# BY Tajurba

Unlocking the Potential of SMEs: The Importance of IPOs

Small and medium-sized enterprises (SMEs) are the backbone of any economy, providing employment and driving innovation. However, these businesses often face challenges in accessing capital, limiting their ability to grow and expand. One way to unlock the potential of SMEs is through initial public offerings (IPOs). As per recent statistics, the fiscal year 2022–23 (April–March) saw India's small and medium-sized businesses (SMEs) raising Rs 2,229 crores through the initial public offering (IPO) process, a 130% increase over the previous year. An IPO is the process of a private company offering shares to the public, thereby becoming a publicly traded company. This allows the company to raise capital from a wide range of investors, including institutional investors, retail investors, and even the general public. By listing on a stock exchange, a company gains access to a pool of capital that can be used to fund growth initiatives, acquire new assets, or pay down debt. IPOs can be particularly important for SMEs because they often lack the financial resources to pursue growth opportunities. Banks and other traditional lenders may be hesitant to lend to small businesses, leaving them with few options for funding. Moreover, venture capital and private equity firms often require a significant ownership stake in exchange for investment, which can be a difficult decision for founders who want to retain control of their business.