Indian wealthtech startups are attracting significant investment from venture capitalists as the country’s middle class seeks to diversify their investments. Traditional financial advisors are being challenged by these startups, who offer investment solutions to high-net-worth individuals. Dezerv, an app that provides a suite of investment solutions, is in talks with Premji Invest to lead a funding round of $30-40 million, which would value the company at $170 million pre-money. Centricity, a digital wealth management platform, is also in advanced talks with Lightspeed Venture for an investment round larger than $20 million.
India’s wealth management market is experiencing growth, particularly in the high-net-worth and ultra-high-net-worth segments. Currently, only about 50-55% of India’s wealth management market is under professional management. Startups are aiming to capture this market by offering more personalized and data-driven recommendations, cutting out middlemen, and serving clients that are currently neglected by incumbents.
Scripbox, backed by Accel, has seen a turnaround in its business, turning profitable and managing over $2 billion in assets. The financialization of India’s economy is also contributing to the growth of wealthtech startups. Sectors like insurance and mutual funds have witnessed significant growth. The number of mutual fund accounts has increased 3.5 times since 2015, with room for further growth as India’s mutual fund AUM-to-GDP ratio is at 15% compared to the global average of 75%. Major financial institutions project long-term growth in the wealth management space, with UBS estimating a 22-25% CAGR in active AUM over FY24-27E.
Startups are also helping more Indians invest in mutual funds, stocks, and gold. Jar, backed by Tiger Global, allows customers to build a savings habit and target the $100 billion Indian gold market. Jar’s average customer makes 22 investments per month. The affluent population in India is expected to double in the next five years, providing a strong tailwind for financial services platforms targeting this demographic. Wealth managers are taking note, with 360 One WAM acquiring popular Indian mutual fund investment app ET Money for $44 million.
The competition in the wealthtech space is intensifying. CRED acquired mutual fund investment platform Kuvera, while smallcase is in talks to raise $40 million at a valuation of $240 million. Asset Plus, another mutual fund platform, is being evaluated for investment by Eight Roads, a venture firm affiliated with Fidelity. Reliance, India’s most valuable firm, has partnered with BlackRock to form a joint asset management venture and a joint venture for wealth management and broking business in India.
In conclusion, Indian wealthtech startups are attracting significant investment as they cater to the growing middle class seeking investment solutions. These startups aim to disrupt traditional financial advisors and capture the high-net-worth market by offering personalized and data-driven recommendations. The financialization of India’s economy and the projected growth in sectors like insurance and mutual funds provide a favorable environment for these startups. The competition in the wealthtech space is increasing, with acquisitions and investments being made by established players. The future looks promising for the Indian wealthtech industry as it continues to cater to the needs of a rapidly growing affluent population.