A major structural shift has been unfolding in the Indian startup ecosystem for some time now. There was a phase when the ultimate goal of every startup was to become a ‘Unicorn’ (a valuation of one billion dollars). However, this priority is now changing. Today, mid-sized startups are increasingly choosing to list on the stock market instead of chasing lofty valuations or the ‘Unicorn’ tag in private markets.
This shift is not merely a passing trend but a consequence of evolving economic conditions. As we move closer to 2026, it has become evident that Indian entrepreneurs are beginning to value the transparency and stability of public markets over the uncertainty associated with prolonged private funding cycles.
Let’s understand the reasons behind this structural change and its wider implications.
What’s Happening?
The approach of new-age and mid-sized companies towards the Indian stock market is changing rapidly. In the post-pandemic boom of 2021, startups preferred to stay private for longer periods in pursuit of unicorn valuations. Today, many of these companies are considering entering the public markets much earlier in their growth journey.
Last year, new-age companies listed on Indian exchanges raised approximately Rs 36,000 crore through IPOs. This provided meaningful liquidity to founders, early investors, and employees. Listings of companies such as Ather Energy, Urban Company, Lenskart, Meesho, Groww, PhysicsWallah, and Pine Labs made it one of the most active years for Indian tech IPOs.
Changing Face of Venture Capital and Selective Capital
The outlook of venture capital investors in the Indian startup ecosystem has also evolved. The era of ‘growth at all costs’ is gradually fading, with investors now backing only those companies that demonstrate strong business fundamentals and a visible path to profitability. This phase is increasingly being referred to as the era of selective capital.
The data reflects this transition clearly. Venture capital investments in India stood at around USD 2 billion in 2012 and surged to nearly USD 40 billion during the post-Covid period. However, funding levels dropped sharply thereafter, halving in 2022 and declining further to around USD 10 billion in 2023. In this tighter private funding environment, IPOs have emerged as a more viable capital-raising route for mid-sized startups.
What Does This Mean for Investors?
For investors, particularly retail participants, this trend presents both opportunities and risks, though the positives appear more prominent. When companies list before reaching unicorn valuations, retail investors get the opportunity to participate in their growth journey at an earlier stage. In the past, a significant portion of value creation occurred in the private phase, benefiting PE and VC investors, leaving limited upside once companies eventually went public.
The increasing number of IPOs from mid-sized startups also adds diversification to the market, offering investors a broader set of choices. Moreover, once listed, these companies operate under greater public scrutiny, leading to improved transparency and governance standards. That said, investors must remain cautious. Many startups have reported losses for extended periods, making it essential to closely evaluate business models, financial health, and long-term growth prospects before investing.
What’s Next?
The IPO pipeline for new-age companies in 2026 appears as busy as the previous year. Companies such as PhonePe, Zepto, Oyo, boAt, Infra.Market, and Shadowfax are expected to collectively raise around Rs 50,000 crore from the public markets through a mix of fresh issues and offers for sale. This reinforces the idea that IPOs have become a key fundraising avenue for tech-led and digital-first businesses.
However, sustaining this momentum may prove challenging. Market participants believe that future IPO activity will largely depend on broader market conditions and investor risk appetite, especially for companies that are still loss-making or have only recently achieved profitability. Public market investors have become increasingly selective about valuations, cash flows, and post-listing performance. This heightened scrutiny is likely to further reinforce the importance of quality, discipline, and financial prudence in the 2026 IPO landscape.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
