As the middle class grows, diversifies its investments, and startups challenge traditional financial advisors by targeting high-net-worth clients, investors are betting on India's wealth tech startups.
Premji Invest is in advanced talks to lead a $30 million to $40 million funding round for Dezerv, an app that provides investment solutions to India’s wealthy, three people familiar with the matter told TechCrunch. The talks value Dezerv at around $170 million in pre-funding, more than doubling its last funding round.
Lightspeed Ventures is in advanced discussions to lead a $20 million-plus investment round in Centricity, a digital asset management platform, two sources said. In October, Peak XV agreed to invest about $35 million in asset management startup Neo.
As the high net worth and ultra-high net worth segments are booming in India, some wealth management firms are aggressively expanding their network of relationship managers to capture this market. According to analysts, only about 50-55% of the Indian wealth management market is currently under professional management.
Much of these services are still relationship-centric and require a personalized approach. Investors are betting that startups will be able to cut out intermediaries, provide more personalized, data-driven recommendations to customers, and serve segments of the market that incumbents are currently ignoring.
Accel-backed Scripbox has been on a turnaround over the past two years, one industry analyst joked. Scripbox founder and CEO Atul Shinghal told TechCrunch that it is profitable and “well-capitalized” with more than $2 billion in assets under management.
More extensive Indian betting
India is also experiencing a surge in financialization of its economy, with significant growth being witnessed in sectors such as insurance and mutual funds. According to Macquarie, the number of mutual fund accounts has increased 3.5 times since 2015, with the number of low-budget systematic accounts growing exponentially over the past three years.
And there is still plenty of room for growth. According to Macquarie, India’s mutual fund AUM to GDP ratio is 15%, while the global average is 75%. “With improved penetration, we believe the mutual fund industry can continue to grow at 20% in the near future,” they wrote in a note. This optimism is also reflected in the long-term growth forecasts of leading financial institutions. UBS estimates active AUM to register a 22-25% CAGR over FY24-27E for leading asset management firms.
Several startups are also working to help more Indians invest in mutual funds, stocks and gold. Backed by Tiger Global, Jar helps customers build savings habits. Targeting the $100 billion Indian gold market, the startup already sees its average customer make 22 investments a month, co-founder Nishchay AG told TechCrunch.
India’s wealthy population is set for explosive growth. According to UBS, the number of individuals with an annual income of more than $10,000 is expected to more than double over the next five years, providing a powerful impetus for financial services platforms targeting this demographic. The industry has taken note.
360 One WAM, India's largest wealth management firm focused on ultra-high net worth individuals, last month agreed to acquire ET Money, a popular Indian mutual fund investment app, for about $44 million.
CRED agreed to acquire Kuvera, a mutual fund investment platform, earlier this year. Smallcase, a startup that CRED previously evaluated for acquisition but passed on, is in talks to raise $40 million at a valuation of about $240 million, according to three people familiar with the matter.
Eight Roads, a venture partner with Fidelity, is evaluating an investment in Asset Plus, another mutual fund platform, according to two people familiar with the matter.
And more competition is coming.
Reliance, India's most valuable company, last year teamed up with BlackRock, the world's largest asset manager, to form a joint asset management venture in India. BlackRock and Reliance's financial units each aim to invest $150 million in the new 50/50 venture, which will provide technology-enabled access to “affordable and innovative” investment solutions to millions of investors in India, the companies said last year.
In April, they announced another joint venture to provide asset management and brokerage business in India.
