Did ‘flipping’ put the nail in the coffin of e-commerce startups?

NEW DELHI: Vijay Shekhar Sharma, founder of fintech agency Paytm, on Thursday urged that flipping of Indian startups might be the purpose behind the demise of many e-commerce corporations in current years.

Flipping refers to the follow adopted by many startups who arrange an organization outdoors India, ideally Singapore and Hong Kong, to accumulate their very own Indian property, successfully altering the domicile of the firm. The causes for such follow is to entry low-cost capital and typically to learn from liberal tax and compliance norms.

“Imagine if you are fighting somebody who can issue billions of dollars of bonds in a flip and then throw that money in your market, how are you gonna survive? You could see that online commerce companies, there were many others, where have they all gone?” Sharma mentioned, referring to corporations which might be arrange overseas to entry low-cost capital.

In the previous few years, the e-commerce market has concentrated to simply two gamers, Amazon and Flipkart, each of that are arrange out of the nation. Many names like Snapdeal, Jabong, Shopclues, Myntra, and so forth are both not in image or have been acquired by their bigger rivals.

“You are fighting global competitors thanks to the access to international market and capital may issue bonds at much lower cost and dump that money in India and wipe you off or slow down your success. Access to the capital is one of the biggest factors for successful business,” Sharma mentioned, talking at Times Network India Economic Conclave 2021.

The pioneer of Indian fee ecosystem was countering the assertion of Sanjiv Bikhchandani, co-founder of Info Edge, an organization that has stakes in marquee startups akin to Zomato, Naukri.com, 99acres, Siksha.com, and so forth.

“If your best startups start flipping, in the long run that is going to be detrimental. If we go back 40-50 years, Infosys was a startup in the 1980s. Imagine if they had flipped then, would they have given all the benefits to the industry and led to creation of a new stock category?” mentioned Bhikhchandani, who was additionally current at the conclave.

Bikhchandani has been fervently against the follow of flipping, and raised the situation in the previous as effectively. He has additionally urged authorities motion in opposition to the follow.

Will Zomato listing by way of SPAC?
Bikhchandani categorically denied that Zomato will select to listing by way of a particular function acquisition firm, popularly often called SPAC, which has gained forex in current occasions as one other strategy to entry inventory markets.

SPAC is in essence a shell firm that’s listed on a inventory change with the function of buying a personal firm, thus making it public with out going by the conventional preliminary public providing course of.

However, Bhikchandani prevented answering whether or not Zomato will listing in India or overseas, even when prodded, given he’s an opponent of Indian corporations going out of the nation in search of capital.

“Zomato is an independent company. We are a minority shareholder. The board will meet and they will decide. I am not allowed to talk about it. However, it (listing buzz) has been in the media that they are working on it and they will make some progress and figure it out,” Bhikhchnadani mentioned.

He mentioned if you’d like corporations to listing in India and so they can’t go the common IPO route as a result of they’re loss making, an Indian SPAC could also be the reply. Reports have mentioned the capital market regulator Sebi has shaped a gaggle of consultants to look at the feasibility of introducing SPACs like constructions in India.

Recently, Elevation Capital and Think Investments launched SPAC for US itemizing of Indian startups and filed for its Nasdaq IPO. Both corporations have funding in startups akin to Paytm, Swiggy, Urban Company, ShareChat, and so forth.

SPAC’s board contains Paytm’s Vijay Shekhar Sharma, Dream11 co-founder Harsh Jain, SoftBank’s former Managing Partner Kabir Misra and others, based on a submitting. The SPAC is led by founders of Elevation Capital and Think Investments Ravi Adusumalli and Shashin Shah, respectively.

“India has this foreign listing rule that is pending since last May. (SPAC) is good for India because you are going to have companies in India with an ability to bring public shareholders from other countries,” mentioned Sharma.

In the subsequent 2-3 years India could have 10-20 corporations with a valuation of $2-5 billion, Sharma mentioned, including these corporations might want to entry capital markets, and since you can not listing immediately, SPAC will likely be one of the selections.