Startups that put money to work

Hitesh Thakkar, 30, an engineer with an MBA from Indian Institute of Management, Ahmedabad, worked with JPMorgan and Samsung before co-founding QuezX, an HR tech startup in Mumbai. He’d been investing for eight years, but the pleasure of seeing his pile grow remained a distant dream— many of his investments ended in losses as he was too busy to track the market closely. That was until six months ago.

He spoke to several personal finance startups, and picked Cube Wealth. “They looked at the amount I wanted to invest, my risk appetite, and suggested an allocation portfolio. The app gives me an overview of all my investments and I can see the rate at which they are growing any time,” Thakkar says.

Young, skilled and earning handsome salaries, millennials are getting smart about how to make their money grow without spending too much time on it. To help them is a new crop of fintech startups that make it easy to save, invest and manage money. They offer varied and innovative products, beyond merely bringing the offline financial platter online. And millennials well-versed with tech take to these products like fish to water.

Thakkar is the ideal investor Cube was built for—young, urbane, busy and moneyed but not a moneybags yet—in the annual income bracket of ₹10 lakh to ₹2 crore. “It’s still early days for our clients so it’s important to focus on the basics like setting up an emergency fund, buying life insurance and health insurance,” Satyen Kothari, founder of Cube, explains.

Almost 80% of Cube users are male, between 28 and 40, from the tech and media spheres. Traditional investments like real estate, fixed deposits and gold lack sheen. More are getting into the equities market. In the last two years, 5.6 million new investors registered at the National Stock Exchange, taking the registered investor base to 28 million this fiscal.

This is fuelled by financial awareness as well as a lower entry barrier, thanks to technology-fuelled ventures. Zerodha, for example, is India’s first discount brokerage. In the nine years since inception, it has become the country’s largest stockbroking firm in number of active traders, two-thirds of whom are millennials.

But it wasn’t enough to bring offline investment products online. Many first-timers need hand-holding. That’s something Groww, founded by four former Flipkart-ers—Lalit Keshre, Harsh Jain, Neeraj Singh and Ishan Bansal—focuses on. The median age of their users is 26.

The four engineers explored this space while still at Flipkart, before quitting in 2016. Firms like FundsIndia and Scripbox were in the fray, and new ones like Kuvera, which used algorithms to assess risk profiles of users to make investment decisions, had just come up. Zerodha too launched a direct mutual funds platform, Coin.

That didn’t scare Groww. It launched in May 2017. “When we talked to users, we learnt they needed tools to help them decide for themselves,” says Keshre. So Groww brought all mutual funds into one app. “While others were building robo-advisers and telling users what to buy, we took a contrarian approach: users are smart, so give them choice and make it simple to choose.”

Nancy Chayara was one of Groww’s beta users. “The app helped me start investing small amounts. I started on Groww with ₹10,000 the middle of my birthday party in 2016.” Now she runs a social venture, Anthill Creations. “As a new entrepreneur, you don’t have a steady salary and savings are important. Groww has given me a sort of financial stability because I know any time I need money, I can pull it out.”

Wealth managers for all

Though millennials are the chief wage earners in India, a good chunk of the 440 million of them aren’t used to saving. That’s where Gurugram-based Sqrrl, launched in 2017 by industry veterans Samant Sikka, Dhananjay Singh and Sanjeev Sharma chose to play.

Savings and investments are used interchangeably, but are different ball games. To tackle the first, you need to plant a habit. Marrying a new habit to an old one is a technique habit scientists recommend. Sqrrl founders did that by embedding their product into the spending cycle of users. Each time you spend on Uber or Amazon or swipe your card for a coffee, your Sqrrl account would round it off to ₹100 or ₹500 and divert the extra into an account that is invested in liquid funds. Sqrrl claims to have users from 600 places across India—from Thekkady in Kerala to Pahartoli in Jharkhand. The median annual salary is ₹5 lakh.

Sqrrl’s proposition is that investment isn’t just a luxury of the rich. “To break down barriers in that segment, you have to think small,” says Sqrrl CEO Sikka. “Think shampoo sachet.”

Once you develop the savings habit, you can move on to investments. Like Adithya Shanker, a 25-year-old engineer with JK Tyres in Mysuru, did. In the beginning of 2018, he used Sqrrl to park what he had saved in a mutual fund. He later took up a systematic investment plan after figuring out how much he could afford to put away every month.

While Sqrrl works on the lower end of the pyramid, Cube has set its sights on the higher end, as the tech set gets rich quick. Cube’s Kothari had “several” millions to invest after he exited Citrus Pay, a startup he founded with Amrish Rau in late 2011. He met many wealth managers and got the idea for Cube. He decided to democratize access to high-quality managers.“When you have lots of money, you get guidance to grow it, but when you don’t have that much, you don’t get access to the best help. We’re trying to change that,” he says.