The investment landscape in India is seeing a surge of interest in wealth tech startups as the middle class seeks investment diversification, and startups begin to lure away high-net-worth clients from conventional financial advisors.
Dezerv, a promising app delivering a comprehensive range of investment services to India’s affluent, is close to finalizing a funding round between $30 million to $40 million led by Premji Invest, as per three sources with knowledge of the discussions. The anticipated valuation of Dezerv is around $170 million pre-money, marking a significant increase in valuation since its prior funding phase.
Following this report, Dezerv disclosed they successfully secured approximately $32 million in funding with Premji Invest leading the initiative. Sandeep Jethwani, a co-founder at Dezerv, commented, “A majority over 65% of HNI portfolios are suboptimal due to mis-selling and excessive diversification. Our solutions counter these challenges by providing trusted, tailor-made investment options, centrally orchestrated portfolios, and leveraging technology to enhance client service.” raised about $32 million.
Lightspeed Venture Partners is also nearing the completion of negotiations to lead a funding initiative surpassing $20 million for Centricity, a digital platform for wealth management, as informed by two anonymous sources. Furthermore, Peak XV committed to investing roughly $35 million in Neo, a fledgling wealth and asset management firm, in October.
With the high-net-worth and ultra-high-net-worth sectors thriving in India, several firms are expanding their networks of relationship managers to tap into this burgeoning market. Analysts estimate that only about half to 55% of India’s wealth management landscape is under professional oversight presently.
These services continue to be primarily relationship-driven, necessitating a customized approach. The expectation is that startups can eliminate intermediaries, offering more nuanced and data-backed advice to clients while capturing segments of the market overlooked by established entities.
Scripbox, supported by Accel, has seen a notable business turnaround in the past two years, achieving profitability, attaining a “well-capitalized” status, and managing assets surpassing $2 billion, according to Scripbox’s founder and CEO Atul Shinghal.
Widening the Bet on India
The country is also undergoing a financial sector boom, with marked increases in insurance and mutual fund sectors. Mutual fund accounts have seen a 3.5-fold increase since 2015, with a particular uptick in low-valued systematic accounts in the last three years, Macquarie reports.
Despite this growth, there is considerable potential for expansion: India’s mutual fund GDP-to-AUM ratio is at 15%, contrasting the global average of 75%. Macquarie analysts anticipate the mutual fund sector could maintain a growth rate of 20% well into the near future. High confidence in the sector’s growth is mirrored by long-term forecasts by leading financial firms, including UBS, which projects a 22-25% CAGR in active AUM between FY24-27E for key industry players.
Several startups are also facilitating easier access for Indians to invest in mutual funds, stocks, and gold. Jar, backed by Tiger Global, is simplifying savings habits for its customers. Aimed at the $100 billion Indian gold market, the startup is witnessing an average of 22 investments per month per customer, shared by co-founder Nishchay AG.
The demographic of affluent individuals in India is set for rapid growth. Projections by UBS suggest that the number of people with annual incomes over $10,000 will more than double in the next five years, presenting a lucrative opportunity for financial services platforms focused on this segment.
360 One WAM, the ultimate wealth management entity for India’s ultra-wealthy, recently entered an agreement to purchase the renowned mutual fund app ET Money for about $44 million last month.
In a significant move, CRED announced its acquisition of the mutual fund platform Kuvera earlier this season. Meanwhile, Smallcase, which CRED previously considered acquiring but ultimately did not, is reportedly in negotiations to raise $40 million at a valuation near $240 million, as indicated by three informed sources.
Additionally, Eight Roads, a venture capital firm connected with Fidelity, is looking into investing in Asset Plus, another mutual fund platform, based on insights from two knowledgeable individuals.
More ventures are expected to enter the competitive landscape soon.
In a significant partnership, Reliance, India’s most valuable company, teamed up with BlackRock, the globe’s largest asset manager, last year to establish a joint asset management venture. They aim to democratize access to innovative investment solutions for millions of Indian investors. The venture is a 50/50 collaboration with both entities committing an initial investment of $150 million each.
An announcement in April detailed another joint venture geared towards offering comprehensive wealth management and brokerage services in India.
Compiled by Techarena.au.
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