The Securities and Exchange Board of India (SEBI) has initiated a fresh review of India’s dedicated startup listing framework, seeking to address regulatory constraints that may be limiting access to domestic capital markets for innovation-led businesses, particularly those in research-intensive and technology-driven sectors.
The market regulator on Wednesday constituted an 18-member working group to review the Innovators Growth Platform (IGP), including its eligibility, listing, fundraising and post-listing requirements, amid the limited traction the platform has gained despite multiple regulatory interventions since its introduction.
The review will examine whether the existing framework is suitable for research-stage, pre-revenue, intellectual property-led and technology-intensive enterprises, whose financing requirements and business models may differ from those of conventional businesses.
“The start-up and innovation ecosystem has evolved significantly, with the emergence of enterprises in areas such as deep-tech, biotechnology, semiconductors, space and other research-intensive sectors,” SEBI said.
The regulator said the evolving nature of the startup ecosystem warrants an examination of the existing framework and its suitability for such enterprises.
Three attempts to revive startup listing platform
The latest review comes after successive attempts by SEBI to create a dedicated market platform for startups failed to generate significant interest.
In 2015, SEBI introduced the Institutional Trading Platform (ITP) to facilitate the listing of new-age startups. However, the framework failed to attract market interest.
In 2019, the regulator amended the ITP framework and renamed it the Innovators Growth Platform in an attempt to make it more attractive to emerging businesses. Further amendments were introduced in 2021 to facilitate listings on the platform.
Despite these interventions, market interest remained tepid, prompting the regulator to undertake a broader review of the platform’s regulatory architecture.
The latest exercise will examine not just the eligibility conditions for companies seeking to list on the IGP but also the requirements governing their ability to raise capital and operate after listing.
Fundraising and investor eligibility under review
The working group will review the eligibility, participation and investment requirements applicable to IGP investors, along with the framework governing capital raising by companies listed on the platform.
This will include public issues, offers for sale (OFS), pricing, allocation and minimum subscription requirements.
The panel will also examine post-listing obligations, including disclosure requirements, corporate governance and trading norms.
Another key area of review will be the framework for migration from the IGP to the main board of stock exchanges, including the eligibility conditions and procedural requirements governing such a transition.
The exercise is particularly relevant for businesses in sectors such as deep-tech, biotechnology, semiconductors and space, where companies may require substantial capital for research, product development and commercialisation before generating meaningful revenues.
The working group will also benchmark India’s IGP framework against international practices and recommend appropriate regulatory amendments and implementation measures.
Venture capital and industry representatives on panel
The working group will be co-chaired by Srini Srinivasan, Chairman of the Indian Venture and Alternate Capital Association, and Prashanth Prakash, Partner at Accel Partners.
Other members include representatives from startups, venture capital and private equity firms, industry associations, the Department for Promotion of Industry and Internal Trade (DPIIT), the Institute of Chartered Accountants of India (ICAI), the Institute of Company Secretaries of India (ICSI), the Confederation of Indian Industry (CII), NSE and BSE, among others.
The composition brings together representatives from the startup financing ecosystem, professional bodies and market institutions to assess the framework from the perspectives of companies seeking capital as well as investors and market intermediaries.
The regulator has also allowed the working group to consult relevant stakeholders to understand sector-specific financing requirements.
“Members of the Working Group may engage with start-ups, industry associations and other relevant stakeholders to understand sector-specific needs and identify measures to improve access to the IGP, while maintaining market integrity and investor protection,” SEBI said.
The recommendations of the working group will be submitted to SEBI for consideration. The regulator has not specified a timeline for submission.
