Investment tech unicorn Groww’s next foray could be into the fast-expanding cryptocurrency market of India, subject to the clarity around regulations on digital assets. Growws’ CEO and Co-founder Lalit Keshre, a former Flipkart executive, in an exclusive interaction with BusinessToday.In, said cryptocurrency investment as a product could be made available on the platform post the government’s introduction of law around these virtual tokens.
“Yes, we are awaiting the regulations on crypto from the government and may foray into that space afterwards,” Keshre said. According to a recent report by Chainalysis, India’s cryptocurrency market has grown over 641 per cent YoY in 2021, with a 59 per cent share in trading activity in central/South Asia.
Groww has currently diversified its product portfolio from mutual funds, stocks, SIPs (systematic investment plans), and gold to fixed deposit investments. Even as the Groww CEO declined to comment on the reports of the company raising a fresh tranche of $250 million at a $3 billion valuation, he said the focus will be on onboarding new users and tapping opportunities in the Indian market. The Bengaluru-based startup had earlier raised $83 million as a part of its Series D funding round led by Tiger Global Management at a valuation of over $1 billion.
Here are the edited excerpts from the interview:
1). Can you talk about the recent Rs 173 crore acquisition of a mutual fund from Indiabulls Housing Finance by Groww? You started as a mutual funds aggregator company, and are now an asset management company (AMC). What kind of opportunity do you see in the mutual fund space in India?
Keshre: Mutual fund is a 100 million user product. It is a very retail-focused product, where one can start with a small amount. You can invest according to your risk profile, so there’s a very good offering. At the same time, mutual funds penetration in India is low, and the market is largely untapped here. We still have a very low percentage of people in India directly investing, or even those who have a savings account.
2). After SEBI’s new regulations allowing fintech firms to enter into mutual funds space, you have competitors like Zerodha and Navi. Any thoughts?
Keshre: We prefer not to comment on our rivals.
3). The stock markets are performing remarkably well, and are also witnessing an uptick in the number of retail investors. But many are talking about a growing bubble. Do you think this bull market will sustain in the long term?
Keshre: I’ve been investing for last, maybe 18, 19 years. I used to predict anything in the markets. Like my take is as good as anybody’s take, and it’s very difficult to find out what and where we are headed. Again, one of the philosophies that we follow is don’t try to predict the markets or don’t try to take calls. We are not an investment advisor company, by the way. We don’t advise customers on where the markets are headed or which stocks you should buy, or which weakened fund you should be investing? We are clear since day one that we will not give any calls on predictions or any tips on stocks. I know it’s a very boring answer but it is what it is.
4). Like the industry peers, has Groww also seen an uptick in the userbase?
Keshre: We founded our company in 2016. A lot of structural changes in the fintech space like UPI, Aadhaar, e-signatures, increased bandwidth have happened since 2015. All of this helped players like Groww, which are digital-first platforms. And, and of course, when the pandemic hit, we saw further digital exploration because it kind of forced a lot of us to move towards online businesses.
5). How do you compare the business since the pandemic and before that?
Keshre: We are a very small company from the industry perspective. Every year, it’s like a new base for us. So when you’re small, every year is like a new year. At the beginning of 2020, we had not even launched stocks, but mutual funds were available. Then we launched new products — ETF, IPO, and other tools to help investors make better decisions. So, like year-on-year, we kind of keep shipping things for customers. Of course, the size is different and that happens every year in the life of a startup.
6). In terms of innovative products, you talked about SIP stock, mutual funds, and gold. From where is the demand coming in?
Keshre: Currently, mutual funds and stocks, both are very popular. With stocks, people are more excited right now due to their volatile nature. But, our focus has always been long-term capital building or long-term investing. We attract customers to invest in all these products and some are time-bound like an IPO. Some, however, are long-term. SIP is one of the good products as customers invest every month.
7). Our sources tell us that you are actively looking at the crypto investment vertical too?
Keshre: Unless the cryptocurrency is regulated, we will not. But we might foray into the vertical post a clarity on regulations.
8). Regarding your profitability target user base. How is that shaping along since the pandemic? What’s been the growth line? Is there a Groww IPO in the pipeline?
Keshre: Our unit economics is good because of the lesser cost per customer. This is due to the kind of technology we use. We can scale customers without scaling the cost associated with it. We don’t advise you (customers) and we don’t push products. That kind of user growth has been good. Since the launch, we have been growing at a good pace. We have 2 million stock investors on the platform now. We are a small company right now, so no IPO plans as such.
9). You say you don’t advise on investment, but on the Groww platform, there are general practical tips to amateur investors or newbies on how to go about it. What would be your advice to anyone who wants to become an investor, especially when the markets are doing so good?
Keshre: The investment advice is generally boring but very important to understand. The most important thing is to invest only in products you understand. Next will be to start with smaller amounts, irrespective of whether the market is bearish or having a bull run. Nobody can time the markets.
Despite investing for so many years, I can’t do that. Long-term investments are always better, which doesn’t mean I am against intra-day trading, future & options, etc. But for complicated products, one can always seek professional advice to handle them in a better way.
10). Finally, your thoughts on the string of IPOs of new-age firms? What kind of interest do you see amongst retail investors for these mega IPOs?
Keshre: Irrespective of the nature of business, the fundamentals of listing for any company will be the same. For the tech startups, the focus should be on unit economics, contribution margin, and profitability, etc. Nothing changes from the investment angle. Eventually, if they can bring down fixed costs and make money, they will sail through. Some businesses will never be able to break out from their fixed costs, and they probably won’t be sustainable.
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