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The global business landscape has witnessed an eruption in start-up culture, presenting a vast array of opportunities for early-stage investors. While not every start-up may guarantee profitability, investors bear the responsibility of thoroughly assessing their potential and understanding their future prospects. Investing in start-ups offers a prime opportunity to maximize exposure and reap substantial returns in the future. As of May 2023, India ranks third in the world’s largest start-up ecosystems, while the US leads the list with over 75,000 start-ups. In this blog, we unveil some of the most promising start-ups that have proven to be multibaggers, dominating their industries and enticing investors. Through a real comparison of Indian and US start-ups, we empower you to discern where the maximum scope for better returns lies.
Start-ups in India
The year 2022 marked a significant milestone in the Indian start-up ecosystem with the successful listings of several industry giants. Notable players like Paytm (One 97 Communication), Zomato, Delhivery, Nykaa, and Policy Bazaar made headlines as they ventured into the public market. The listings of Zomato, Nykaa, and Delhivery brought joy to public investors, celebrating favorable stock performances. However, investors who had put their faith in Paytm and Policy Bazaar experienced contrasting results as the stocks failed to impress. Despite this, early-stage investors who had displayed unwavering trust in these start-ups were handsomely rewarded.
A standout moment for the start-up ecosystem in India was witnessed in 2022 with Paytm’s awe-inspiring IPO, raising a staggering ₹18,000 crore and earning the title of India’s second-largest IPO. The market’s resolute confidence in this start-up’s listing showcased the immense potential it holds.
The graph below showcases the pre-listing valuations of these start-ups compared to their valuations after going public.
The IPOs of Zomato, Nykaa, and Delhivery not only provided much-needed liquidity for early investors, founders, and employees but also acted as a driving force for further growth and expansion
opportunities for these start-ups. The success of these listings inspired other start-ups to contemplate going public, seeking capital infusion and increased visibility.
Nevertheless, it is crucial to acknowledge that investing in IPOs carries inherent risks, as exemplified by the mixed performance of Paytm and Policy Bazaar. Stock prices can be susceptible to volatility, demanding careful research and a thorough understanding of one’s risk tolerance before participating in such offerings.
The unprecedented IPO boom in 2022 signifies the maturing state of India’s start-up ecosystem. Companies displaying robust fundamentals and significant growth potential have garnered substantial attention from public investors. Building on this momentum, other start-ups like Mobikwik, OYO, Ixigo, and more are lining up to release their IPOs, indicating that the Indian stock screener market will continue to offer captivating opportunities for investors seeking to be part of the nation’s entrepreneurial triumphs.
Start-ups in the US
The start-up culture in India is gradually taking shape, but in the US, it has been a prevalent and influential force in the business ecosystem for a considerable period. As mentioned earlier, the US boasts the highest number of start-ups, with some of them proving to be true game-changers. While 2022 witnessed a surge in the listing of Indian start-ups, the US market has been witnessing the listing of numerous start-ups since the early 2010s. It all began with Facebook, the social media giant, which went public with its IPO in January 2012. Financial institutions valued the company at a staggering $104 billion, marking it as the largest valuation ever for a newly public company. The IPO turned out to be a resounding success, with Facebook raising a whopping $16 billion and securing its place as the third-largest IPO in US history. This milestone shed a spotlight on the start-up ecosystem, gaining prominence in the mainstream business environment. Subsequently, more start-ups joined the fray and went public, further solidifying the influence of the start-up culture. Notable examples include Uber, which made its IPO debut in May 2019, followed by Airbnb and DoorDash in December 2020, and Robinhood in July 2021. The US market has been a breeding ground for revolutionary start-ups, and their successful IPOs have contributed to shaping the entrepreneurial landscape and inspiring emerging companies to seek public listings.
Comparison
Investing in emerging start-ups can yield substantial rewards for astute investors. However, such investments come with inherent risks, making it mandatory for meticulous attention and careful consideration of various factors. By partnering with seasoned investment experts and evaluating key aspects such as market potential, leadership proficiency, and financial viability, you can navigate the start-up landscape with prudence and maximize your chances of success. As a part of our effort, we compiled some important factors that are to be considered while making an investment in a start-up organization.
(The below given companies are compared based on business module and industry to avoid biased opinions)
a) Zomato vs DoorDash
| Components (in $) | ZOMATO | DOORDASH |
| Market Cap | $8.60 Billion | $32.7 Billion |
| Revenue in latest quarter | $916.6 Million | $2.0 Billion |
| Profit earned in the latest quarter | $(36.07) Million | $(162) Million |
| Net worth | $5.4 Billion | $30.43 Billion |
- OYO vs AirBnB
| Components (in $) | OYO | AIRBNB |
| Market Cap | (Not listed) | $92.4 Billion |
| Revenue in latest quarter | $751 Million | $1.8 Billion |
| Profit earned in the latest quarter | $(37) Million | $166 Million |
| Net worth | $9.6 Billion | $73.34 Billion |
c) PayTm vs Affirm
| Components (in $) | PayTm | AFFIRM |
| Market Cap | $6.06 Billion | $5.0 Billion |
| Revenue in latest quarter | $213 Million | $381.0 Million |
| Profit earned in the latest quarter | $(82) Million | $(205)Million |
| Net worth | $2.3 Billion | $5.06 Billion |
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Happy investing!
