Investors Flock to India’s Wealthtech Startups!

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Highlights

Indian wealthtech startups attract investors as middle-class expands.
High-net-worth market growth drives investment in digital platforms.
Major players and new entrants compete in the evolving wealth management space.

Growing Interest in Indian Wealthtech Startups

Investors are increasingly focusing on Indian wealthtech startups as the country’s middle class seeks diversified investments. These startups are now challenging traditional financial advisors to cater to high-net-worth clients.

Significant Funding Rounds in Wealthtech Startups

Premji Invest is close to leading a $30-$40 million funding round in Dezerv, an app providing investment solutions to India’s affluent. Sources revealed that this round values Dezerv at approximately $170 million pre-money, more than doubling its previous valuation. Similarly, Lightspeed Venture is in talks to lead a $20 million-plus round in Centricity, a digital wealth management platform. In October, Peak XV committed $35 million to Neo, a wealth and asset management startup.

Expanding Market Opportunities

The high-net-worth and ultra-high-net-worth segments in India are booming, leading wealth management firms to expand their relationship manager networks. Analysts estimate that only 50-55% of India’s wealth management market is currently professionally managed, highlighting significant growth potential.

Personalized and Data-Driven Services

Investors believe startups can bypass traditional intermediaries, offering personalized, data-driven recommendations. These startups also aim to serve market segments neglected by traditional firms. Accel-backed Scripbox, for instance, has become profitable and manages over $2 billion in assets, as reported by its founder and CEO, Atul Shinghal.

Broader Economic Trends

India is witnessing significant financial growth, particularly in insurance and mutual funds. The number of mutual fund accounts has increased 3.5 times since 2015. However, India’s mutual fund AUM-to-GDP ratio is still 15%, compared to a global average of 75%, indicating substantial growth potential. Macquarie and UBS project strong growth in the mutual fund industry and active AUM over the next few years.

Startups Driving Financial Inclusion

Startups like Jar, backed by Tiger Global, are helping more Indians invest in mutual funds, stocks, and gold. Jar’s co-founder, Nishchay AG, shared that their average customer makes 22 investments monthly, targeting the $100 billion Indian gold market.

Expanding Affluent Population

India’s affluent population is set to grow rapidly, with the number of individuals earning over $10,000 annually expected to more than double in the next five years. This growth provides a robust opportunity for financial services platforms.

Industry Moves and Acquisitions

360 One WAM recently acquired ET Money for about $44 million. CRED acquired Kuvera earlier this year and evaluated Smallcase, which is now in talks to raise $40 million. Eight Roads, affiliated with Fidelity, is considering an investment in Asset Plus, another mutual fund platform.

New Competitors Enter the Market

Reliance, in partnership with BlackRock, announced a joint asset management venture targeting an initial investment of $150 million each. This venture aims to offer tech-enabled, affordable, and innovative investment solutions to millions of Indian investors. In April, they also announced a joint wealth management and broking business.