Uday Kotak Warns Startup Ecosystem Of Rising Interest Rates: “Cinderella Times Won’t Last Forever”
- ByStartupStory | January 21, 2022
In his keynote speech on ‘Governance Matters’ at a virtual event presented by Institutional Investor Advisory Services, Uday Kotak, Executive Vice-Chairman and Managing Director of Kotak Mahindra Bank, had lots to say to entrepreneurs.
The speech’s most memorable line was Kotak’s advice to startups to obtain a “thorough health check-up” before going public. This, he believes, will keep IPOs from colliding with the realities of rising rates. “It should be the responsibility of entrepreneurs to make sure investors have the chance for ongoing growth, instead than merely listing day gains,” he said, cautioning firms against premature listings.
While the IPO boom is projected to continue this year, as buoyant equities markets continue to be loaded with easy money accessible at record-low borrowing rates, the IPO boom is predicted to slow down this year. However, a succession of disappointing listings, including Paytm, CarTrade, and RateGain, has refocused attention on the markets and how they will fair as interest rates increase.
The seasoned businessman advised the entrepreneurs to remain aggressive while adhering to the law of the land. Kotak shared an example about how, in the early days of his business, he pioneered the notion of bill discounting, which was only done by banks at the time and had never been tried by a private player.
He went on to say that he had the entire plan checked out by the law and that they then started buying and selling bills of exchange. He expressly warned aspiring entrepreneurs, however, that everything must be done within the bounds of the law.