IPOs: Natural Progression for Startups and a Missed Opportunity for Legacy Companies?

In recent years, I’ve noticed a curious pattern across business media interviews: the inevitable question about IPO. Whether it’s a startup founder being grilled by a journalist or an investor waxing poetic about “partnering through to IPO,” the public listing seems to be treated as the natural culmination of entrepreneurial success. It’s as if IPO is not just a financial milestone—but a rite of passage.

And the evidence is compelling. Urban Company’s blockbuster IPO a couple days back—India’s most oversubscribed listing of the year—saw its shares soar over 56% on debut. Before that, we witnessed strong public debuts from Zomato (2021), Nykaa (2021), Paytm (2021), and Delhivery (2022). Each of these IPOs marked a moment of transition: from startup hustle to institutional presence.

This observation led me to a broader reflection: is going public truly the logical next step for every Indian company? And if so, why do some of India's most iconic firms—like Zoho, Haldiram’s, and even Reliance Industries—resist or delay this move?

Let’s look into this.


The IPO Obsession: Why It’s Seen as “Natural”

For startups, the logic is straightforward: -

- It offers a clean exit for early investors.
- It validates the company’s maturity and market relevance.
- It unlocks large-scale capital without incurring debt.

For conglomerates, IPOs serve a different purpose:-

- They allow each business vertical to be valued independently.
- They attract specialized investors (e.g., those interested only in telecom or energy).
- They impose governance discipline through public scrutiny.

Vedanta’s recent decision to hive off into multiple public entities is a textbook example. It’s not just about raising money—it’s about signaling clarity, specialization, and investment friendliness.


The Holdouts: Why Some Giants Stay Private

And yet, some of India’s most admired companies remain shy of the public markets. Consider:-

- Zoho, with its engineering-first ethos and frugal culture, prefers autonomy over quarterly earnings pressure.
- Haldiram’s, despite its massive brand equity, resists IPO—perhaps due to cultural conservatism or a desire to retain tight family control.
- Reliance Industries, while public, has long operated as a unified behemoth. Only recently has it hinted to spin off its telecom and retail arms into independent public entities.

These choices aren’t irrational. They reflect deeper philosophies:-

- A desire to preserve legacy and emotional capital.
- A strategic preference for internal cash flows over external dilution.
- A cultural discomfort with the excessive scrutiny and volatility of public markets.


Why More Family Firms Should Consider IPO

I believe Indian legacy businesses should still explore going public—not as a surrender, but as an evolution. Here’s why: -

- It brings in fresh capital for innovation and expansion.
- It professionalizes governance and succession planning.
- It increases transparency and market discipline.
- It enhances global visibility and investor confidence.

Importantly, going public doesn’t mean losing control. With thoughtful structuring, family scions can retain influence at the board level, while inviting broader participation.


Beyond Finance: The Philosophy of Institutional Maturity

This isn’t just a financial argument—it’s also a philosophical one. The question is not “Should they IPO?” but “Can they evolve without losing their soul?”

Some companies, like Zoho, may never need to go public. Their internal logic is sound, and their ecosystem is thriving. But for others, especially those with sprawling operations and generational leadership, IPOs could be a gateway to deeper institutional maturity.

It’s about embracing professionalism without abandoning identity. About inviting scrutiny without losing autonomy. About scaling impact while preserving values.


Final Thought

India’s economic future will be shaped not just by unicorns and conglomerates, but by how India's legacy businesses choose to grow. IPOs are one path—but the real journey is toward transparency, accountability, and strategic clarity.

And, maybe, it’s time for India's family firms to step into the sunlight—not to be judged—but to be understood and invested, by the aspirational Indian middle-class.

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