'Go public when...': Naukri.com boss Sanjeev Bikhchandani's big tip to startup founders eyeing IPO

Info Edge founder Sanjeev Bikhchandani has said that startups should look at going public only if they have become profitable or are confident they will in a couple of years after getting listed in the stock market.

In a conversation with Cred founder Kunal Shah on his podcast, Bikhchandani said startups should evaluate if they have the internal systems and processes in place to deal with the requirements that come with being a publicly listed company.

When Shah asked the man who founded Naukri.com when he'd advise a startup to go public, Bikhchandani responded: “When either you're profitable or you know for sure that you’ll be profitable in the next couple of years. I would say you should go public when your internal systems, processes and people can handle the public company."

He emphasised that the oversight of a company changes significantly with the regulators coming in as soon as the company goes public.

“Oversight is different when public money is involved. In the beginning, it's your company. You are the only shareholder. People care less. Then you raise let's say VC money. Now you have a shareholder agreement, you got a board, you got MIS, you got oversight, you got business plans, you got all those things. But still you're accountable to only two or three people, and it's not public money. When you go public, the government's job and Sebi's job is to safeguard public interest. The nature of reporting oversight compliance changes," he said.

Bikhchandani shared the experience of listing Info Edge back in 2006. “When we went public, the question was there are now stakeholders and potential stakeholders who don't have perfect alignment of interest. If I price the IPO very high, it's very good for current shareholders, especially those who are exiting the IPO. But if I price the IPO there, and then the price tanks after IPO, you hurt the incoming shareholders, and you have hurt your reputation. So, this is a tough tradeoff to manage and eventually it's a question of judgment. You'll never get it perfectly right because you will always be pricing too high or too low."

He added that he encourages startup founders to not be aggressive in pricing the IPO. "I've always said don't price the IPO aggressively. You know if the little guy (retail investors) gets hurt it's bad karma, in India especially because India still has a socialist heart. We have a capitalist tradition, yes, but we also have a socialist tradition. India has been a capitalist country, there are enough capitalists in India, but the heart of India is socialist. You can't be hurting the little guy,” he said.

Bikhchandani's Info Edge is an early backer of multiple Indian startups including Zomato, and is a major stakeholder in PolicyBazaar and 99 Acres.