Market regulator SEBI has ruled out any rethink on its decision to keep small investors away from the newly-created platform for start-ups.

This is even as some start-ups looking to list themselves on the Institutional Trading Platform (ITP) see a case for allowing small investors to get a piece of the action.

But SEBI Chairman UK Sinha was emphatic that allowing small investors could be considered only a few years down the line. “At this stage of market development, our main effort should be to establish the credibility of these companies where informed investors can come in and are satisfied that the companies are well run… rather than bring small investors,” he said at an interactive session of Start-ups and SME IPOs, organised by the PHD Chamber of Commerce and Industry, here today.

The ITP opens a new window to the stock exchange for e-commerce, data analytics, bio-technology and other start-ups to enter. SEBI had, however, stipulated that only institutional investors, and not individuals, can access the ITP. The minimum investment size is set at ₹10 lakh.

Sinha told reporters that “Start-ups by design are risky. So, we have consciously kept small investors away from this market. When issuers (start-ups) finally go to the main board, everybody can participate.”

He agreed that start-ups may offer handsome returns, but pointed out that there could be losses also. “This is not only in India but all over the world. The name (Institutional Trading Platform) suggests that this is a market for institutional investors and not for small investors,” he added.

Sinha said there was no need to panic about start-ups listing outside India, adding that SEBI was ready to finetune its norms to help in the development of start-ups. The SEBI chief said that he would take up with the government certain tax-related issues affecting development of the start-up ecosystem. He later told BusinessLine that some industry associations had raised concerns over TDS (tax deducted at source). There were also some issues around carry forward of losses for tax purposes in case the shareholding in a start-up were to change.

Many start-ups are shifting to the US or Singapore because of the investor preference there, industry representatives pointed out, adding that investors are still not attracted to this segment in India.

Sinha said one of the reasons for start-ups going abroad is a “perception” that there are not enough sophisticated investors within the country. Also, there is a view that the pool of capital available abroad is not available here.

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