Groww IPO: Nithin Kamath, Aloke Bajpai, Ritesh Banglani debate profits, IPOs, & cash burn

As wealth-tech platform Groww made its much-anticipated public debut, the moment sparked more than just investor enthusiasm — it triggered a broader debate on how Indian startups are built, and whether their playbook is sustainable.

While rival Dhan’s founder Pravin Jadhav congratulated the company and wished them luck, some others used the occasion to share their perspective on how startups scale, spend, and navigate the path to profitability.

Kamath on growth


Zerodha CEO Nithin Kamath posted on X that India’s tax system influences how startups grow, often encouraging them to focus on fast expansion instead of profits.

“If you take money out of a business as dividends, the effective tax rate is 52% (25% corporate tax + 35.5% on personal income). Through capital gains, it's just 14.95% (with cess),” he wrote.


Kamath said this pushes founders and investors to spend heavily, build a strong growth story, and sell shares at high valuations — all while paying lower taxes. “If you're an investor (especially a VC), the math is simple: reduce corporate tax by showing minimal profits or losses. Spend on acquiring users, build a growth narrative, and then sell shares at a higher valuation while paying much lower tax.”

He linked this to IPOs, saying that many venture-backed startups are under pressure from investors to list because mergers and acquisitions are rare in India. As a result, the IPO becomes the main exit route for investors, often before the company achieves consistent profitability. Kamath warned that this can make startups fragile, as many have grown through sheer cash burn rather than stable profits.

Also Read: Esop windfall: Groww IPO to unlock employee wealth worth Rs 2,500 crore

He also pointed out that markets reward unprofitable growth more than steady performance: “A company doing Rs 100 cr revenue with 100% growth might get 10-15X, while a profitable one with 20% growth gets 3-5X.” This, he said, pressures even conservative firms to burn cash just to compete, creating an ecosystem focussed more on valuation than long-term resilience.

Also Read: Groww raises Rs 2,985 crore from investors ahead of IPO, sovereign funds, SBI MF join anchor book

Bajpai’s response to Kamath

Ixigo chairman Aloke Bajpai disagreed with some of Kamath’s contentions. He said venture capitalists don’t actually run companies. They mostly advise from the board and it’s founders who decide to reinvest profits. “It’s not the VCs optimising for tax but companies choosing to invest in market creation and creating value for shareholders through capital gains, vs. optimising for short term profits and paying dividends,” he said.


Bajpai explained that when markets are large and growing, reinvesting profits makes more sense than paying dividends. He pointed out that “Google and Meta never paid a dividend till 2024,” and even Steve Jobs preferred reinvesting to fuel innovation. Dividends, he said, only make sense when a company has no new opportunities or has built up a “supermassive treasury.”

Also Read: Ixigo posts 37% revenue growth; slips into loss on one-time costs

He also said that burning cash simply to match competitors is unsustainable, and this pushes companies to innovate. Bajpai emphasised that real value lies in long-term cash flow, not a temporary valuation boost. He added that investors should focus on “how much operating cash companies are generating today and how fast will they grow that cash flow in the future,” even if that requires more detailed analysis.

Also Read: Groww founders opt out of OFS; Tiger Global trims share sale ahead of IPO

Banglani’s take

Ritesh Banglani, partner, Stellaris Venture Partners, also disagreed with Kamath. He said venture capital isn’t designed as a way to avoid taxes.

“Venture capital is not some underhand tax arbitrage scheme. In fact, we celebrate every time a portfolio company starts paying tax, because it means their profits have wiped out years of accumulated losses,” he explained.


Banglani said there are three main reasons why most VC-backed startups don’t make profits early on, and none relate to tax.

He explained that many startups are experiments, still figuring out how to make money. Others, like Uber or Facebook, need to reach huge scale before becoming profitable. And some smaller companies stay unprofitable because they must keep investing in growth to justify their value and offset losses from other failed projects.

Also Read | Groww IPO: We make so much money, we could keep it all — but that’s not how you build a 100-year-old company: CEO Lalit Keshre