The Cost of Y Combinator Backing: Meesho, Razorpay, Groww to Pay $600 Million in Taxes for India Return

Three of India's largest startups—Meesho, Razorpay, and Groww—are being compelled to shell out a staggering $600 million combined tax bill as they wind down US-based corporate structures to return home ahead of planned public listings. This staggering fee is the price of playing Y Combinator's early playbook, one in which startups needed to convert themselves into Delaware, USA, corporations in order to be able to access the accelerator's capital and international investor network.

 

Key Highlights:

 

•⁠  ⁠Huge Tax Outgo: Meesho is paying $288 million, Razorpay $150 million, and Groww $160 million in taxes to shift the headquarters of their companies from the US to India—a record among Indian startups.

 

•⁠  ⁠Reverse Flipping Trend: The trend, which is termed a "reverse flip," begins paying capital gains and IP-related taxes as startups re-patriate assets and ownership to India.

 

•⁠  ⁠IPO-Driven Initiatives: The step is driven by regulatory requirements for Indian IPOs and a necessity to harmonize operations and tax exposures with their domestic market.

 

•⁠  ⁠Shifting Paradigms: What was once a mark of pride, US residence is now a pricey diversion, as founders and VCs rethink the need for foreign-incorporation.

 

Future: With Indian startups queuing up for local listings, the costly lesson of such "reverse flips" is fueling a new wave of homegrown ambitions. Local incorporation and regulator Meesho, Razorpay, Growwreferred choices, the shift of India's startup economy away from Silicon Valley's shadow.

 

Source: Moneycontrol, Times of India, Economic Times