rapidly, with technology, regulations, and investor sentiment aligning to create a sustainable growth path for public market listings. We as Lead Invest are preparing in advance to support investors to access late stage startups before they hit the IPO markets.
Cloud based firms and AI driven platforms helps in facilitating real time data access, offers ease in document sharing which helps in connecting multiple stakeholders including underwriters, legal teams, and regulatory bodies without confusion. Regulatory technology assures that it maintains compliance with securities regulations, automating reporting and monitoring processes to streamline IPO procedures. This amazing bunch of technologies surely helped in uplifting and enhancing security, compliance and security.
How Regulatory advancement shaped up IPO industry
Along with technology regulatory advancement has improved the IPO scenario. Digitalization has simplified the process of investor outreach, compliance procedures, and pricing mechanisms, which helps in preparing the company’s public listings.
Securities Exchange Board of India (SEBI) has implemented various initiatives to safeguard retail investors and streamline the process for companies wishing to go public. These measures include shortening the minimum lock-in period for pre-IPO investors, enhancing the T+3 listing procedure, and introducing ASBA (Application Supported by Blocked Amount). Together, these outstanding modifications have simplified the IPO process for investors by minimizing refund-related inefficiencies and boosting participation in public offerings.
Trailblazing IPOs of 2024
IPOs play significant role for startups which helps the budding startups to enter into broader economic sector of the industry. It offers access to large amounts of capital, offers opportunities for growth and expansion, and increases market visibility.
The year 2024 has witnessed a mix of high, low and average performing IPOs. In these IPOs few of the sectors have created a significant milestone.
Consumer Tech and Fintech Companies: As the digital economy expands, firms in fintech and direct-to-consumer (D2C) sectors have achieved strong market listings and maintained growth following their IPOs, driven by high rates of user adoption.
Specialty Manufacturing & Green Energy: with each passing the demand of sustainable energy sources is shooting up. IPOs in electric vehicle (EV) components, renewable energy, and semiconductor manufacturing have surpassed market expectations, demonstrating investor excitement for sustainable companies.
Top 3 IPOs of 2024 were Jyoti CNC Automation Limited, KRN Heat Exchanger & Refrigeration, Premier Energies. Jyoti’s issue price was 331/share and it approximately gained 276%. KRN’s issue price was 100/share and it gained 319% in total. On the other hand, Premier Energies’ issue price was 100/share and it gained 278% in total.
Possible Constraints of IPO market in 2025
• Economic Instability: Geopolitical uncertainties such as inflation, change in the interest rate can cause volatility in the market. If RBI rises the interest rate the business would swell up and it would help the companies to raise more funds.
• Fluctuation in Stock Market: IPOs broadly depends on stock market and if it experiences downturn in 2025 it can negatively impact the IPO market.
• Sunken Tech industry: If the tech market faces lower growth due to more regulatory pressures it can badly impact IPOs. Too much competition in this market can lead to decreasing the valuation of IPOs in the market.
• Post Pandemic Impact: Pandemic has devastated the Indian economy and these IPOs can bring economic recovery. If there is any lingering effect from the pandemic it will prove to be economic disruption that would be perilous for IPOs.
How IPOs can be traded above their price?
• Sensible Pricing: in order to get a good performance, the companies should set the pricing of their IPOs as per the market which aligns with all market demands and financial fundamentals.
• Regular communication: To perform well in the stock market you need to build trust and improve market stability rate is very important to shine. The companies should actively engage with institutional investors, analysts, and retail participants through transparent financial disclosures.
• Scalability & Profitability: Companies should have a well-defined path to maintain profitability, and scalability in the business. The IPOs needs to be sustainable having post-listing momentum.
• Anchor investors: If you have trustworthy and eminent anchor investors, it would offer you a wider confidence which would help you to stay afloat in the broader spectrum of IPO market and it would also ensure that your IPO would show a stabilized performance after the final listing.
Future of IPO in 2025
Challenges are part and parcel of any industry . Amidst turbulent challenges 2025 is proved to be promising which would offer several hopeful opportunities for IPOs, particularly in critical sectors like consumer internet, fintech, renewable energy, and deep-tech. With India's GDP growth projections staying robust and more companies reaching the stage of maturity suitable for an IPO, this momentum is expected to persist.
