Away from the The lights in the press and the frenzy of fundraising, an emerging technology company in India has made an achievement that only a few of its peers have been able to: publicize.
IndiaMART, The largest online platform to sell products directly to companies, raised about $ 70 million in the rare IPO of India this week.
The company's 23-year-old teacher is unusual for India's booming ecosystem. In addition to increasing enrollment 36 times, demand for And IndiaMART The bourse saw its share price rise 40 percent on the first day of trading on the national bourse on Thursday – a momentum maintained on Friday.
The stock ended Friday at 1326 rupees ($ 19.3), compared to its 973 rupees ($ 14.2).
IndiaMART is the first inter-company e-commerce company to be publicly traded in India. The IPO is also the first listed company Narendra Modi has been reelected In his capacity as Prime Minister of the nation and the drought that lasted for months.
EY said it expects more companies from India to follow suit in the IPO in the coming months.
"Now that the national election is over and positive results are secured, IPO activity is expected to gain momentum in the second half of 2019. The companies that submitted their bid documents to the Indian stock market regulator during H2 2018 and Q1 2019 may come Finally to the markets in the coming months, " Said in a statement (PDF).
Origin of IndiaMART
Fireworks for the IPO are as impressive as the IndiaMART trip.
Founded in 1996 and for the first 13 years, the company has focused on exports to overseas customers, but has since updated its business after the wave of the Internet.
The thesis, in 1996, was no computers or Internet in India. "Information on India's market to the West was very limited," said Denish Agarwal, co-founder and chief executive officer of IndiNart, TechCrunch.
Until 2008, IndiaMART was fully immune and profitable with $ 10 million in revenue, Agarwal said. But things began to change dramatically that year.
The Indian Rupee has become very strong against the dollar, leading to a slowdown in export activity. This is also the case when the stock market was collapsing in the West, further undermining the export demand. "
By this time, millions of people in India were online, and with tens of millions of people having a distinct phone, market conditions began to shift towards digital technology.
This is when we decided to follow a completely different path. We have started to focus on the local market. "
Over the past 10 years, IndiaMART has become the largest e-commerce platform for companies with a market share of about 60%, according to research firm KPMG. It deals with 97,000 categories of products – ranging from machinery parts, medical equipment and textile products to cranes – and has brought together 83 million buyers and 5.5 million suppliers from thousands of cities and cities of India.
According to the latest data published by the Indian government, there are about 50 to 60 million small and medium-sized companies in India, but only about 10 million of them have any presence on the Internet. Agarwal said about 97 percent of the top 50 listed companies use IndiaMART services.
This does not mean that moving to the current day was a clear process for the company. IndiaMART tried to take advantage of its early advantage through a range of new services that did not finally reap the rewards required.
In 2002, it is Launched Corporate travel portal. A year later, the Business Verification Service was launched. This also reveal The payments platform is called ABCPayments. None of these services worked and the company moved quickly.
Part of IndiaMART's success story is its strong leadership and cautiousness in raising and spending its money, Rajesh Sauni, Said a sequential angel investor sits on IndiaMART's board of TechCrunch in an interview.
IndiaMART, which employs around 4,000 people, is operationally profitable from the fiscal year that ended in March this year. I recorded about $ 82 million in revenue a year. Has raised about $ 32 million so far from Intel Capital, Amadeus Capital Partners And Kona Capital. (In particular, Agarwal said Offers rejected Of VCs for a very long time.)
The company earns most of its revenue from the subscriptions it sells to vendors. The subscription gives the seller a range of features including access to features on storefronts.
4/4. Many small Indian companies have a lot to thank
] DineshAgarwal To on. After initial subscription, many Indian entrepreneurs will have to thank him for this – opening India's markets forever to the current and future generation of Indian Internet companies 🙏🏼
– Kunal Bahl (@ 1kunalbahl) 4 July 2019
Where the industry stands
There are only a few Internet companies in India that have become generic in the last decade. The MakeMyTrip online travel service became public in 2010. The Intellect Design Arena software company and the Koovs e-commerce store were set up in 2014, Yatra Travel and Infibeam e-commerce followed two years later.
India has consistently attracted billions of dollars in funding in recent years and has produced many animals. Those include Flickrart, that was Wal-Mart got it last year for $ 16 billion, Paytm, has collected more than $ 2 billion so far, Swiggy, which has He has earned 1.5 billion dollars so far, Zomato, collected $ 750 million, and The relatively newcomer Peugeot – But few are approaching profitability and most likely do not see IPO in the near future.
In this context, IndiaMART may set a standard for others to follow.
"The fact that we have a local digital trading company, serving both urban cities and smaller cities, has struggled and existed for a long time to build a very difficult company and finally put its shares on the local stock market is an extraordinary story," Ganesh Rengaswamy, partner at Quona Capital, TechCrunch in an interview. "It keeps the story of technology in India, to the Western world," he said.
In general, it is agreed that the number of IPOs in India is very low and the industry can benefit from the momentum and encouragement of the outstanding and successful public lists.
There is a strong consensus that markets in India prefer only public offerings to lucrative companies. Investors in India may not appreciate those companies. Both of these issues are being addressed by IndiaMART, Sauni said.
We need between 30 and 40 initial subscriptions. This also means that the stock market here has matured and understands technology stocks and how it differs from other consumer stocks that usually deal with them. More technology companies that have been publicly traded will pave the way for many to explore exchanges outside India.
"The Indian market is ready for more technology shares," Suhani said. "We just need to push more companies there," although he expected it to take a few years before the vast majority of emerging startups are ready for the public market.
For its part, the Indian government announced this week a number of incentives to raise the "spirit of initiative" in the nation.
Finance Minister Nirmala Sutraman said the government would ease foreign direct investment rules for some sectors – including e-commerce, food delivery, grocery – and improve the ecosystem of digital payments. Seetharaman, the first woman to hold the position in India, said the government would also launch a television program to help startups connect with investment entrepreneurs.
The way forward for IndiaMART
"IndiaMART has been able to build a sticky company that forces more than 55% of its customers to return to the platform and conduct another transaction within 90 days," said Agarwal, the company's chief executive. With about 3,500 of its 4,000 employees classified as sales managers, the company is aggressive in its pursuit of new customers. As we move forward, this will remain one of the biggest focus areas, according to Agarwal.
"Most of our time still goes to educate SMEs about how to use the Internet." This was a challenge 20 years ago and remains a challenge today.
In recent years, IndiaMART has begun expanding its range of offerings to its business customers in an attempt to increase the value they receive from their platform and thereby increase their dependence on their services.
IndiaMART has designed a Customer Relationship Management (CRM) tool so that customers do not need to rely on spreadsheets or other third party services.
"We will continue to explore more SaaS offerings and look at problem solving in accounting, billing management and other areas," Agarwal said.
The company has recently started to provide payment facilities between buyers and sellers through a PayPal Such as the security system.
"This will bridge the trust gap between entities and improve the ability of SMEs to accept all types of payment options, including new age offerings."
There is an elephant in the room.
IndiaMART's biggest challenge is the increased interest of Amazon and Walmart in the business space. Many start-ups including Udaan – raised North 280 million dollars From DST Global and Lightspeed Venture Partners – have increased in recent years and are increasingly expanding their operations. However, Agarwal does not appear to be too worried, telling TechCrunch that he believes his main competitor is more focused on B2C and serves the niche audiences. Besides he has $ 100 million in the same bank.
In fact, as noted by Rengaswamy of Quona Capital, the competition is not new to IndiaMART – the company has survived and flourished for more than two decades.
"Ali came and gave up."
The important question – unanswered – that follows a successful IPO is how IndiaMART will be priced in the coming months. A quick look at the US – where struggling companies such as Uber, Lyft and other companies have fallen – clearly shows that early demand and sustainable stock performance are not the same.
No one knows at this stage, and the additional complexity of playing is that the concept of technological IPO is so uncommon in India that there is no specific answer to it … yet. But IndiaMART's biggest achievement may be that it sets the course for many others to follow.