Mamaearth IPO Dilemma: To Proceed or Pause

Mamaearth was founded by husband-and-wife duo Varun and Ghazal Alagh in 2016. The core value proposition of Mamaearth’s offer focused on toxin-free, safe products based on natural ingredients, which resonated strongly with its target audience. Despite operating in a tough and competitive industry with many large, established global and Indian companies, Mamaearth had been able to build a strong presence in the market and achieve unicorn status in 2022. One remarkable aspect of the firm’s growth had been that it was one of the few unicorns that—along with strong top-line growth—had a positive bottom line and had turned profitable in the previous two years. This early success gave founders and investors the confidence to plan their next move, which was to issue an initial public offering (IPO) at a valuation of $3 billion in 2023. But the IPO was planned at a time when there was a marked downturn in funding in the start-up ecosystem. Further, the post-listing performance of some of the other celebrated unicorns had been less than satisfactory, resulting in heavy losses for investors. Therefore, many unicorn firms that had been planning IPOs had deferred their plans. Facing the possibility of such a poor scenario, should Mamaearth move ahead with its IPO, defer in anticipation of a more opportune time, or find alternative means of raising funds?

This case is designed for both undergraduate- and graduate-level courses on new venture creation, managing start-up growth, and scaling up entrepreneurial ventures and entrepreneurial finance. It can also be taught in executive education programs focused on start-up growth and funding focusing on planning future funding routes, or used while delivering a design thinking workshop on idea generation and validation. Furthermore, it may be used to showcase that taking a start-up company public is more an art than a science, particularly with regard to timing and when the start-up has no established trading history. After working through the case and assignment questions, students will be able to do the following:<ul><li>Understand how personal needs and empathy can be sources of opportunity.</li><li>Explain how to build a strong brand based on intrinsic value and deep customer connections.</li><li>Develop an understanding of the factors leading to a decision on issuing an IPO in an emerging economy.</li><li>Understand the factors involved in deciding whether to issue an IPO.</li><li>Assess the factors affecting the timing and market for an IPO.</li></ul>

• Mamaearth
• unicorn
• IPO
• funding
• start-up
• growth
• profitable
• toxin-free
• natural ingredients
• branding
• market presence
• valuation
• venture creation
• entrepreneurial finance
• scaling up
• emerging economy
• customer connections
• timing
• alternative funding
• market performance
• initial public offering
• venture funding