SUMMARY
Vested Finance allows Indians to buy stocks in US-listed companies at zero commission, claims Shah
Vested is keen to offer startups and private stocks from the US in the future too, said Shah
With pre-seed investments from leading angels, Vested intends to raise another funding round this year
No matter where we live today, we are surrounded by products of Microsoft, Google, Samsung, Facebook and other tech majors big companies and while many of us might not be using Apple or Tesla products due to the price and availability barrier, these products are equally fascinating for many.
“I think we would all be equally thrilled with the idea of owning a stake in these companies,” says Viram Shah, cofounder and CEO of Vested Finance.
Having been associated with JP Morgan, Shah, a UC Berkeley alumnus, found the idea worthy of pursuit, but he did not find any right platform for Indians where one could pursue it.
The Narendra Modi government has allowed Indian resident individuals to remit up to $250K per financial year to other countries for investments and expenditure. With the liberalised remittance scheme (LRS) of RBI — which includes any investments like stocks in Apple and other companies, real estate, and bank deposits — owning a healthy geographically-diversified portfolio from across the world is a real option for investors.
The question is how can Indians invest in overseas companies?
Companies like ICICI Direct, HDFC Sec, Kotak Sec and Reliance Money have tied up with foreign brokers and offer the facilities to invest directly into US stocks, but companies like Vested Finance and Winvesta are dedicated platforms for Indians looking to invest in US stocks.
Founded in 2018 by Viram Shah, Darwin Arifin, Eric Huynh and Yinghan Lin, Vested Finance is an SEC Registered Investment Advisor and has also partnered with DriveWealth, a US-SEC-registered broker which serves clients in 150 countries and is a member of the Securities Investor Protection Corporation (SIPC), which insures securities in their customers’ accounts up to $500K.
Edited excerpts
Inc42: At a time, when global investors are more excited about the Indian market, you choose the opposite.
Viram Shah: Despite having done bachelors in engineering, I was always interested in the business world. Also, due to my family business background. I wanted to somehow mix technology and finance. Working at JP Morgan and their investment banking team across Mumbai and Hong Kong cultivated this idea further.
I realised that in spite of knowing a lot of global companies, the process of investing in them was quite tedious. At Berkeley, I explored the idea with my classmates who are from Indonesia and Hong Kong. Mates, who are also cofounders at Vested now.
We realised that while a US retail investor keeps 15% of their portfolio in foreign securities, our portfolios, back home (in India) are completely locally concentrated. This was a common ground to start Vested up in August 2018.
Inc42: The temporary slowdown apart, the Indian market offers immense potential, why should a retail investor invest in US-listed stocks?
Viram Shah: There are many reasons. Diversification of portfolio in terms of assets, time, bond and geography is essential and is what experts and we suggest to every investor. Diversification in terms of geography, thus, is one of the essential pillars of a portfolio. 10-15% of our portfolio must be geographically diversified, as it negates the local market factors.
As an investor, you want to invest in asset classes that are not linked to each other. So, even if local stocks go down due to the local market slowdown, International stocks won’t really go down.
Secondly, wealth creation through companies, you want to invest in. People do want to invest in such innovative companies and create wealth that way.
Thirdly, you get to hold some investments in dollars. Over the last 10 years, the rupee has depreciated about 4% every year. So that means that by having an investment in dollars you get to benefit from that depreciation.
Inc42: Does Vested also offer services to investors who are looking to invest in US startups or unlisted companies too?
Viram Shah: That’s indeed interesting and we will definitely be looking at it. We haven’t studied this very segment in detail yet, but if we are keen to explore this private market space too.
We have started with the public markets, but we want to become the destination for any kind of international investing that you might want to do. That’s our goal.
Inc42: Indian retail investors are not much globally aware — what’s been your experience in this regard?
Viram Shah: Despite having registered in August 2018, it’s just been six months since we launched our web and mobile products and services. The response so far has been quite positive and we are witnessing growth of 30% on a monthly basis on the brokerage accounts that are being opened by us. I won’t be able to share the exact numbers but there’s been interesting stuff that we have observed in such a short span.
For instance, we have created a new category. With Vested, we are creating an awareness about this space. So one of the key things that we see, is the new behaviour being created. And what we’ve been seeing is that nowadays one out of four people who do fund transfers, repeat the transaction the next month.
This is a very encouraging sign for us to further improve our product. The interesting part however is that you can buy fractional shares at Vested too. For instance, Amazon stock price is around $2K, which is roughly INR150K; however, you don’t need to invest that much in one go, you can start investing in with about even INR 100 or INR 500.
Inc42: Your cofounders are from different countries. Is Vested limited to Indians only, or open to other investors from other countries as well? Which are the international stocks you currently offer?
Viram Shah: Currently, it is limited to Indians only, however, we very much have global ambitions. And, as you rightly pointed out, we have two cofounders from different countries, so we definitely want to leverage their local networks to launch in different markets.
The offered stocks are currently from the US market only.
Inc42: Is Vested registered in India or the US?
Viram Shah: We have set up an office in India. The Indian company is a subsidiary of the US company. We are a team of 18, most of whom work in India, except the founders who are based in the US.
Inc42: Revenue model has been a key issue for startups. What’s yours?
Viram Shah: We have intentionally aimed to make our platform primarily a long-term investment platform rather than a trading platform. We don’t charge any commission for trade but we charge on value-added services that we provide on additional features. So for example, we provide some pre-built portfolios that our users can invest in, in an easy manner. They won’t have pick companies or do a lot of their own research. We provide all a list of the best-suited companies, according to their profile. That is something that we monetise.
Further, we have also partnered with banks in India for the seamless conversion of currencies.
Inc42: What’s the funding situation for Vested Finance?
Viram Shah: So far, we have raised over $1 Mn from investors across the US, India, China and Singapore in pre-seed funding round. This has been carefully done to add strategic values to the company and not just funding. For instance, founders of BharatPe, Razorpay, BookMyShow and Avendus’ leadership team Karan Sharma, Pankaj Naik have invested in the company. The plan is to raise a larger round in 2020.
