Hey there!

It’s Sparsh here!👋 

Every founder dreams of building a global company, but for many Indian startups, the road to global scale has come with an unexpected and massive bill.📃

In the past year, some of India’s most prominent tech companies, including Meesho, Groww, and Razorpay, have shelled out over $600 million in taxes just to reverse their “Delaware flips” and move their headquarters back to India. 🤝

What’s behind this reversal, and what lessons should today’s founders take from this costly saga?💲

🧭 The Backstory: Why Did Everyone Flip to Delaware?

For much of the last decade, incorporating in Delaware, USA, was seen as a rite of passage for Indian startups with global ambitions. 🌏

The reasons were clear:

As a result, dozens of Indian startups “flipped” their corporate structure, making the Indian company a subsidiary of a new Delaware parent.🪙

💸 The Reverse Flip: Why Are Startups Coming Home?

The tide has turned. With the US IPO window largely shut for foreign tech companies and India’s public markets booming, the incentives have shifted dramatically. 🌊

Indian founders now want to list at home, but that means undoing the Delaware structure, a process known as a “reverse flip.”🤸🏼‍♀️

But here’s the catch:

Reverse flipping triggers massive capital gains taxes in the US.

🔹Meesho🛒: Paid $288 million in US taxes to redomicile in India.

🔹Groww📈: Paid $160 million in taxes, and saw its valuation cut by over 30% in the process.

🔹Razorpay💰: Budgeted $150–200 million for its tax bill on the flip.

🔹PhonePe📱: Paid a staggering $1 billion to move back from Singapore.

These numbers have left the Indian startup community reeling, with founders and observers on forums like r/StartUpIndia openly questioning whether the US entity hype was ever worth it. 🤔 

🗣️ What Are Founders and Investors Saying?

A look at the Reddit discussion and broader commentary reveals a mix of shock, regret, and hard-earned wisdom:

🗨️ The Bottom Line

The Delaware flip was once the default playbook for ambitious Indian startups. Today, with hundreds of millions lost to taxes on the way back, founders are rethinking old wisdom. 💸 

As India’s public markets surge and local capital deepens, the hype around US entities is fading, replaced by a more nuanced, case-by-case approach. 📰 

If you’re a founder, the message is clear: