In an honest and candid moment, Vijay Shekhar Sharma, founder of Paytm, publicly expressed his deepest regret regarding his company’s highly anticipated IPO, which debuted in November 2021. Speaking at Tie Delhi NCR’s India Internet Day 2024, Sharma admitted that his choice of bankers for the IPO had a significant impact on the outcome, setting the tone for a rough market debut.
Here’s a deeper look into Sharma’s reflections, the challenges his company has faced since its IPO, and the lessons he hopes fellow entrepreneurs can learn from his journey.
Credits: Office Chai
The IPO Regret: A Misstep in Choosing Bankers
At the 2024 India Internet Day event, Sharma didn’t shy away from addressing his regrets. In a metaphor that resonated with many in the audience, he compared the selection of bankers for the IPO to choosing the right priest when visiting a temple. “To enter the temple of God, you need the right priest… perhaps we didn’t choose the right one,” he said, bowing before the audience in penance for what he considers one of his biggest mistakes.
His words come at a time when Paytm’s stock is still grappling with the aftermath of a poor IPO debut. Listed at ₹2,150, the stock price quickly plummeted and is now down nearly 60% from its initial offering price. The company’s market performance has since been under scrutiny, with Sharma acknowledging that the wrong choices may have played a role in this downfall.
Credits: Business Upturn
A Booming Market—But Paytm Struggled
The regret feels sharper against the backdrop of India’s ongoing bullish market. In 2024, IPOs are booming, with even smaller companies experiencing overwhelming demand and sky-high subscriptions. Sharma, in a moment of reflection, pointed out, “Nowadays even small IPOs get so big,” clearly envious of the favorable conditions that Paytm didn’t enjoy during its listing.
While Paytm was one of the most hyped IPOs of its time, the outcome was anything but smooth. The company’s stock debuted at ₹1,560.80 on the NSE—far below the issue price—and has since struggled to regain value. With investors questioning the IPO process and the company’s valuation, Paytm’s listing is now seen as a cautionary tale in India’s tech and financial sectors.
Facing Regulatory Scrutiny
Adding fuel to the fire, the Securities and Exchange Board of India (SEBI) recently issued show cause notices to Vijay Shekhar Sharma and other Paytm board members. The notices focus on alleged misrepresentation of facts during the IPO process and non-compliance with shareholder classification norms.
The core of the issue is whether Sharma should have been classified as a promoter when filing IPO documents, given that he had managerial control over the company. This controversy began following a review from the Reserve Bank of India (RBI), which had raised questions about Paytm Payments Bank earlier this year. Paytm, in response, has said it is working with SEBI and making necessary representations regarding the matter.
Lessons from the Past: The Early Struggles of an Entrepreneur
Sharma’s reflections extended beyond just the IPO. He also shared the struggles of his early days as an entrepreneur, recounting the difficulty of securing venture capital (VC) funding. “I did not get VC luck till seven years after starting my company. My Series A happened in 2007, while I started the company in 2001,” Sharma revealed, offering a rare glimpse into the patience and grit required to build Paytm.
In those early years, Sharma had to bootstrap the company, relying on cash generation to keep it afloat. His learning from this period is something that resonates with every entrepreneur: “There is nothing called P&L. The real truth is cash, everything else is trash.” It’s a lesson in practicality, highlighting the importance of liquidity and cash flow management over theoretical profitability.
A Message for Future Entrepreneurs
Sharma’s candor serves as a wake-up call to the next generation of entrepreneurs. His advice is simple but crucial: choose the right banker. The decision to partner with the right financial institutions during an IPO can have far-reaching consequences, as seen in Paytm’s case.
As startups and SMEs continue to flock to public markets, Sharma’s reflection is timely. IPOs are not just about valuation and hype; they are about long-term trust, execution, and partnership. The right financial partners can make or break a listing, and this hard-earned lesson from one of India’s most prominent tech entrepreneurs is something others would do well to remember.
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