What Made Groww the Second Youngest Fintech Unicorn

The 2017-launched startup has a dual aim: to make investing simple and foster an investing culture in the country
What Made Groww the Second Youngest Fintech Unicorn
Image credit: Groww/Lalit Keshre

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In just four years after its launch, Groww has achieved the Unicorn status. The fact that the Bengaluru-based startup is the second-youngest fintech company among the 10 fintechs that are part of the coveted Unicorn club makes the achievement so much more striking.  

A private company with valuation of over $1 billion is termed a Unicorn in the startup and the venture capital ecosystem. 

Last week, Groww raised $83 million in its Series D funding round led by Tiger Global, valuing the company over $1 billion. This financing round more than quadrupled the company’s valuation from its Series C round of $30 million in September last year. Existing investors Sequoia Capital India, Ribbit Capital, YC Continuity—fund dedicated to supporting growth-stage startups—and Propel Venture Partners also participated in the Series D round.

The latest financing round brings Groww’s total capital raised close to $143 million. 

 

Fostering investing culture among millennials

Groww was launched in 2017 by former Flipkart employees Lalit Keshre, Harsh Jain, Neeraj Singh and Ishan Bansal with a dual aim: to make investing simple and foster an investing culture in the country. The idea germinated from their personal and that of their friend’s experiences that the process of purchasing financial products in India is opaque and complex.

“Only 3-4 per cent of our population is investing in equities, while there are close to 200 million people with investable income,” said co-founder and CEO Kheshre. “A lot of Indians' money is lying in savings accounts attracting very little interest, while foreign institutional investors (FIIs) are able to make the most of the growth that our economy has to offer. We want to change that and foster an investing culture in the country to increase the retail participation of millennials in equities.”

Before rolling out operations, the founders spent almost a year identifying the user’s fundamental pain points. 

Initially, Groww started as a direct mutual fund (MF) distribution platform with only three mutual funds. Apart from that, as part of experimentation to figure out the right user experience, the founders also built a minimum viable product (MVP) for other features, which included customer profiling, robo advisory and risk analysis.

After six months of experimentation, the company retained MF distribution and dropped all other features. “We did this because our users loved what we built and they wanted more flexibility and more MF options to buy,” said Kheshre. 

“Our journey is based on continuous learning and improvement. Keeping user experience in mind, we kept adding or retaining the necessary features and removed the ones that were not helping our users.” 

On being asked what is the core principle that the founders swear by, Kheshre said all their efforts have been focused on launching financial products that people can invest in without hassles and building educational resources to bring wealth creation within the grasp of investors. 

 

Growth amid the COVID-19 pandemic

The company has had a good run amid the COVID-19 pandemic and has big expansion plans for the coming years. Groww claims 15 million registered users currently on its platform, of which almost 7 million were added in the last six months.

Ask Keshre how they made it happen and he says the COVID-19 pandemic has played a major part. 

“The COVID-19 crisis was a wake-up call for Millennials that in addition to physical and mental health, financial health also matters,” he said.

“Three factors contributed to our growth. First, 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. Second, as people were working from home, they had more disposable income and time to learn how to invest and analyse companies and more time to invest more frequently. Third, for the do-it-yourself (DIY) millennial generation our platform has made investing easier, faster and transparent by removing hurdles with paperless on-boarding, addressed cost concerns with very low brokerage and brought all types of investment options on a single platform.”

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. “We launched stocks at a time when many investors were looking to benefit from the prevailing market conditions. Since the launch of the stocks platform in June, we have opened more than 18 lakh demat accounts,” said Keshre. 

With the launch of direct stock investing, the wealth management platform is competing with the likes of Zerodha, Upstox and Paytm Money. Groww charges the lower among INR 20 or 0.05 per cent per executed order as brokerage. 

In the coming months, Groww will add deposits, US stocks, sovereign gold bonds and Futures and Options (F&O) to its product offerings.

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