Several startups opting for public listing are grabbing higher valuations in public markets than their private fundraising rounds. With stronger fundamentals and a clear path to profitability, startups today are sustaining the attention of retail investors, say analysts.

Brainbees Solutions, which operates baby-care retailer FirstCry, saw its valuation jump 44% on the listing day to Rs 32,783 crore from its last-known valuation of $2.7 billion or Rs 22,698 crore in early 2023. The valuation of co-working and managed offices provider Awfis jumped 53% to Rs 2,909 crore on the listing day in May from $226 million or Rs 1,900 crore in September 2023, when it had raised its last priced round. As of November 1, 2024, its valuation has improved further to Rs 4,828 crore, more than 2.5 times its last private valuationVaranasi Investment. Among the more recent IPOs, SoftBank-backed Unicommerce listed with a cap of Rs 2,152 crore, reflecting a market cap-to-sales ratio of 20.7.

Companies with established revenue streams have always commanded higher valuations during IPOs and are no exception, say expertsJaipur Stock. “Many of these startups have demonstrated robust business models and revenue growth, which significantly bolstered investor confidence,” Somdutta Singh, an angel investor and founder-CEO of Assiduus, told FE. A more favourable regulatory environment for IPOs has also contributed to this trend.

The process is streamlined, with reduced compliance burdens, creating a favourable environment for startups to go public.

Awfis, Go Digit, TBO Tek, Ola Electric, FirstCry, ixigo, and Unicommerce are some of the startups that have listed on the stock exchanges this year. Analysts also say that the overall bullish sentiment in the stock market has led to an increased demand for tech stocks, particularly those with strong growth potential.

“’s strong regulatory environment, coupled with a growing focus on domestic unicorns and high-quality businesses, is driving momentum in listings, despite global economic challenges. In this favourable IPO environment, we are also witnessing public savings being channelled into equity at higher rates,” Nruthya Madappa, partner, 3one4 Capital, told FEBangalore Investment. According to the Association of Mutual Funds in India (AMFI), the ’s total assets under management (AUM) reached a record high of Rs 6,670,000 crore in August 2024, a growth of about Rs 16 lakh crore in 2024, driven by a rise in equity inflows and increased investor interest.

The increasing gains from IPO for startups today is also due to retail investors’ confidence in startups post the successful IPO run by startups like Mamaearth. When Mamaearth-parent Honasa was listed on the bourses in October last year, its valuation on the listing day was about 23% higher than its last-known valuation in a private funding round. Further, investors are also increasingly valuing startups based on their scalability and the size of their target markets For instance, experts point out that companies like Zaggle are tapping into vast markets with their innovative solutions, making them attractive to public investors who seek long-term growth potential. As of November 1, 2024, the fintech startup had a market cap of Rs 5,285 crore.

Startups that secure significant investments before going public also often see enhanced valuationsMumbai Wealth Management. This is because investment from established firms can validate a startup’s business model and provide additional market credibility. For instance, Zomato raised funds from high-profile investors like Ant Group and Tiger Global, which resulted in a valuation of around $5 billion before its IPO in 2021.