Young, loss-making startups are keeping their offer for sale (OFS) portions lean in initial public offerings as investor scrutiny intensifies, according to an ET analysis. The shift prioritizes large fresh issue components to fund growth, contrasting with the 2021-22 startup listing cycle when investors were more accepting of large secondary share sales.
Shift in IPO Structure
An ET analysis of more than 40 venture-backed and new-age firms shows that seven of the 10 new-age IPOs in 2021-22 had an OFS component of more than 50%. The median OFS share in that cohort was about 80%. Companies like Paytm, Policybazaar, CarTrade, Nykaa, RateGain, MapmyIndia, Nazara, and Tracxn had larger secondary components. In contrast, Zomato and Delhivery were fresh issue-heavy.
The current cycle is markedly different. For instance, Ola Electric and PhysicsWallah had OFS portions of about 10-11% of their IPOs. Quick commerce platform Zepto’s proposed Rs 8,010-crore fresh issue is the latest example.
Investor Scrutiny on Loss-Making Startups
An investment banker who has worked on new-age IPOs commented:
Investors are not saying loss-making companies cannot list. But if a company still needs capital to build scale and improve profitability, a large OFS sends the wrong signal. A fresh issue heavy listing is easier to justify because the money is going into growth and balance-sheet strength.
Post-listing volatility, valuation corrections, and concerns around cash burn have made investors more careful about how IPO proceeds are used. This has driven the trend toward fresh issue-heavy listings among young, loss-making firms.
Examples of the Trend
| Company | Proposed Fresh Issue (₹ crore) | OFS Share | IPO Status |
|---|---|---|---|
| Zepto | 8,010 | Not specified (fresh issue heavy) | Filed |
| Ola Electric | Not specified | ~10-11% | Listed |
| PhysicsWallah | Not specified | ~10-11% | Filed |
| Curefoods | 800 | Depends on final pricing | On hold amid market choppiness |
| Oyo | Not specified | Nil-OFS proposed | Filed |
Curefoods, which filed for a Rs 800-crore fresh issue, has put its IPO plans on hold amid market choppiness. Meanwhile, Oyo has proposed a nil-OFS issue, underlining that capital needs and market signalling now matter as much as age.
Market Evolution Since 2021
Aakash Agrawal, associate director at Anand Rathi Investment Banking, noted:
Today’s startups are reaching meaningful scale, stronger governance standards and greater business predictability much earlier than their predecessors. As a result, the public markets are becoming a natural source of growth capital rather than merely an exit avenue.
Companies like Groww, Lenskart, and Urban Company had larger secondary components, but they were scaled, older and profitable by the time they listed, reducing the need for substantial fresh capital. Swiggy’s OFS was shaped significantly by Prosus’ sell-down. Meesho, while loss-making, kept its listing fresh issue heavy and showed improvement in operating metrics.
Implications for Trade Finance and Capital Access
For the target audience of CFOs, treasury directors, and trade finance professionals, this trend signals a maturing market where growth capital is deployed for operational expansion rather than shareholder liquidity. Startups like Zepto need capital for quick commerce expansion—including dark stores, supply chain, delivery infrastructure, technology, and customer acquisition. Ola Electric required capital for manufacturing, research, and distribution. PhysicsWallah has been expanding offline and its hybrid learning centres.
The evolution reflects a market demanding that loss-making companies demonstrate a clear path to profitability before offering large exits. For trade finance professionals, this means that IPO proceeds are increasingly directed toward building real assets and working capital—potentially reducing reliance on external trade financing as companies use equity to fund their supply chains.
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