Investment tech unicorn Groww, which raised $83 Mn in its Series D round in April this year, is reportedly looking to raise another $250 Mn at the valuation of $2-3 Bn in the coming weeks. Reports suggest that the funding round is likely to be co-led by existing investors Tiger Global, Coatue and TCV, and Insight Partners may also be exploring the possibility of investing in the startup.
Launched in 2017 by ex-Flipkart employees Lalit Keshre, Harsh Jain, Neeraj Singh and Ishan Bansal, Groww provides users with direct plans for mutual funds investing via its mobile application and web platform. In addition, it offers stocks, ETFs, IPOs and gold provisions on its platform. Earlier this month, the insurtech startup also acquired 13-year-old Indiabulls’ mutual fund business for INR 175 Cr to diversify its business offering.
India’s rather disorganised insurance sector appears to have seen a boom since the onset of insurtech companies. In fact, according to Mordor Intelligence, India’s insurtech segment is expected to reach an approximate valuation of INR 220 Bn by 2024.
The startup is in direct competition with Zerodha, which recently received in-principle approval from the Securities and Exchange Board of India (SEBI) to launch its asset management company. In addition, it also competes with the likes of Paytm Money, Upstox, ETMONEY, Smallcase and other traditional brokerage and investment firms.
In FY20, Groww’s net loss saw a 3,348% jump from INR 23 Lakh in FY19 to INR 7.93 Cr. In addition, the startup also saw a spike in its expenses by over 2,500%, from INR 31.76 Lakh in FY19 to INR 8.69 Cr in 2020.
This can be considered a drawback for the unicorn, given that the asset under management (AUM) for the Indian mutual fund industry has grown 424.96% to INR 36.59 Tn this year from INR 6.97 Tn in August 2011. The competition for Groww is only set to become intense with fintech players, such as PhonePe, entering the mutual fund and insurance business.