Why India’s mid-sized startups are choosing IPOs over the unicorn dream

This shift reflects a stronger focus on profitability and sustainable growth, even in early-stage startups, rather than aggressive capital burn. Once companies reach a scale of ₹300–400 crore and show predictable performance, they are increasingly turning to public markets to build brand credibility, attract talent, and provide shareholder exits.

Startups including Scripbox, MyGate, FabHotels, and Classplus are in various stages of discussions to tap Dalal Street sooner than previous cycles would have suggested, at least four people familiar with the matter said. The shift is being driven by strong valuations, deep domestic liquidity, and founders’ desire to avoid waiting for another private round.

“Public market’s current attraction plays a huge role in people’s decision to opt for a listing. It definitely has secured a position as a top option for the next round fundraise for many early- to mid-stage startups," said Mukul Rustagi, co-founder and chief executive officer (CEO), Classplus.

While Rustagi did not comment on the potential size of the initial public offering (IPO), he said startups are considering diluting anywhere between 10-15% of their market capitalization through a public issue. Classplus is likely to finalize its listing plans after the close of the current financial year.

IPO over private capital

According to one person cited above, these startups are likely to raise ₹400-600 crore through an initial public offering.

“Many of the companies that are being approached today prefer the IPO route rather than growth capital as they are seeing some of their peers command rich valuations right now," a second person said.

An earlier IPO allows founders to dilute less, reset investor expectations, and reduce the pressure created by repeated private-market exit cycles. For many, the trade-off now favours predictable capital and liquidity over chasing high private valuations.

“These companies are in active discussions with advisors and bankers to evaluate an IPO," a third person said, speaking on condition of anonymity.

MyGate did not respond to Mint’s requests for comment. FabHotels, which operates under parent entity Travelstack Tech Ltd, filed its draft red herring prospectus last month to raise ₹250 crore.

Scripbox is also working toward being IPO-ready over the next six to eight quarters. “Like many scaled new-age businesses today, we are evaluating public markets as a way to support long-term growth, transparency, and stakeholder alignment—rather than as a near-term funding event," co-founder Atul Shinghal told Mint in an emailed statement.

“We have not finalised the size or structure of a potential offering, and the eventual timing will depend on market conditions and regulatory requirements. At this stage, we are discussing options with advisors as part of standard preparation," he added.

SME and mainboard lines blur

The shift comes as the number of small businesses going public has risen steadily over the past two to three years, despite tighter regulations to curb excesses and macroeconomic conditions that dampened some issuances.

Total fundraising on the SME platform rose 31% year-on-year to ₹11,539 crore in 2025, Mint reported last week. As SME quality improves, the gap between SME IPOs and the smallest mainboard offerings has narrowed. In fact, over the past four years, the largest SME IPOs have exceeded the smallest mainboard issues, according to Primedatabase.com. In 2025, the biggest SME IPO was ₹166 crore, while the smallest mainboard IPO was ₹116 crore.

Mainboard IPOs have also performed strongly over the past year, with 103 companies raising a record ₹1.76 trillion. In 2024, 91 companies raised ₹1.6 trillion via IPOs on the main board exchanges.

“For growth startups, it is advisable to move for a mainboard listing considering the quality of the investor base and the depth of the market," Rustagi said.

Experts point to strong investor appetite across deal sizes, ranging from IPOs below ₹300 crore to those exceeding ₹1,000 crore.

“But the shift has been driven primarily by the mid-sized IPO segment ( ₹300-1,000 crore). Within this, the ₹300-600 crore range has shown a notable increase in activity, emerging as the most active segment after large IPOs," said Prateek Indwar, managing director and head of capital markets at InCred Capital. “Overall, mid-sized companies, including those in the ₹500-600 crore band, are materially more willing to access public markets today than they were in the mid-2010s or even in the pre-pandemic period."

Exits reset

Prosus Group’s Gunjan Shukla said the growing interest in public markets is not solely driven by tighter private funding conditions. “What we are seeing is a reset in how exits are sized," said Shukla, global head of strategic finance.

“Indian public markets are deep enough at the mid-cap level and ₹600-700 crore IPOs may now be rational, not reactive, choices. Founders, rightly, may prioritize certainty, liquidity and governance over chasing peak private valuations. Some of this is cyclical, but the shift toward earlier, smaller IPOs could structurally stay," she said.

There are several factors pushing companies to evaluate IPOs at this stage: strong domestic liquidity, improved governance, a greater focus on profitability among issuers, better investor sentiment, and more deliberate exit planning.

Typically, companies targeting IPOs in the ₹300–1,000 crore range would have raised a comparable private funding round of about $20–80 million in primary capital, Indwar said, adding that this segment appears to have plateaued.

In 2019, about 145 such private rounds were raised, totalling $5.7 billion. In 2025, the number of rounds increased marginally to 152, but total funding remained similar at $5.4 billion. After spiking between 2020 and 2022, private funding levels today are broadly comparable to those seen between 2017 and 2019, he estimated, with public markets increasingly emerging as a competitive alternative.

With these undercurrents at play, companies traditionally reliant on private capital are now actively evaluating public markets, reflecting a broader shift in mindset, Indwar said.

Founders are also increasingly turning to public markets at an earlier stage to reduce pressure from private investors to exit.

Cautious confidence

The durability of this shift will depend on whether domestic liquidity remains deep and valuations supportive as the IPO pipeline thickens.

“Some of this is cyclical, but the shift toward earlier, smaller IPOs could structurally stay," Shukla said, reiterating that founders are prioritising “certainty, liquidity and governance over chasing peak private valuations."

Indwar said the narrative is already evolving. “The shift is from staying private until very large to using public markets as one of several growth levers," he said, as more EBITDA-positive, fast-growing companies become IPO-ready.

Still, founders remain cautious. “A gold rush is only a gold rush, until the gold’s still there," Rustagi said.