Reverse Flipping: The New Trend Among Indian Startups

For years, Indian startups set up holding companies abroad — commonly in Singapore or the US — to access global venture capital, enable easier exits, and leverage favorable regulations.

However, a new trend is emerging: reverse flipping, where startups shift their headquarters back to India. This strategic move is driven by several factors.

Why Startups Are Opting for Reverse Flipping

  • IPO Readiness in Indian Markets: Simplifies compliance, reporting, and regulatory approvals for domestic IPOs.
  • Access to Domestic Capital: Indian VCs and institutional investors increasingly prefer companies with a domestic presence.
  • Policy Reforms (MCA/RBI): Regulatory clarity has reduced barriers to reverse flipping.
  • Strategic Alignment: Being India-domiciled strengthens relationships with domestic customers, investors, and partners.
Reverse flipping is no longer just a strategic option — it’s becoming a mainstream approach for startups preparing for IPOs and domestic fundraising.

Recent Examples of Reverse Flipping

  • Decentro – Initiated reverse flip
  • Groww – Fully moved domicile back to India in March 2024
  • Livspace – In-principle board approval; targeting IPO by early 2026
  • Meesho – Concluded reverse flip; filed DRHP with SEBI
  • Razorpay – Concluded reverse flip; gearing for IPO
  • Zepto – Concluded reverse flip; gearing for IPO
Why it matters: Startups like Livspace and Meesho signal that reverse flipping is now a strategic move to align with India’s growing capital markets.

Challenges and Considerations

  • Tax Exposures: Example: Razorpay reportedly paid ~₹1,245 crore as part of its reverse flip tax obligations.
  • Valuation Alignment: Aligning valuations between offshore and domestic entities can be complex.
  • Shareholder Consent: Obtaining approvals from all relevant shareholders is critical to avoid disputes.
  • FEMA / RBI Approvals: Compliance with foreign exchange regulations and other regulatory requirements is essential.

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