The Indian fintech industry has been growing from a niche-based approach to a bundled product, where bits and pieces of the financial services industry are added as startups look to bolster revenue. This has enabled the players to strengthen their revenue streams overall but left many without a core focus.
Through the Covid-19 pandemic, fintech startups in the lending sector were particularly stressed, but the diversified services of many startups held them in good stead. While payments have continued to grow, the lending ecosystem has been struggling. Similarly, wealth management saw plenty of upheavals too, with many investors choosing to withdraw funds from the market as the stock markets crashed.
But Kuvera says it saw positive growth during Covid-19 by targeting the audience that was most likely to invest in this time — younger age groups and millennials who had looked at wealth management seriously after the financial impact of the pandemic.
Launched in 2016 by Gaurav Rastogi, Neelabh Sanyal and Mayank Sharma, Kuvera is a direct mutual fund investment platform, which also offers lending and digital fold investments. Like most investment platforms, it also provides access to a range of advanced solutions and services to help investors make the most of their investments. But it’s the way it enables these advanced services that make Kuvera a more attractive proposition for the millennials and Generation Z investors it is targeting, who won’t usually opt for these services.
While the company charges zero-commission for advisory and mutual fund investment, it has taken a gamification approach to upsell its wealth management services.
Gamification Brings In Young Investors
With a base of 1 Lakh active investors, who pay to use the company’s services, Kuvera allows users to accrue virtual coins for using the free mutual funds’ service, SIP, STP, loans and more. The coins earned can be used for value-added micro advisory services, which would otherwise not see adoption from first-time or unaware investors.
The company has “gamified” its direct revenue stream by keeping value-added services like tax harvesting, family account planning as paid, and either charging a small fee for it, or allowing users to use the loyalty coins to avail them. The loyalty coins can also be purchased and the company sees this as an additional monetisation stream.
Other services for partnerships like that of digital gold and lending also rake in commissions for Kuvera. “We add more value-added services based on what the user base tells us, which is one channel of revenue for us. We also make money by cross-selling different products— loans, remittance partners etc,” the cofounder added.
The company has grown its asset under management base to INR 12.5K Cr with over 7.5 Lakh investor base across 800 cities. Rastogi noted that the company began the year with INR 6K Cr of AUM, and this growth has also come on the back of Covid-19 with cut down in expenses for several users.
“March was a fantastic month for us, sign-ups grew 2.2x and the number of investors who switched from regular plans to direct plans, and that volume was up close to 3x. April was not that good, but May and June picked up again,” Rastogi added.
He also noted that growth has been driven by existing investors moving to Kuvera and as a result, its average portfolio balance has trended up during this Covid-19 period. “The average portfolio size for an active investor is INR 9 Lakh, which has trended up during this period. On average, we are doing INR 35 Cr worth transactions every day, but it is growing dramatically,” Rastogi added.
The team didn’t disclose their FY20 performance, but the ministry of corporate affairs filings revealed that in FY 19, the company made revenue of INR 30 Lakh with an expense of INR 2.49 Cr and loss of INR 2.18 Cr. However, Rastogi added that in FY21, the company aims to have at least INR 25K Cr in AUM and break-even in the next 4-5 years.
The company has raised $4.8Mn from UK-based venture capital company Eight Roads Fintech Strategic Investment and angels. Competing against players like Paytm Money, ETMoney, INDwealth, etc, Kuvera is vying for a larger piece of Indian wealth management industry.
“If this demand destruction continues and the demand does not come back, then there is a serious chance that income goes down dramatically as well. And when that happens, then people will stop investing more, people will start dipping into their investments to survive that downturn,” he adds. Rastogi believes that the country is 4-5 months away from that, but this is a risk because of something like Covid-19 and no one can predict what will happen.