Startup founders raise personal stakes before going public

Indian startup founders have stepped up efforts to raise their stakes in their companies ahead of planned IPOs this year. This trend appears across several late-stage startups, as founders show more confidence and seek tighter control before heading to the public markets.

Perhaps most notable is Lenskart, where cofounder Peyush Bansal bought back a 2.5% stake for Rs 222 crore from existing investors including SoftBank and Chiratae. Significantly, Bansal bought these shares at a valuation of $1 billion, one-tenth of its last private market valuation ($10 billion). This move comes just before the company’s IPO filing and ranks among the largest founder-led buybacks in the current cycle.

Zetwerk’s Amrit Acharya and Srinath Ramakkrushnan have invested Rs 600 crore into the company by raising personal debt. The capital infusion has increased their combined stake by around 2%.

At Amagi, the founding team has acquired shares worth Rs 9 crore. InMobi has raised Rs 32 crore from its cofounders Naveen Tewari, Abhay Singhal, Piyush Shah and Mohit Saxena, along with Singapore based investor Vatera Pte Ltd. Both companies are working toward public listings and are likely to file DRHP this year.

Meesho’s Vidit Aatrey and Sanjeev Barnwal have increased their holding through ESOP allotments. Aatrey received 20.65 lakh shares while Barnwal was allotted 6.59 lakh shares.

These developments come after regulatory changes from SEBI in June that made it easier for founders to hold and exercise ESOPs before filing for a public offer.

This trend is not new. In 2021, Zomato granted 368 million stock options to founder Deepinder Goyal before its IPO. That same year, Delhivery allotted shares worth Rs 25 crore each to cofounders Sahil Barua and Kapil Bharati, while PB Fintech awarded 10.2 million shares to founders Yashish Dahiya and Alok Bansal. In 2023, Swiggy rolled out a $271 million ESOP plan, with $200 million worth granted to founder Sriharsha Majety. The foodtech and quick commerce company listed in November 2024.

While the trend is a welcome sign for many, the fact remains that for many of these founders, significant liquidity events well before the IPO have already ensured they are way ahead of late stage investors. Plus, the move to IPO is in some ways, the final, key uptrend for the firm’s valuation before it settles into a more predictable trajectory. For these founders, putting back some of those gains to send a strong signal to the market is a small price to pay for the signal it sends to the market, especially for an IPO the size of say LensKart, or any other firm today. Interestingly, founders who invest at higher than market price post IPO to shore up company finances remain relatively rarer, and the move made during a downtrend in stock price rarely makes a significant impact.