Post-IPO Performance Is Holding Up for the Right Startups

In every private market conversation, especially at the late stage, the same questions resurface:

“But what happens post-IPO?”
“Won’t early investors dump their stake?”
“Why invest at this stage when post-IPO returns are uncertain?”

The skepticism is valid. Over the last few years, we’ve seen a wave of IPOs where companies listed at peak valuations only to lose momentum in the quarters that followed. Early investors took partial or full exits, share prices dropped, and retail sentiment soured. So when investors today ask, “Will this startup’s stock hold up?” or “Isn’t this just a handoff to the public?”, they are just being cautious. And the last cycle gave them every reason to be.

But 2025 brings something we haven’t had in prior years: a growing pool of performance data from India’s post-IPO startup cohort.

The RainGauge Index : A First-of-Its-Kind Lens on Post-IPO Performance

The TRMG RainGauge Index, which tracks 39 publicly listed Indian startups, offers real-world performance across a diverse cohort. And what it shows is clear: durability is very much possible. The only condition is that you back the right companies.

RainGauge Index vs Major Indices : A Premium Built on Growth and Sound Fundamentals

Since its launch on Jan 1, 2023, the RainGauge Index has returned 98% through May 2025, matching the NASDAQ 100 (99%), and far outpacing:

• S&P BSE MidCap: 82%
• NIFTY 50: 40%

But the outperformance isn’t just in price. It’s also in the fundamentals.

Here’s how RainGauge Index constituents stack up on valuation multiples and forward revenue growth (median estimates):

Public markets are awarding a valuation premium for a reason. These now listed startups are delivering faster, cleaner, and more margin-efficient growth than even top-tier listed peers.

Myth 1: “Startup Stocks Don’t Hold Up Post-IPO”

Reality: The majority of well-underwritten startups in India have delivered strong returns even years after listing.

Here are a few companies tracked in the RainGauge Index and their returns since listing (as of July 20, 2025):

• Zomato: +134.2% since July 2021
• Policy Bazaar: +56.7% since November 2021
• Bikaji: +132.4% since November 2022
• IndiaMart: +340.7% since July 2019
• Homefirst: +122.1% since Feb 2021

These are not one-off anomalies. They span across sectors and had varying growth trajectories. What unites them is operational maturity, strategic growth, and visible profitability.

Myth 2: “Late-stage investors just offload and walk away”

Reality: The data doesn’t support this narrative. If mass offloading was a consistent issue, performance would crater. Instead, as is evident in the performance of many of the companies included in the RainGauge Index, we see:

• Margin expansion and positive earnings growth supporting valuations
• Selective FII entry post-listing, particularly in companies with capital discipline
• Strong correlation between operational maturity and post-IPO resilience

In other words, strong companies continue to perform and often strengthen their narrative after going public.

As for the investors, they are not exiting blindly. Partial monetization is not a betrayal of conviction; it’s capital rotation. And in many cases, early investors continue to participate in governance, strategy, and follow-on raises.

Why This Matters for Late-Stage Capital

As more Indian startups approach IPO scale, the role of late-stage capital has become more strategic. It’s not just about getting in before the public listing. It is now increasingly about building the foundation that makes public performance sustainable. That includes:

• Backing companies with underwritable unit economics
• Supporting companies through financial readiness and governance shifts
• Engaging in strategic pacing, not exit pressure

Late-stage capital, when aligned with long-term conviction, is not looking for a window to sell. It is helping build a foundation that translates into durable public performance.

The right question is “What’s It Built On?” and not “Will It Hold?”

If a startup has:

• Margin expansion potential
• Category leadership
• Disciplined capital deployment
• Founder-GP alignment
• Path to profitability

Then listing is a continuation of the story, not the end of it.

IPOs as Transitions, Not Endpoints

The outdated assumption is that IPOs are where growth ends. The RainGauge cohort proves the opposite: companies like Zomato, IndiaMart, and Bikaji have demonstrated that public markets can be a platform for sustained growth. With quarterly reporting discipline, increased scrutiny, and a larger shareholder base, they’ve scaled their governance and strategy and continued to deliver value.

What Allocators Should Watch

If you’re an allocator evaluating growth or late-stage funds or even direct opportunities, consider this:

• Don’t fear the IPO moment, fear weak fundamentals
• Look for margin visibility, earnings maturity, and growth discipline
• Treat the public phase as a continuation of the capital journey, not the conclusion

In 2025, the right investment is about backing companies with solid fundamentals that can survive and scale in public view.

Why This Matters in 2025

We’re in a capital cycle where investors are more cautious, data-driven, and liquidity-aware. It means:

• Businesses that list in this market do so with a higher bar and more to prove.
• Investors who back them have to build deeper conviction, not just follow the flow.
• Companies perform well post-IPO because the structure was sound, the business was ready, and the capital was aligned.

Final Thought: Post-IPO Performance Is Not a Coin Toss

Yes, some companies stumble post-listing. But that’s not a strike against late-stage investing. That’s a reminder that underwriting still matters.

And when capital is aligned, growth is measured, and businesses go public with discipline, performance holds up and continues to compound.

The truth is simple: share prices do not collapse after IPOs. Poorly underwritten businesses do.

More than access, the edge in late-stage investing is in understanding what drives public durability and then backing the companies with the right set of characteristics early enough to matter.

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