The Wealthtech Revolution: How Indian Startups Are Siphoning Off Billions from the Middle Class
A growing middle class in India is fuelling a surge in demand for wealth management services, and startups are capitalizing on this trend to make a killing. With traditional financial advisors struggling to keep up, Indian wealthtech startups are using data-driven approaches to offer personalized investment solutions to the wealthy.
Premji Invest Leads $30-40M Funding Round in Dezerv
Premji Invest is leading a funding round of $30-40 million in Dezerv, an app offering a suite of investment solutions to India’s wealthy. The current talks value Dezerv at $170 million pre-money, more than doubling its valuation since its last funding round.
Lightspeed Ventures Backs Centricity
Lightspeed Venture is in talks to lead an investment round larger than $20 million in Centricity, a digital wealth management platform. Meanwhile, Peak XV has agreed to invest $35 million in Neo, a wealth and asset management startup.
The Middle Class is Up for Grabs
India’s high-net-worth and ultra-high-net-worth segments are booming, prompting some wealth management firms to aggressively expand their relationship manager networks to capture this market. Only about 50-55% of India’s wealth management market is currently under professional management, leaving a huge gap for startups to fill.
Startups are Cutting the Middlemen
Investors are betting that startups can cut the middlemen, offer more personalized and data-driven recommendations to customers, and also serve a class of the market currently neglected by incumbents. Accel-backed Scripbox has had a turnaround in its business in the last two years, with profits and assets under management of over $2 billion.
The Broader India Bet
India is experiencing a surge in the financialization of its economy, with significant growth witnessed in sectors like insurance and mutual funds. The number of mutual fund accounts is up 3.5x since 2015, with exponential gains in low-ticket-size systematic accounts over the past three years.
A Lot of Room for Growth
India’s ratio of mutual fund AUM-to-GDP is at 15% versus a global average of 75%, according to Macquarie. "As penetration improves, we believe the mutual fund industry can quite comfortably continue to grow at 20% for the foreseeable future," they wrote in a note.
Startups are Disrupting the Status Quo
A number of startups are making inroads, helping more Indians invest in mutual funds, stocks, and gold. Jar, backed by Tiger Global, allows customers to build a habit of savings. The startup, targeting a $100 billion Indian gold market, is already seeing its average customer make 22 investments each month.
The Affluent Population is Poised for Explosive Growth
India’s affluent population is poised for explosive growth, with the number of individuals with annual incomes exceeding $10,000 expected to more than double in the next 5 years, according to UBS. Industry has taken note, with CRED acquiring mutual fund investment platform Kuvera and Smallcase in talks to raise $40 million.
More Competition is on Its Way
Reliance, India’s most valuable firm, partnered with BlackRock last year to form a joint asset management venture in India. BlackRock and Reliance’s finance unit are targeting an initial investment of $150 million each into the new 50/50 venture, which will seek to offer tech-enabled access to "affordable, innovative" investment solutions for millions of investors in India.
The War for India’s Wealthy Has Just Begun
With traditional financial advisors struggling to keep up, Indian wealthtech startups are using data-driven approaches to offer personalized investment solutions to the wealthy. As the market continues to grow, expect even more competition to emerge, with the biggest winners being the ones who can disrupt the status quo and offer the most innovative solutions to India’s affluent population.
