Several new-age tech companies are aggressively raising large pre-IPO rounds as they prepare for potential listings by the end of the year. The move highlights a growing trend among Indian start-ups to bolster their financial position before going public, signalling strong investor confidence in the tech sector.

“The most important factor driving pre-IPO investments is the focus on unit economics during the downturn over the past couple of years. This has created stable and high-growth assets that now have strong revenue growth, less aggressive cash burn and a strong roadmap to profitability, thereby making them attractive bets for investors,” said Sandeep Murthy, Managing Director, Lightbox.

This comes at a time when companies such as Groww, Bluestone, Infra.Market and others are raising funds.

Groww is looking at a $200-million fundraise and has held discussions with GIC, Tiger Global, at $6.5-billion valuation, while Bluestone has successfully secured ₹900 crore in a pre-IPO funding round, raising its valuation to $970 million.

Captain Fresh has raised ₹250 crore in a pre-IPO funding round as it gears up for a stock market listing in the next financial year. The funding round was led by existing investors Prosus Ventures, Accel and Tiger Global Management.

“Usually, pre-IPO rounds are a good indication to assess what lies ahead for such tech companies when they file papers to go public. Currently, some really sound tech companies with great fundamentals are lining up to go public and, hence, the interest in their pre-IPO rounds is immense,” said Siddharth Manchanda, Partner, IndusLaw.

Later-stage deals

Industry experts also noted that dry powder, accumulated during the downturn, is now finding its way into later-stage companies.

“2024 was an outlier year for tech IPOs and this will continue. Investors largely stayed away from growth and later-stage deals during the downturn, but we’ve seen some recovery starting from the last quarter of 2024 as the prospects for quick and profitable returns via the public markets open up,” added Murthy of Lightbox.

Investors consider parameters such as investments range from industry performance and founders’ credibility to company’s governance and financial health for pre-IPO rounds, said Manchanda.

“Usually, pre-IPO rounds are led by late-stage investors who come in at pre-IPO stage with the intent of continuing post-listing before cashing out in a couple of years. The parameters considered for undertaking such investments range from industry performance and founders’ credibility to company’s governance and financial health,” he added.

The wave of pre-IPO fundraising signals a maturing Indian start-up ecosystem where companies are increasingly focused on sustainable growth and long-term capital markets. If successful, these IPOs could further establish India as a key hub for public tech companies, encouraging more start-ups to take the public route.

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