From the second half of this year, it seems like every week, at least one new-age Indian startup is lining up for an IPO. Sure, many were waiting for the right window to get listed on the bourses, to scale, build credibility, and deliver investor exits. Yet, as the IPO pipeline swells, some listings fail to meet the basic litmus test.

D2C meat delivery company Zappfresh’s painfully long IPO was a case in point, and the market’s response is showing it.

Despite being the first D2C meat brand getting listed on the Indian stock exchange, public market investors, particularly the retail segment, have shown a clear disinterest in the company.

It was on the verge of being one of the first new-age startup IPOs to be turned back by the market after the regulator’s green light and that usually comes with a big reputational blot.

Founded by Deepanshu Manchanda and Shruti Gochhwal, the company will complete its prolonged subscription window on Monday, October 6 and with 94% subscription at the time of writing. But it was not smooth sailing.

On Day 1, the IPO was subscribed just 21%, crawling up to 52% by the end of the third day (September 30). And it was only on Friday that it crossed the 90% mark, after bidding was left open for five whole sessions. And the company had to reduce its price band marginally.

Even if Zappfresh has now cleared the hurdle, what explains this poor traction?

And although it is a BSE SME IPO with less than INR 60 Cr being raised, the stuttering IPO is nonetheless a serious concern for Zappfresh.

There are questions being asked among analysts. Such as why Zappfresh went for an IPO when it could have banked on its existing investors for the raise — small as it was. Existing shareholders include the likes of Dabur Family Office, LetsVenture, Ah! Ventures, HT Media, SIDBI VC, among others. Just two years back, the startup had raised half its IPO target or INR 30 Cr from some of these investors.

Was an IPO a stipulation for this fundraise for the 10-year-old company? Or was it purely Zappfresh looking to step up to the public markets like many startups of its vintage?

While there is much speculation about Zappfresh failing to raise a private round before the IPO, let’s not focus on the past. What went wrong now for Zappfresh, especially with the bullishness in the air for startup IPOs? And does this signal a caution for the next wave of startup IPOs?

Demystifying Zappfresh’s Extended IPO

Analysts unanimously believe that the public market investors are concerned about Zappfresh extracting much scale from a market where giants like Licious and FreshToHome have also faced difficulties, due to local, unbranded competition and the distribution disruption from........

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