Growwing up to Become a Unicorn

“We started Groww almost five years ago to make investing accessible and transparent to everyone in India.” Founded in 2017 by former Flipkart employees Harsh Jain (IIT Delhi, UCLA), Neeraj Singh (CDAC), Ishan Bansal (BITS Pilani), and Lalit Keshre (IIT Bombay), Groww is an investment platform with over 15 million registered users. This investment platform has taken the fintech space by storm and is now the second fintech startup to achieve unicorn status after Zerodha. The team said that it had raised $83 million as a part of its Series D funding round led by Tiger Global Management at a valuation of more than $1 billion. Groww has also expanded its investing options from Mutual funds to stocks, IPOs, ETFs, intraday trading, and digital gold to keep up with the growing user demands. Last Tuesday, Groww said it would buy Indiabulls AMC’s mutual funds business from Indiabulls Housing Finance in a deal valued at Rs 175 crore, helping it break into the asset management space. Let us dive deep into the journey of this popular platform.

The Business Idea: The process of investing in financial products in India has been a daunting experience for a very long time. “The stock market is purely based on luck,” “You won’t be able to survive without credit” Similar myths about finance combined with insecurity stemming from a lack of financial education is a significant psychological barrier to investing among Indian households.  Additionally,  tedious formalities disincentivize investing for budding investors. The founders of Groww examined the market for user convenience, understood these fundamental user pain points, and started addressing them to create their product. To win over the Indian market, the team set out to provide the best security on its platform.

Groww is born: After analyzing these problems and resigning from Flipkart back in 2016, Lalit Keshre, along with Harsh Jain, Neeraj Singh, and Ishan Bansal, came together to form a new fintech start-up called Groww, which aims to make investing simple, accessible and hassle-free for anyone and everyone.

Support from Marquee Investors: In April 2021, Groww made headlines after it raised an astounding $83m in the Series D round. This incredible fundraiser pushed the start-up’s overall valuation over $1 billion, making it the latest member of the “unicorn” club. Tiger Global Management from America led the fundraising with the participation of Groww’s existing investors from 2017. In September 2020, Groww raised $30m in the Series C funding, and in September 2019, it raised over $21.4m in the Series B funding round. All these fundraisings were led by Groww’s long-time existing investors Sequoia Capital India, Ribbit Capital, YC Continuity and Propel Venture Partners. The company had also raised $1.2 million in Pre-Series A led by Insignia Venture Partners and Kairos fund. 

Competitors: Groww has become a juggernaut among Indian investment platforms, but it is not alone in this race. Zerodha, another unicorn, made headlines as the stock brokerage company gave itself a $1 billion valuation without raising a single dime from investors. And now, the Hurun Global Unicorn List of 2020 values the startup at a whopping $3 billion. Zerodha is the new entrant in the Hurun list and ranks 108th in the global unicorn ranking. Upstox, an online commodity and equity broking firm, is another tough competitor backed by big names like Tiger Global and Ratan Tata. By 2020, Upstox had become the second-largest stockbroker after Zerodha.  Paytm’s financial services arm, PayTM Money, is another competitor to look out for. PayTM Money is reportedly in talks to raise $1.2 billion at a valuation of $5 billion,  making it the third unicorn venture from the PayTM family.

User base: Studies suggest that only 6-8 million households in India are investing in equities, while there are close to 20 crore people with investable income. Groww currently has more than 1.5 crore users. Over 20 lakh new Demat accounts have been opened since June 2020. The app, which has been downloaded over 5 million times on the Google Play Store, has a rating of 4.5 stars. The team believes that the best way to attract customers is by making investing simple and accessible while boosting financial education. Groww intends to focus heavily on this area in the near future. 

About the App: Groww is a new-age investment app wholly developed in India. While there are plenty of apps available in the stock market, Groww stands out because it helps people make DIY investments by tapping a button. Groww is a simple Demat and stock trading app that allows you to open a Demat account and trade on the BSE and NSE listed stocks in the market. Opening a Demat and trading account on the Groww app is free of cost. It charges a brokerage amount equal to Rs. 20 or 0.05 percent of the order value, whichever is lower. When you tap on one of the investment categories, such as high return funds, the app unfurls a list of mutual funds with a return percentage mentioned to the right. You can further select a mutual fund and see its all-time performance in an informative, clean graph. The app also has a mutual fund SIP calculator that helps you estimate the returns for an investment over a period. Overall, the app is pretty simple and user-friendly. It also updates you with the latest performances of your interested funds.

The Pandemic A blessing in disguise: Groww has entered the Unicorn club within four years of its inception. What makes this achievement so striking is that Groww is the second youngest fintech company to join the Unicorn club. But what propelled the start-up towards this milestone in such a short time? “The Covid-19 crisis was a wake-up call for Millennials that in addition to physical and mental health, financial health also matters,” Keshre said in an interview. A large section of office-goers are now working from home, allowing them to save more, and at the same time, learn how to invest and analyse companies. Covid-19 created an opportunity to buy the otherwise high-value stocks for cheap or pick-up shares that are likely to benefit from the post-COVID scenario, thus garnering more investment. Also, apps like Groww have made investing easier, faster, and transparent for the DIY (do-it-yourself) generation by removing hurdles with paperless onboarding, addressing cost concerns with very low brokerage, and bringing all types of investment options on a single platform. It is similar to what Flipkart and Amazon did for the online shopping experience, or Swiggy and Zomato did to the food delivery experience. Strategic timing of the launch of direct stock investing, initial public offerings (IPOs) and intra-day trading last year has also contributed to the spurt in the user base. 

The Road Ahead:  Groww plans to expand its product lines to financial education initiatives making investing comprehensible for millennials. It also aims to utilise the funding to increase the consumer reach and widen the base of investing options to deposits, US stocks and sovereign gold bonds. Last Tuesday, Groww said it would buy Indiabulls AMC’s mutual funds business from Indiabulls Housing Finance in a deal valued at Rs 175 crore. The founders believe this move will help the Bengaluru-based startup break into the asset management space. 

Groww has reached a significant milestone, but their journey is only beginning.

Insight, IIT Bombay would like to congratulate Groww for their remarkable achievements and hope that they continue to grow with momentum.