Zerodha ceo in the midst of the ipo market frenzy said that Startups are concentrating on increasing their valuations amid the craze surrounding the IPO market. Nithin Kamath, the CEO, and founder of Zerodha advised them to concentrate on slow compounding over the long term rather than maximum valuation. He continued by saying that consumer-focused startups from all over the world that have conducted a public offering have not succeeded in winning over their investors.
The CEO through his LinkedIn page writes that “Startups devote a lot of time and resources to marketing. However, I believe that B2C startups around the world that have gone public in recent years have overlooked one of their greatest assets—a chance to turn millions of retail investors with influence on social media into brand ambassadors”
There has been a lot of discussion going on in the securities market regarding the buzz of IPO’s of new age startups. The new-age tech companies looking for a higher valuation while launching their IPO has set a bad example by facing a backlash from the Netizens. The latest company to face such backlash was mamaearth when they decided to launch their IPO seeking a gigantic valuation of Rs 24000 cr.
The CEO further adds This entails creating a story that can reflect the best-case scenario for the company. But for a business to succeed as a listed company, different requirements apply. Success means generating wealth with the least amount of volatility. Retail investors often become alarmed after sudden drops and sell their stocks at lows.
Nithin Kamath explains that a company can lessen stock price volatility before and after its initial public offering (IPO) by setting realistic expectations and being open with investors.
Nitin believes that if a company follows these simple steps then it will let the shareholders feel that they have ownership over the company and help reduce the acquisition cost which is considered to be the biggest cost of a b2c business.
