Make My Trip IPO: Flash in the Pan or Harbinger of the Future?

Make My Trip (MMYT) IPOed yesterday on the NASDAQ, and posted the biggest first-day gain for a U.S. initial public offering since 2007. It is valued at over $900 M, and more than 9 X forward revenues. By comparision, Naukri is valued at $ 750 M. MMYT also happens to be just the 4th Indian company to list in the US while there are 200+ Chinese companies listed on US exchanges, and at least 14 Chinese companies went public in the US in 2010 alone.

Back to my question. Is MMYT a Flash in the Pan or the Harbinger of the Future? I happen to believe its the latter, and over the next decade, 10s of Indian internet and technology companies will list on US exchanges.

  1. The internet in India is taking off and while there is unlikely to be an Indian Baidu (because English is so widely spoken), there could well be an Indian Tencent or Shanda or Amazon or Zappos or….
  2. Venture capital has been around in China since the early 90s while venture funded companies were as rare as the Indian snow leopard till a few years ago
  3. The biggest change in India in the last 5 years (IMO) is the change in scale of ambition. To illustrate the point, let me share a story. I recently met a college classmate who is now a very successful investment banker after more than a decade. Over a drink, I asked him what his goal was, and without batting an eyelid, he said, “I plan to make $ 100M in this gig“. I almost fell off my chair!
  4. Till recently, the Indian economy was both too small and growing too slowly to create global scale companies. In 2000, China’s GDP was just over $ 1 T (more than 2 X India) and in 2010, it will be around $ 5 T (more than 3 X India). With Indian growth rates finally creeping above 8 % on a sustained basis, the Indian economy will be $ 3-4 T (current prices) by 2020

What do you think? What needs to change to make this happen? Who do you think will ring the bell on NASDAQ in 2015?

About Ashu

General Partner with Foundation Capital. Areas of interest range from digital media, mobile and internet infrastructure to all things related to India. Currently on the board of TreeHouse, Aspire, Conviva, Agni and TubeMogul.
This entry was posted in India. Bookmark the permalink.

4 Responses to Make My Trip IPO: Flash in the Pan or Harbinger of the Future?

  1. Indian companies IPOing in the US is a bit of an unnatural act. The company is in India, the market is in India but the investors are in the US. There’s bound to be some “loss in translation” just because of the distance. Of course, if you can get a valuation like what MMYT got, it can justify anything. Unfortunately, that can be temporary. The appetite for emerging markets may cool down in the US. Indian market valuations might one day reflect a better understanding of internet companies.

    IMO, an Indian IPO and a subsequent additional listing, like many of the services companies did (for whom the US is the primary market) is a more natural thing.

  2. I think India has a huge unrealized entrepreneurial potential, but due to lack of a supportive ecosystem this potential has not been realized. The biggest missing link in India I believe is the risk capital for start-ups and scaling up operations. This i believe will improve in the short run. The current growth projections will become meaningless, India could out-strip China in a short time. All the Chinese are doing is copying business models from the west and competing on low costs. We in India have “free” minds, global outlook and linkage. We will in a short time have truly innovative companies of global scale, up in the value chain, which will create great value and capture it. It will be a great time for you and your company to believe in India and be the early spotter of innovations in India. I hope a couple of great investments in India, initiated by your companies could lead to a gold rush of Venture Capital to this market.
    I am a PhD student in Public Policy at your alma-mater IIMB, I have a lot of great ideas, a couple of which i am working on. The current project is CleanCredit with the mission to make India as clean as Switzerland in 1 yrs time, and in 2-3 yrs time clean up the whole planet. I would like to know how you could help us achieve our mission.

    • Ashu says:

      I agree that India has great entrepreneurial potential. Also, you have rightly pointed out that capital has been constraints are real, but changing. However, there are many other bottlenecks in India. The poor infrastructure, the high cost of real estate, the lack of R&D, the absence of role models/start-up advisors all make starting a company harder than it needs to be. Hopefully all of these issues will get addressed. Regarding your start-up, send me a mail at work (agarg(at)foundationcap.com)

      • Khallejon says:

        I think India has a huge unrealized epuienrenetrral potential, but due to lack of a supportive ecosystem this potential has not been realized. The biggest missing link in India I believe is the risk capital for start-ups and scaling up operations. This i believe will improve in the short run. The current growth projections will become meaningless, India could out-strip China in a short time. All the Chinese are doing is copying business models from the west and competing on low costs. We in India have free minds, global outlook and linkage. We will in a short time have truly innovative companies of global scale, up in the value chain, which will create great value and capture it. It will be a great time for you and your company to believe in India and be the early spotter of innovations in India. I hope a couple of great investments in India, initiated by your companies could lead to a gold rush of Venture Capital to this market.I am a PhD student in Public Policy at your alma-mater IIMB, I have a lot of great ideas, a couple of which i am working on. The current project is CleanCredit with the mission to make India as clean as Switzerland in 1 yrs time, and in 2-3 yrs time clean up the whole planet. I would like to know how you could help us achieve our mission.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s