Startup IPO Momentum Slowing Down? Market Signals Raise Questions

Every week, it feels like a new IPO is making headlines—Ather Energy, Smartworks, ArisInfra, IndiQube, BlueStone, and now Urban Company. But beyond the excitement of individual listings, a bigger question looms: is the overall IPO momentum slowing down?

After the record-breaking spree of 2024, when 13 startups raised nearly ₹30,000 crore through IPOs, 2025 was expected to keep the wave going. Instead, the numbers suggest a pause. Despite nearly 25 companies—including Meesho, Fractal, PhysicsWallah, Lenskart, Shadowfax, and Turtlemint—having filed draft red herring prospectuses (DRHPs), only five startup IPOs have materialised so far this year, and most struggled with muted debuts.

What’s Holding Startups Back?

The slowdown is not due to lack of appetite for listing but rather the realities of current market conditions. Global volatility, foreign investor outflows, and shifting trade equations have made companies more cautious. On the domestic side, regulatory adjustments and tighter scrutiny are further adding to delays.

Perhaps the biggest gap lies in the difference between private and public markets. In private funding rounds, startups can command valuations based on future potential. But in the public markets, retail investors demand profitability and clarity on long-term sustainability—something many growth-stage companies are still working toward.

Dalal Street: A Wider Market Picture

This cautious stance extends beyond startups. More than 85 traditional companies filed DRHPs in the first half of 2025, the highest in a decade, yet only about 24 mainboard IPOs hit the markets, down from 36 during the same period last year. Some months were nearly dry—March saw no IPO at all, while April witnessed just one.

One of the reasons behind the slowdown is the secondary market performance. With many newly listed companies trading below their issue price, investors have become selective, pushing for lower valuations. For promoters and early investors, this mismatch often means waiting longer instead of risking weak post-listing performance.

Will Momentum Pick Up Again?

The pipeline itself remains strong. Issues worth over ₹2.6 lakh crore are lined up, with about ₹1.2 lakh crore already cleared by SEBI. Analysts suggest that improved monsoon forecasts, GST rationalisation, and the possibility of foreign capital inflows could bring fresh energy to the market in the coming months.

However, the kind of frenzy witnessed in 2024 may not return in the same form. A more disciplined, fundamentals-driven approach seems to be replacing speculative exuberance. For startups, this means focusing on profitability and realistic valuations before stepping onto the bourses.

A Healthy Correction?

Rather than a collapse, what we’re witnessing may simply be a market correction. After last year’s overheated run, the current pause is forcing companies to strengthen their financial models and pricing strategies. Some are even turning back to private equity as a stopgap, delaying IPOs without derailing growth.

So, is the startup IPO momentum really slowing—or is it just recalibrating for a healthier, more sustainable future? The answer may become clearer in the months ahead.