The Turn Of The Tortoise

Shakespeare had once said, “There is a tide in the affairs of men. Which, taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries.”

This could best describe the risk that Vishal Mehta, Founder, Infibeam, took with an IPO when all odds were stacked against him. The IPO might have only just made it, but it has opened the doors for the public funding that can feed the e-commerce and tech spaces in the next couple of years.

In an industry that has been about cash burn, is it a bad or brave move to come out with an IPO that too in the market that has recently seen a nosedive valuation? Entrepreneur explores.

Straight to IPO

As more and more consumers are joining the framework of buying online, e-commerce has been the chosen one for investors as well. There are 35 million shoppers right now, and it will be 180 million in next five years as per the Technopak report.

It has further helped the company in positioning itself in the e-commerce business. At present, only 1.2 percent retail is happening online, it will further go up to 4 percent in the coming years as per the Technopak report.

It has been a challenging turf for Infibeam over the years as it was never among the first two or three e-commerce players. Although the Flipkarts and Snapdeals of the world have been raising investment from VCs and PEs, Infibeam always stayed away from external investors.

Talking about starting up Vishal Mehta says, “We saw a very unique business opportunity with a fragmented ecosystem of supplying to merchants as well multiple destinations for people to go to shop. It allowed merchants to scale up on the top of our infrastructure.” What started as an e-retail website went on to operate an e-commerce marketplace as well called BuildaBazaar. Its other businesses are Incept and Picsquare.

The Ahmedabad-based company has already ventured out of Gujarat with offices in Delhi, Mumbai and Gurgaon. As per Mehta, “We have 900 people and will continue to grow our company with professionals.” The company has been so far content operating out of Ahmedabad not finding it difficult to source talent. Although investors have been vary of keeping themselves away from the real silicon valley of start-ups: Bengaluru.

With other e-commerce players adopting multiple domains of offline and online, Infibeam doesn’t intent to get into omni channel. When asked of any plans to go offline, Mehta says, “We have not done that in the past, and there is no plan to do that in the future. We will be having merchants to build it out.”

With the Rs 450 crore IPO fully subscribed, it has added to the success of a company all going the bootstrap way and coming out with an IPO. It’s further going to give start-ups a lot of boost in building it all up by themselves instead of knocking investors’ doors.

Commenting on the performance on the last day, Amar Ambani, Head (Research), IIFL, says, “It sailed through so it might be a relief for promoters because there was a worry that it might be unsubscribed. It had lukewarm response given the kind of valuations and negative press the IPO received.”

Lessons learnt

The IPO has not been able to arise hopes on the e-commerce industry for making it gung-ho about upcoming IPOs. With all negative publicity it has gained in the past and exit of two bankers from the public issue it sailed through. As they say all is well that ends well.

So far, e-commerce businesses have been raising funds from investors with different rounds and none of the e-commerce companies have raised profits so far. Infibeam posted profits for the first six months of 2015-16, which was Rs 6 crore at that time. On day three, the IPO got oversubscribed by 1.11 times. Will it lead to winning the battle against the big boys?

This article first appeared in the Indian edition of Entrepreneur magazine (April 2016 Issue).