Importance of startup exits:
When I sold FreeCharge 3 years ago, most of my family members who were in business expressed regret when they met me instead of being happy. For them selling a company was equal to selling their spouse. They felt I sold as I was in distress but in-fact we had broken even that month and had approx 550 crores in the bank. This mindset to me is again visible from the kind of comments I have seen on social media around Flipkart exit.
Most of India still has a tribal mindset to build the company like an empire and expect founders to be like warrior king who rules over it. But the current Indian market cannot make a company go public as Indian markets seek profit for a successful listing and companies can take 20-30 years to get there. Richer markets can make this happen sooner.
An investor is expected to return money to its LPs in a certain period of time (ranging from 7-12 years) and without exits, market remains unattractive for a large set of investors. With every exit, confidence of investors grow and many more get attracted to the market and helps create a huge eco system. A Flipkart exit will potentially result in 1000+ companies getting funded from wide range of investors.
Obviously building without investors is also doable and has been done by 99% of founders in history of India. But if we have to accelerate growth of India, we HAVE to get foreign capital to come in large volume and make it get good returns.
There’s not a single nation that became prosperous without creating a conducive environment for its investors.
-kunal shah(founder of free charge)