Thinking about investing, especially in instruments such as mutual funds and exchange traded funds exchange traded funds Exchange traded funds ETFs are a type of security that tracks an index, sector, commodity or other assets. It can be purchased or sold on a stock exchange just like an individual stock. (ETFs), evokes a lot of responses. For India’s emerging tribe of retail investors, who depend heavily on informal advice and media chatter, confusion is high on the list. Investment platform smallcase aimed to solve for this when it was founded in 2015, letting users invest in curated bundles of stocks and ETFs or “smallcases” as it calls them.
Users can choose to build their own bundle, access a free one offered on the platform, or subscribe to one curated by an advisor. The latter two can only be offered by registered investment advisors (RIA) authorised by the Securities and Exchange Board of India (SEBI) to dispense investment advice.
It’s an idea that’s becoming increasingly popular with investors. smallcase has about 3.5 million users investing in 250 curated bundles on its platform, chief executive officer (CEO) Vasanth Kamath told The Ken. The platform has clocked about Rs 14,000 crore ($1.9 billion) worth of transactions, and Kamath added that revenues have also grown by around 5X since last year.
Where users are, investors tend to follow. smallcase has attracted a total of Rs 455 crore ($62 million) in funding, including a recent Rs 293 crore ($40 million) funding round led by the Mumbai-based private equity firm Faering Capital. The round marked Amazon’s venture capital entry Amazon’s venture capital entry The Ken Amazon is warming up to wealth management in India Read more into India’s wealth management sector and also saw participation from Premji Invest.
smallcase’s popularity, however, has meant that it’s no longer the only player in the niche it occupies. Selling investment products to users in bundles is an inherently intuitive idea—it’s easy to use, and customers get to cut through the hubbub for a fee. But it also means the idea is easy to replicate, a proposition several others have taken advantage of.
Mumbai-based WealthDesk arrived on the scene barely a year after smallcase, offering similar bundled investment products, stocks and ETFs labelled “WealthBaskets”. It raised Rs 23.5 crore ($3.2 million) in seed funding in January 2021 and claims to have over 50,000 users.
