Investors are betting on Indian wealthtech startups as a growing middle class looks to diversify investments and startups challenge traditional financial advisors for wealthy clients.
Premji Invest is in late-stage talks to lead a $30 million to $40 million funding round in Dezerv, an app that offers a suite of investment solutions to wealthy Indians, three people familiar with the matter told TechCrunch. The ongoing discussions value Dezerv at about $170 million before the investment, more than double its valuation since its last funding round.
Lightspeed Venture is in advanced talks to lead a more than $20 million investment round in Centricity, a digital wealth management platform, two sources said. In October, Peak XV agreed to invest about $35 million in wealth and asset management startup Neo.
The high-net-worth and ultra-high-net-worth segments are growing significantly in India, prompting some wealth management firms to aggressively expand their relationship manager networks to capture this market. According to analysts, only 50-55% of the Indian wealth management market is currently managed by professionals.
A significant portion of these services remain relationship-driven and require a tailored approach. Investors are betting that startups can cut out the middleman, offer more personalized, data-driven recommendations to customers, and also serve a market category currently neglected by incumbents.
Accel-backed Scripbox has seen a turnaround in its business over the past two years, an industry analyst said. The company has become profitable, is “well capitalized” and has more than $2 billion in assets under management, Atul Shinghal, Scripbox’s founder and chief executive, told TechCrunch.
The bet on India in the broad sense
India is also witnessing a strong financialisation of its economy, with significant growth seen in sectors like insurance and mutual funds. The number of mutual fund accounts has increased 3.5 times since 2015, with exponential gains in small systematic accounts over the last three years, according to Macquarie.
And there is still plenty of room for growth: India’s mutual fund AUM-to-GDP ratio is 15%, compared to a global average of 75%, according to Macquarie. “As penetration improves, we believe the mutual fund industry can continue to grow comfortably at a 20% pace for the foreseeable future,” they wrote in a note. This optimism is reflected in the long-term growth projections of leading financial institutions. UBS estimates a 22-25% CAGR in active AUM over the 24-27E period for major wealth management players.
A number of startups are also making strides in helping more Indians invest in mutual funds, stocks and gold. Jar, backed by Tiger Globalallow customers to develop a savings habitThe startup, which is targeting a $100 billion Indian gold market, already sees its average client making 22 investments each month, Nishchay AG, its co-founder, told TechCrunch.
India’s affluent population is poised for explosive growth. According to UBS, the number of people earning more than $10,000 a year is expected to more than double in the next five years, making it a major boon for financial services platforms targeting this demographic. The industry has taken notice.
360 One WAM, India’s largest wealth manager focused on high net worth individuals, agreed to acquire popular Indian mutual fund investment app ET Money for around $44 million last month.
CREDIT agreement to acquire mutual fund investment platform Kuvera earlier this year. Smallcase, a startup that CRED assessed for previous acquisition but passedis 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 capital firm affiliated with Fidelity, is evaluating an investment in Asset Plus, another mutual fund platform, according to two people familiar with the matter.
And the competition is intensifying.
Reliance, India’s most valuable company, partnered with BlackRock, the world’s largest asset manager, last year to form a joint asset management company in India. BlackRock and Reliance Financial’s unit are targeting an initial investment of $150 million each in the new 50/50 venture, which will seek to provide technology-enabled access to “affordable and innovative” investment solutions to millions of investors in India, the two said last year.
In April, they announced another joint venture that will seek to offer wealth management and brokerage business in India.
