Homecoming – Why are Indian Startups Reverse Flipping?

The Indian startup ecosystem has witnessed a remarkable surge in recent years, with numerous innovative ventures emerging from across the country. However, a trend that has gained traction in recent times is the phenomenon of reverse flipping, where startups that were initially incorporated in offshore jurisdictions are now choosing to relocate their holding companies back to India. Startups that were initially incorporated in offshore jurisdictions, such as Singapore, Mauritius, or the Cayman Islands, relocate their holding companies back to India. This trend marks a significant shift in the perception of India's startup environment, highlighting the growing maturity and attractiveness of the Indian market. Reverse flipping, also known as internalization or homecoming, is a business strategy where a company that was initially incorporated in a foreign jurisdiction transfers its domicile back to its country of origin. This process involves restructuring the company's ownership and control to bring it under the domestic legal and regulatory framework.

India's startup ecosystem has matured significantly over the past decade, offering a supportive environment for entrepreneurs with access to funding, talent, and infrastructure. The Indian government has also implemented various initiatives to promote entrepreneurship and attract startups, including tax incentives, ease of doing business reforms, and dedicated startup programs. Besides, India's vast and growing consumer market presents immense opportunities for startups across various sectors, making it an attractive destination for launching and scaling businesses. Simultaneously, India's venture capital and private equity ecosystem has grown considerably, providing ample funding opportunities for startups seeking growth capital. All these reasons have together made an environment that enables startups to thrive and therefore, startups are moving back to India. The online furniture retailer, Pepperfry, initially incorporated in Singapore but relocated its holding company to India in 2021. Urbanladder, its competitor, also shifted its business from Mauritius to India in 2022. PhonePe, the digital payments platform too, was initially incorporated in Singapore but relocated its holding company to India in 2022. Meesho, RazorPay, Groww and Sharechat are some other examples of startups coming back home.

Reverse flipping can provide Indian companies with access to a larger pool of capital, including domestic venture capital funds and institutional investors. This can help them fuel their growth and expansion plans. Listing on Indian stock exchanges can also enhance the brand image and credibility of these companies, making them more attractive to investors, partners, and customers. Reverse flipping brings back valuable knowledge and expertise that was developed overseas. This can contribute to the overall growth and development of the Indian economy. As these companies expand their operations in India, they are likely to create new job opportunities, contributing to employment growth and economic development. The return of Indian companies can foster innovation and entrepreneurship in the country, as they bring back new ideas and technologies. Overall, reverse flipping can strengthen the Indian startup ecosystem by demonstrating the viability and potential of domestic companies, and encouraging other entrepreneurs to stay and grow their businesses in India. The trend of reverse flipping can encourage the government to further streamline regulations and improve the business environment, making India more attractive for both domestic and foreign companies.

References:

1.?Returning home. Now, start-ups are flipping in reverse

2.?Reverse Flipping: Time To Internalise Into India Inc

3.?India: Reverse Flipping: Is It Time To Return Home?

4.?Image by storyset on Freepik

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