Comment on Bootstrapping vs Funding - a tax arbitrage

Arun Tankha commented on 30 May 2021, 03:54 PM

Hi Nithin, a beautiful article. I have a couple of points to make:
1. High growth companies like GOOG, AMZN etc you mentioned haven’t paid dividends (tax efficiency is a part of the reason) but they invested that revenue in business growth. Hence the stock price appreciated.
2. For Indian startups I wonder how long this dance will last. With out revenue, just forecasting user growth and finding an investor who buys it from you at a higher price has to stop at some time. I wonder if this is the reason why very very few Indian startups made it to public in the last decade. Because ultimately increasing valuations need to be supported by increasing revenue.

For Indian PE sector, I have come to believe that the game is to find a fooler investor rather than finding a growth business (by growth, I mean growth supported by growing business and revenue). Would love to hear your views on it.


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