By: Mohita Khilwani, Founding Member, Scrabble
India’s start-up ecosystem is burgeoning. As the competition stiffens and the stakes rise, achieving Initial Public Offering (IPO) for a start-up becomes a crucial milestone to its perseverance and longevity. A symbolic of company’s strategic growth and maturity, IPO is when the start-up truly begins to belong to the general public. Amidst mounting aspirations, the role of CFO thus emerges to be indispensable to a start-ups success, as measured by the success of its IPO. Here’s delving deeper into the pivotal role CFO play in steering a start-up to a successful IPO.
India’s Start-up Ecosystem & the Surge in IPOs
In the recent past, and despite the funding winter spell on start-ups, India’s start-up ecosystem has seen tremendous surge in its IPO activity. Last year alone, a total of 13 start-ups collective raised more than INR 29,200 crore from the stock market. With this, 2024 became the record number for IPOs in a single year.
Amongst the surge in IPO activities, noteworthy to mention is Swiggy’s largest IPO at INR 11,327.43 crore. Furthermore, Ola Electric was also successful in raised INR 6,145.56 crore in IPO. Start-ups like FirstCry, TBO Tek, and Digit Insurance contributed to other significant IPO activities in India.
This trend is only going play forward this year, with 2025 already speculated to be a blockbuster year for start-ups & IPO. Popular companies like Lenskart, Groww, and Pine Labs are gearing for IPO, aspiring to collectively raise more than USD 1 Billion in IPO. This only makes it paramount for Indian start-ups to have a CFO and be prepared ahead of time for their upcoming IPOs.
IPO: The Significant Milestone for Start-ups
IPO is an important milestone in the journey of a start-up, offering significant edge over its competitors and legacy businesses alike. For starters, it infuses new capital that a start-up needs to scale its operations, expand its research and development, and possible venture into newer markets.
Not stopping at just that, IPO brings enhanced credibility for the start-up and its founders. Whether it is customers, investors, or partners, each stakeholder start viewing the start-up with reaffirmed trust and admiration.
By offering liquidity for stakeholders, furthermore, the IPO is crucial in helping the founding team, investors, employees realise significant returns on their investments. And most importantly, a successful IPO ensures strategic growth of the start-up, creating a strong currency for merger and acquisitions and fostering long-term growth.
Simply put, a successful IPO is when a start-up graduates into becoming an empire, a legacy.
The CFO’s Unique & Pivotal Role in a Successful IPO
A CFO has to be an integral part of any start-up’s IPO. From the start, a CFO assesses and ensures that the company is ready to go public, while also ensuring a smooth post-listing transition. At the same time, the CFO will play a vital role in getting other stakeholders onboard such as lawyers, bankers, auditors, and legal advisors. In addition, CFO also prepares DRHP (Draft Red Herring Prospectus) and secure approvals from SEBI and stock exchange.
Another mission-critical responsibility administered by CFO is ensuring accurate and transparent financial reporting, in strict compliance with the regulatory norms. CFO also determines optimum capital structure and IPO pricing, which has a direct bearing on investor perception and market sentiment.
In addition finance and compliance, CFO plays a strategic role in designing the entire IPO roadmap and counselling the founding team on important decisions. At the same time, they would also have to build a compelling narrative for the IPO, deepen investor relations, lead roadshows, and ensure every key stakeholder is informed about key developments.
In a nutshell, the CFO serves as the linchpin that makes up for a successful IPO by aligning finance prudence and preparedness, regulatory compliance, and stakeholder collaboration.
The Checklist to be a Successful Start-up CFO
Strategic business acumen and industry-rich technical insights – that’s just the starting of what it takes to be a successful CFO of a start-up. Today’s business landscape is fast changing; and to the same end, here’s taking a deep dive into the skills and capabilities one needs to become the CFO who successfully steers a start-up to its IPO.
- Regulatory Experience & Expertise – proficiency in skilfully navigating the regulatory landscape is a must. This includes, but not limited to the requirements of the stock exchange and understanding of the security law.
- Long-term Vision – Entrepreneurs are more comfortable working with someone who possesses a business mindset. While deep technical expertise of your field is important, equally important is to think like a business-owner and come up with financial strategies that align well with the company’s long-term vision and objectives.
- Expert & Fluid Communication – Being the CFO involves getting different stakeholders on to the same page. Being able to positively influence and secure agreements is crucial for today’s CFOs.
In a nutshell, the prominence of a CFO’s role is only going to grow as more number of start-ups venture into public markets. Being equipped with a deep regulatory foresight, strategic thinking, and expert communication that’s fluid and invokes trust and agreement is crucial to be a successful CFO in the present times. For start-ups aspiring to go public in the near future, investing in the expertise of a CFO is mission-critical: not just a “good to have” but “imperative” to the success & longevity of a start-up.
