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Good morning [%first_name |Dear Reader%],
Zepto, Acko Insurance, Phonepe, Cars24, and more are lined up for IPOs in the upcoming months, and they have one thing in common. No, I am not talking about their startup backgrounds. It’s that all of them have been consistently loss-making for years.
Nearly 70% of startups getting listed on the main board between 2021 and 2025 had never turned a profit before going public. Profitability no longer seems to be the primary criterion it once was for companies looking to list.
But history, by and large, shows that not all loss-making companies that went into an IPO continued to show losses for those who bet on them.
Back in 2021, something shifted in Indian capital markets.
Market regulator Sebi rolled out a more accommodating framework for new-age companies. Six startups rushed to list: Eternal (then Zomato), Paytm, Policybazaar, Nykaa, Cartrade, and Rategain. Four of them were loss-making.
The debate was quite fierce. Should retail investors bear the brunt of venture capital firms’ inflated valuation models without profitability?
Five years later, we have our answer.
All six are now profitable. Eternal, Rategain, Nykaa (adjusted issue price based on bonus share issuance), and Cartrade have seen their stock prices surge 2–3X since listing. While it cannot be generalised for investment purposes, investors interested in startups have a slew of signals to consider beyond headline profit and loss, ranging from IPs, market potential to unit economics.
“Thirty years ago, when companies built factories, those costs were capitalised, and profitability looked far healthier,” Santosh N, managing partner of D&P Advisory. “Today’s intangible investments make balance sheets look weaker than the underlying economics.”
Path to profitability
With the upcoming IPO of Zepto—which reported losses of nearly Rs 6,000 crore in its latest financial year—the debate has resurfaced. Its current IPO filing reads like a paradox.
The pure-play quick-commerce challenger, not yet six years old, generated more than Rs 23,000 crore in revenue in FY26, almost matching competitor Swiggy’s topline.
Impressive on paper. But the filing also suggests the company remains firmly in its growth phase. Zepto’s draft red herring prospectus (DRHP) also acknowledges that the Rs 8,100 crore it plans to raise may not be sufficient and that it could require “alternative forms of funding” after the IPO.
