Background
In a significant development for the Indian startup ecosystem, Pine Labs, a merchant commerce startup, has received approval from a Singapore court to merge its local entity with its Indian unit. This move is expected to enable the firm to shift its operations to India and take advantage of the country’s growing demand for technology companies.
Court Order
Pine Labs disclosed the court order in a recent regulatory filing seen by TechCrunch. The startup has received approval from the Singapore court to transfer all its assets and properties to its Indian unit, effectively permitting it to shift its operations to India.
Pine Labs: A Brief Overview
Pine Labs is a merchant commerce startup that offers a range of products and services to merchants, including cloud-connected point-of-sale machines and working capital. The company has received significant investment from top-tier venture capitalists, including Peak XV, Fidelity, Invesco, Temasek, PayPal, and Alpha Wave. With a valuation of over $5 billion, Pine Labs is one of the most valuable startups in India.
Why Indian Startups Are Shifting Their Domiciles to India
The move by Pine Labs to shift its operations to India is part of a larger trend among Indian startups. Meesho, Zepto, Flipkart, Razorpay, and Udaan are also evaluating a similar move, while fintech startups PhonePe and Groww have already relocated their overseas holding entities to India.
According to an investor in Indian startups who requested anonymity to speak candidly, firms are shifting their domiciles to India because it is highly unlikely for startups with valuations below $20 billion to get meaningful coverage from analysts in developed markets. This limited demand from institutional investors can hinder the growth of these startups.
However, in India, there is a high demand for technology companies, which leads to a premium valuation. Entrepreneur Gokul Rajaram has also observed that software companies in India tend to trade at a premium due to this demand.
Benefits of Shifting Operations to India
The transfer of Pine Labs’ operations to India is expected to help the firm achieve business synergies and economies of scale. The company will also benefit from cost savings and simplification of its shareholding structure.
Investor Perspectives
The investor in Indian startups who spoke to TechCrunch emphasized that Indian startups are shifting their domiciles to take advantage of the country’s growing demand for technology companies.
"Everything trades at a premium because there’s so much demand for tech companies," said the investor. "But in developed markets, it’s highly unlikely for startups with valuations below $20 billion to get meaningful coverage from analysts."
Conclusion
The approval by the Singapore court to merge Pine Labs’ local entity with its Indian unit marks an important milestone for the startup ecosystem in India. As more Indian startups evaluate shifting their operations to India, it will be interesting to see how this trend unfolds and what benefits these startups can gain from operating out of India.
Timeline: Key Developments
- Pine Labs receives approval from Singapore court to merge its local entity with its Indian unit
- Meesho, Zepto, Flipkart, Razorpay, and Udaan are evaluating a similar move
- Fintech startups PhonePe and Groww have already relocated their overseas holding entities to India
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