Storyboard | Decoding the IPO after-effect on consumer brands

According to experts, the true test of any brand is after its IPO. Image: Shutterstock

It’s raining IPOs in India. At last count, 38 companies had IPOs and raised Rs 71,833 crore compared with 16 public issues that raised Rs 31,128 crore in 2020. Among the big ones was Zomato’s blockbuster listing. A flurry of upcoming initial public offerings (IPO) from the startup ecosystem has generated even more excitement. The line-up includes insurance-tech platform PolicyBazaar, fintech major Paytm, digital payments app MobiKwik, hospitality brand Oyo, among others. Digital mapping company MapMyIndia and Nykaa, a beauty, wellness, and fashion marketplace, are among the few profit-making internet companies that are also gearing up to list on the stock market.

Listing on stock exchanges is a big moment for any company. But what’s the immediate impact on a brand after a company goes public?

Impacts of a public listing  
Angel investing platform LetsVenture's founder Shanti Mohan believes that an IPO, “changes the value of consumers for the company”. Especially for startups, “when consumers become investors, they also become a part of the company’s success and growth.”

Business strategist and angel investor Lloyd Mathias adds, “the value and prestige that come with listing on a major stock exchange is a motivator for both employees and associates, and helps attract talent by offering stock options.”

It also immediately widens and diversifies the audience. Being in the public market itself gives startup brands, “immense reach and recall in a diverse country like India,” adds LetsVenture's Mohan, “which probably cannot be gained with marketing dollars.”

But a listing almost immediately puts additional pressure on brands, which can come from anywhere. For instance, being a listed company puts brand founders in the public spotlight. “You are not only answerable to the board but also to the public. So your actions will be scrutinised more minutely,” says Dheeraj Sinha, CEO and chief strategy officer—South Asia, Leo Burnett. Actions both big and small, online and offline, can have an impact on the brand and business.

Watch the trust factor
Vivek Khare, an advisor and angel investor who has put his money in companies such as Zomato, Policybazaar, and Cashify, agrees with Sinha of Leo Burnett. “An investor is constantly looking at what consumers are talking about a brand outside the financial market. Consumer experiences could affect their decision as an investor.” That’s where building trust becomes crucial.

CleverTap, an AI-powered customer lifecycle and user retention platform, has been closely working with several consumer companies that are set to go public. Clevertap’s CEO and co-founder, Sunil Thomas, tells Storyboard, "IPOs boost brand recognition and earn companies a badge of honour in the eyes of consumers. They indicate a level of success and proof of concept that consumers are often more willing to trust.”

However, new businesses should be cognisant of the fact that consumer trust is never simply handed over. Thomas says, “Marketing momentum should not slow down once a company has gone public. Businesses should keep customer engagement and retention as their top priority before, during, and after the launch of their IPO to continue to earn the trust of their audience.”

Going public is the “beginning of a new story” for brands, says Thomas. “The credibility and trust net will just widen from here, as there is no scope of hiding."

The bottom line is that the true test of the brand is after the IPO.

The author is an Assistant Editor of Storyboard.

The thoughts and opinions shared here are of the author.