oppn parties Backing Loss-Making Firms In The Knowledge-Based Economy

News Snippets

  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
  • India has moved to the 40th spot in the innovation index, up 6 spots from last year
  • DGGI has alleged that top insurance companies, banks and NBFCs has committed a fraud of Rs 800cr by claiming input tax credit without underlying supplies
  • The Centre will borrow Rs 10000cr less than planned earlier due to good revenue collections
  • At $23.9bn, India's current account deficit widened to 2.8% in Q1, the worst in four years
  • Stocks continue to flounder on Thursday: Sensex sheds 188 points to 56409 and Nifty 40 points to 16818
  • The 36th National Games were declared open on Thusrday by PM Modi in front of a record crowd in Motera near Ahmedabad
  • Jasprit Bumrah most likely to miss T20 World Cup due to recurrence of back injury
  • PFI's political wing, the SDPI is on EC radar and action will follow soon if discrepancies are detected
  • Ashok Gehlot to meet Sonia Gandhi today, says all issues will be sorted out soon
  • Referring to the PFI ban, most Muslim organizations ask the government to take similar action against right wings organizations like the RSS, Bajrang Dal, VHP and the like
In a landmark order, Supreme Court rules that all women, married or unmarried, are entitled to safe and legal abortion up to 24 weeks of pregnancy as per the MTP Act
oppn parties
Backing Loss-Making Firms In The Knowledge-Based Economy

By Ashwini Agarwal
First publised on 2021-11-12 08:33:49

Nykaa's stellar debut on the bourses - the share listed at a huge premium and quickly scaled to double its issue price - made its founder Falguni Nayar a billionaire. But that was not the only thing it achieved. It reinforced the emerging belief that the Indian startup ecosystem is headed for greater heights, backed by investors who are willing to take the long term view and put their money behind entrepreneurs who they think are positive disrupters and will make a difference.

There was a time when investors would not touch a loss-making company (with no break-even in sight, let alone profitability) with a bargepole. But with savvy fund managers willing to pour money in these startups by betting on the future, the retail investors have also changed their stance. This is evident from the way they have backed the recent IPOs of loss-making firms like Zomato, Nykaa, Policybazaar and Paytm, despite their huge valuations and supposedly exorbitant issue price. Most analysts have agreed that such huge valuations for these firms are not sustainable and the share price is likely to go down hugely. But the share price of both Zomato and Nykaa has not gone down after their listing, proving that retail investors were not guided just by the premium in the grey market at the time of the IPO.

India has seen 35 unicorns (firms with a valuation above $1bn) this year. Funds have poured in more than $32bn in startups in India till September this year. This proves that money will never be a constraint for new ideas and innovation. The government now needs to ensure that the regulatory environment is conducive to the nourishing of startup activity. Although a lot has been done to free startups from stifling red tape, the enormous amount of money now being attracted by these firms should not make them targets for tax and other regulatory authorities. This can only be prevented if clear laws and transparent rules are drawn up to help the onward march of these firms that expand India's knowledge-based economy.