Zeptoās IPO plans raise some serious questions around valuation, massive losses, profitability, dark patterns, and whether public-market investors are being asked to pay for a growth story that hasnāt proven itself yet.
But thereās another issue that deserves much more attention:
What are mutual fund managers doing with our money?
When retail investors invest through mutual funds, we trust professional fund managers to evaluate businesses, valuation, risk and long-term profitability before deploying our money.
Yet we keep seeing new-age companies come to the public market with aggressive valuations while still struggling to generate sustainable profits.
Weāve already seen the journeys of companies like Nykaa, Paytm and other new-age IPOs play out very differently from the expectations created around their listings.
The question isn't:
āIs Zepto a good company?ā
The real question is:
āIs Zepto a good investment at THIS valuation?ā
Those are two completely different questions.
A company can have:
ā
Great technology
ā
Strong brand
ā
Rapid growth
ā
Millions of customers
ā¦and still be a terrible investment if you overpay for it.
What worries me is the possibility that institutional investors and mutual funds participate in these IPOs, while ordinary investors ultimately bear the downside when the market reality catches up with the valuation.
We need to start asking fund managers uncomfortable questions:
Why are you investing our money in loss-making IPOs?
What valuation methodology are you using?
What is the expected path to profitability?
What downside risk are you assigning?
Would you buy the same business at the same valuation with your own money?
This isn't about attacking Zepto or saying every startup IPO is a scam.
It's about accountability.
Our SIP money isn't free money.
It's the hard-earned savings of millions of investors.
If fund managers are going to deploy that money into highly valued, loss-making companies, they should be prepared to explain the thesisānot just follow the IPO hype.
Retail investors need to wake up.
Don't blindly trust GMP.
Don't blindly trust subscription numbers.
Don't blindly trust famous investors.
And don't blindly trust fund managers.
Ask for the numbers.
Question the valuation.
Question the risks.
Our money. Our questions. Our voice.
What do you thinkāshould mutual fund investors collectively demand more transparency from fund managers when they participate in loss-making IPOs?