Last week, B2B online listing platform IndiaMart had a $60MM IPO subscribed 36 times, a big first for an online Indian e-commerce player. 

To Be or Not to Be

After a few years of moving to the US, in 1995 Dinesh Agarwal got some interesting news from back home. 

India was launching the Internet in 1995, and Mr. Agarwal had been inspired in the US. His time working with HCL Technologies, one of the first companies to send people "onsite", was instrumental in shaping his view. 

Seeing a woman clicking images using some software called "Windows" was when he had the epiphany that this would be big. Just a few months after VSNL launched the dial-up connection (remember those?), he returned to India, making the big entrepreneurial leap into a rosy future. 

To be or not to be an entrepreneur was the question, but it turned out to be far harder than he thought.

Spending months trying to get an internet connection, after 9 months he could finally get to work on what he wanted to build. The first idea was to be a website builder for Indian companies, who being new to the internet could need these services. 

But having a trickle of internet consumers in India would suggest that there would be no market for this product, and Mr Agarwal looked elsewhere. 

Realizing that there were buyers abroad on the internet, and sellers in India who wanted to sell, an online "marketplace" for businesses was born. The online marketplace would take orders from buyers online, convert them into requests as actual post-mail, and send them to sellers. With the help of his brother Brijesh and his family, the company would fulfill requests. 

IndiaMart was born, but a storm was coming. 

The Winter of Our Discontent

With 600K INR of revenue (~$15K) in 1998, the company was off to the races. 

As a fully bootstrapped company, with no idea of what VCs were, IndiaMart was cash flow positive and rejected term sheets (a VC investing in India in 1998!). As the business focused on being a business, and not the valuation game, it grew at a good clip.

Despite the challenges of working with difficult internet infrastructure, the team struggled through to a revenue of 52 lakh. But the internet would boom, out of control.

Soon, everyone had a startup. Sify bought IndiaWorld for 500 crore in 1999. (Sify still exists today). Competitors would raise money and poach from IndiaMart, while others would transact.

Taken in the wave of money flowing into the ecosystem, IndiaMart decided to raise. From its 18-year-old web forum post, it looks clear that they expected the $3-$4MM raise to come in. 

It never did.

Though the business grew to 1.5Cr ($400K) in 2001, it had no investors. September 11 put a freeze on funding. The US went into protectionism, and as IndiaMart was primarily a channel for exports, it suffered significantly. 

Despite a promising start, winter was here, and IndiaMart was in a battle to stay relevant. 

That Glitters is Not Gold

Over the next few years, IndiaMart tried to capitalize on its early-mover advantage on the internet to get into related businesses. 

Due to the freeze, the company tried new strategies to generate revenue. In 2002, it launched a travel portal for agencies, a very early precursor to MakeMyTrip. In 2003, it launched a business verification service for its own businesses. For a fee, it would verify businesses on its platform.

Trying to add to further revenue, it launched a payment transaction platform called ABC Payments. A decade earlier than when it would become relevant due to somebody called Vijay Shekhar Sharma, the company pushed it hard. 

All that glitters is not gold, and IndiaMart had to wind down all these businesses by 2007.

The wind down was so significant, that the company began to question its original business model of helping Indian businesses export globally. Faced by the headwinds of exports, and the increasing growth of Indian conglomerates, IndiaMart changed its strategy entirely.

The company pivoted, to focus on being a marketplace for Indian businesses.

Boldness Be My Friend

The boldness of the pivot would take some time to materialize.

Buffetted by the headwinds due to China exports making India exports uncompetitive, IndiaMart was pushed into a corner. The rising penetration of the internet would help few buyers come up and list on the website. There would still be some product manager at IndiaMart who would come up with killable ideas (online rakhi gifts), but the transition was beginning.

In 2009, Intel would invest in IndiaMart, Global Talent Track and certain One97 Comunications. 

Being the largest online B2B seller with 500K sellers and 5MM buyers, the company had arrived. It would soon become the darling of the media, a bright spot in an economy reeling from a global recession.

Growing 40% in 2009, the company would do well for itself and its businesses. The company would enlarge its focus to become a digital media company focused on SMBs.

By 2010 the company had scaled 15x from when it started, growing to revenue of INR 65 Cr ($13MM), with little or no competition. With 15000 clients and a presence in 100 cities, the company was a force to reckon with.

It was such a big force, that it sponsored an award function whose winner was (guess who), Vijay Shekhar Sharma of One97 Communications. In possibly a prediction that went wrong in the rightest way ever, Mr. Sharma predicted that One97 would IPO in 2011.

The rest, as they say, is history in your wallet. 

Uneasy Lies the Head that Wears a Crown

As IndiaMart built upon its B2B traction, it became an evangelizer for SMEs

The company ramped up a digital marketing strategy to become more widely used, it also spoke about Indian SMEs in global conferences. It got interest to raise $20MM in 2011, valuing the company at $150MM. 

The world's second-largest marketplace had $20MM of revenue in 201. While PE/VCs courted the company, pushing it to achieve 3x growth in one year, it would stay away by trying to hit 45-60% every year. This fiscal discipline would be instrumental in its future, and it would reach $35MM in 2014. 

In 2014, trying to cement its leadership in its segment, the company launched Tolexo to protect its crown. The platform would be on the lucrative B2C route, and it would end up raising $10MM immediately. 

The ambitious target would be $1Bn, and there were high hopes from this entity. In 2016, IndiaMart would target $5Bn of GMV. The company would close 2016 with a revenue of $50MM.

With a $30Bn target in 2020, the company would raise a $30MM Series C. But the crown would be thorny.

Tolexo would collapse, hurting the 2017 IPO chance of the company. 

Some Are Born Great

The silver, or black lining, would be that the company had been profitable most years.

Despite all its experiments, and fundraises, the ethos that the company maintained from day one would follow through over 2 decades. The burn rate that had come through Tolexo would be managed by shutting it down. 

Having buffetted so many storms over so many years, the company was able to manage the impact of a large scale project like Tolexo not working out. 

Reaching almost $100MM in revenue, the company was still doing well. The company began to plan for an IPO in early 2018, a first for an e-commerce company, but doable because it was profitable.

At its core, the business was a listing marketplace. Like any such marketplace, it made money through listing fees, ads and commissions for B2B players.

A $800Bn+ market, with 12 million SMBs, the market is massive. Being highly disorganized, organizing this market is a huge opportunity. Massively funded player like Udaan also have entered the mix, but the path IndiaMart took will help it. 

The world is the stage. 

All the World's a Stage

In 2019, 23 years after it started, the company began to plan for the IPO in earnest. 

On the back of two good decades of business, the company accounted for 60% of online B2B e-commerce. With 59MM+ registered subscribers, the company had a net profit of ~$3MM. With a healthy 30% growth year on year, IndiaMart has grown its base significantly to dominate the market. 

The company debuted with a massively oversubscribed IPO, a dream that it had nurtured for a long time. With demand 36x supply, investors and early backers had a rare moment of finding liquidity through an IPO. 

But the 23-year marathon is only a beginning for another 23 years, according to the founder. IndiaMart, even at this scale, is a percentage of the overall market with a lot of room ahead. 

Not only India, but it can also scale to other neighbouring markets using its technology, supply chain know-how and customer base. There is a lot to be achieved, using steady access to public markets for financing large scale projects. 

All the world's a stage for IndiaMart, and it only looks more promising.