SEBI’s IPO Reforms Are Here—But Are Indian Startups Ready to Cash In?

It’s been over two weeks since SEBI dropped a set of IPO reforms aimed squarely at making life easier for startup founders and investors. From allowing ESOP retention to smoothing out the reverse-flipping process, the Securities and Exchange Board of India sent a strong message: India wants its startups to stay, scale, and list locally.

Now, as the dust settles, conversations across boardrooms and founder WhatsApp groups are getting sharper: Is this the moment Indian startups have been waiting for to finally go public?

With IPO plans quietly being dusted off by several high-growth startups and investors reevaluating exit timelines, SEBI’s reforms may just be the inflection point the Indian capital market needed.

Flashback: The Reforms That Changed the Game

To recap, SEBI’s latest board meeting ushered in significant changes to public issue regulations:

• Founders can now retain ESOPs granted at least a year before filing the DRHP—no more forced liquidation pre-IPO.

• Dematerialisation of shares is now mandatory for promoter groups, employees, directors, and institutional investors before DRHP filing.

• Conversion-based equity shares (from Compulsorily Convertible Securities) no longer need to meet a 1-year holding period before IPO sale.

• New categories of investors (like AIFs and FVCIs) can now contribute to Minimum Promoter Contribution (MPC), earlier a promoter-only domain.

The Post-Reform Buzz: Founders Feel Heard, Investors Feel Safer

Since the announcement, there’s been a visible shift in sentiment within the Indian startup ecosystem.

Founders, especially those with global aspirations or ESOP-heavy compensation structures, have expressed relief. “This reform recognises the effort and long-term commitment of startup founders,” a Series C founder told TICE under anonymity, while preparing their reverse-flipping roadmap.

On the investor side, allowing institutional players to contribute to MPC is being seen as a “clean-up” that reduces compliance headaches and makes IPO timelines more flexible.

There’s also growing chatter around startups like Zepto, FirstCry, and Ola Electric, which are reportedly lining up for IPOs later this year. SEBI’s relaxed norms could mean faster execution and less founder dilution.

Reverse-Flipping Gets Real: From Talk to Action

One of the most immediate impacts is being felt in the reverse-flipping corridors. For Indian startups incorporated in Delaware or Singapore, returning to India is no longer just patriotic—it’s practical.

By easing share conversion rules and IPO lock-ins, SEBI has addressed one of the biggest pain points for these companies.

A venture capitalist told, “SEBI’s move significantly lowers the friction for reverse-flipping. If tax policy aligns with this, we might actually see serious movement in the second half of 2025.”

What It Means Now: Startups Need to Recalibrate, Fast

These reforms don’t just simplify the IPO process—they raise the bar.

Startups that were previously delaying IPO plans due to unclear regulations are now being nudged to get IPO-ready sooner than expected. This includes:

• Auditing ESOPs and shareholding structures

• Cleaning up cap tables and converting physical shares to demat

• Engaging bankers with a fresh outlook on MPC composition

In fact, startup CFOs are already booking consultations with compliance experts to see how they can take advantage of these new norms.

But Is This Enough? Founders Still Want More

While the ecosystem has welcomed the reforms, several industry voices feel there’s more to be done.
Some of the pending issues include:

• Taxation clarity on ESOPs, especially for early employees

• Time-bound approvals for DRHPs to reduce go-to-market friction

• Sector-specific IPO guidance for tech and D2C brands

A founder of a fintech unicorn said,“It’s a great start. But to really unlock Indian IPOs for the startup world, we need consistency—especially from tax departments and ROC offices.”

What’s Next: Will SEBI’s Moves Trigger the IPO Boom?

There’s cautious optimism.

Market analysts believe that SEBI’s moves, paired with cooling inflation and global investor interest in India, could set the stage for a strong IPO cycle in late 2025 to early 2026.

SEBI’s reforms have clearly lowered the barriers, but the baton is now with startups—to move fast, restructure where needed, and take the public plunge.

If just a few high-profile IPOs succeed in this new regulatory landscape, it could spark a domino effect for the rest of the ecosystem.

SEBI’s latest reforms might just go down as a watershed moment in India’s startup IPO journey. For the first time, regulatory empathy is meeting startup agility.

But whether this results in a full-blown IPO boom or just a few isolated wins will depend on how quickly founders and investors recalibrate their playbooks.