Insights

Founder Blog

Startup insights, entrepreneurship tips, and innovation stories from founders and industry experts.

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Veniam impedit ess

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Jun 12, 2026

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Jun 12, 2026

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anything that works
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anything that works

anything that works

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Hellop Pitchsap

Jun 12, 2026

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Jun 9, 2026

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Jun 3, 2026

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This is why SEBI allows startups that are making losses, or have just started making profits, to launch an IPO.
Tier 3

This is why SEBI allows startups that are making losses, or have just started making profits, to launch an IPO.

SEBI allows loss-making, high-growth startups to list through Regulation 6(2) even if they don’t meet the usual three-year profit requirement, but with strict conditions most importantly that 75% of the IPO must be allotted to qualified institutional buyers and only 10% to retail investors. The idea is that large institutions understand risky business models better, help in fair price discovery, attract foreign capital, and provide exit opportunities for early venture capital investors, which in turn supports India’s startup ecosystem. However, this structure creates an artificial shortage of shares at listing because founders, early investors, and even IPO institutions are locked in and cannot sell for 6 months to a year. Due to high hype and very limited supply, stock prices often jump sharply on listing day, creating the illusion of success. Retail investors, seeing these listing gains, buy at elevated prices without realizing the rise is driven by supply constraints rather than business fundamentals. Once the lock-in period ends, large shareholders rush to sell, flooding the market with shares, overwhelming demand, and causing prices to fall sharply often below the IPO price. As a result, while the policy helps develop capital markets and encourages startup funding, it frequently benefits smart money that enters early and exits on time, leaving retail investors exposed to post-lock-in crashes.

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Nehal

Dec 21, 2025

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Anonymous

Aug 22, 2025

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My First Blog
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My First Blog

This is a summary of the blog..

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Ujjwal Tyagi

Mar 19, 2025

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