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The capital markets in India are at a very nascent stage. It is certainly going to be a long time before we see maturity displayed by the markets; albeit the overall economy needs to grow substantially to fuel such a growth. Also, in India, investing is not optional; it is a necessity as the inflation rates are very high. Over the last 5 years, money has lost approximately 38% of its purchasing power as inflation has averaged about 9.8% p.a. After-tax interest can simply not match up to these rates even if money is invested in fixed deposits. Therefore, investing in stocks/mutual funds/gold is pretty much the only way for an average, middle class person to preserve the purchasing power of his money. Finding a market in the middle class's aspirations, many startups have come up. we recently covered Zerodha, a startup in the same domain. And, here we have Investopresto. My talk with Ashwini Anand, Co-Founder, Investopresto, begin with him sharing his struggle during the starting days.
“We had some initial difficulty finding good techies to work with a startup like ours as they tended to prefer stable jobs over the vagaries of startup life. However, over time, we put together a wonderful team of competent and passionate developers, designers and financial analysts,” said Ashwini, when we talked about his startup Investopresto. At the end of our talk he revealed his secret formula for hiring great people.
The hard work and determination exhibited entrepreneurs such as Ashwini motivates other individuals to dream and aspire. I interacted with Ashwini over multiple phone calls and got to know about Investopresto in detail. A “next generation investment portal” as Ashwini prefers to call it, Investopresto is for the young, tech savvy people with a little or no knowledge of investment. It enables these young and smart individuals to make smart investment decisions.
The story of Ashwini and Aditya meeting each other dates back to Ashwini’s days at Singapore. “I started building the initial prototype with the help of interns from NUS (Singapore). I raised our pre seed rounds of funding in Singapore after the initial prototype was ready. Once there was some money in the bank, I started looking for full time techies and financial analysts in India. It was then that I met Aditya Rallabhandi, who eventually became our COO. He had just returned to India after finishing his second masters from LSE,” adds Ashwini.
Ashwini feels finds India to be a great place in the long run. The middle class is growing rapidly and people are willing to spend money. There are quite a few challenges that entrepreneurs in the internet space have to face in India. For starters, internet penetration has a long way to go despite the recent spurt in numbers. A large segment of the market in India is still not entirely comfortable with buying online. Innovations such as “cash on delivery” have helped address this, but these are not behaviors that will change overnight. “It is my personal opinion that with the market as it is today, an online + offline model is mandatory for any B2C startup. Success with a purely online model is very hard to pull off in the India of 2012,” he adds.
Also, in financial services, there’s a lingering distrust among financial advisors and bankers since mis-selling of investment products is not uncommon in this industry. Aditya adds to this that, “This is a global phenomenon and is not restricted to India. I frequently get calls from my bankers trying to sell me a ‘fantastic investment scheme’ with ‘guaranteed returns’ that will make rich in no time. The worst part is that I see many highly educated friends of mine buying into such talk and investing their hard earned money into these schemes. They eventually find that their investment returns after accounting for the various fees involved are notmuch better than a savings account.”
Investopresto offers the following features to small investors in India:
- Investment education articles and tutorials to help users understand how financial markets work and how to invest smartly.
- Personalized financial planning tools that make customized investment suggestions based on a person’s income, expenses, financial condition and investment preferences.
- Investment portfolio analysis tools that help investors keep track of how their investments are doing. Users can slice and dice their portfolios to cut their losses and capitalize on their profitable investments.
- Social features that enable users to see where their friends and favorite market experts are investing. These tools essentially enable users to collaborate with each other and make better investments.
- Research reports and stock recommendations based on the fundamental analysis of investments.
Aditya also points out 3 major factors that separate from the other players: personalization, beginner friendliness and strong social features. He explains these three factors in detail: Focusing on beginners and new investors is something that very few players in the market seem to be doing. We believe that given the right kind of tools and support system, people are not only smart enough to make their own investment decisions but also prefer to do so. Secondly, our tools allow people to get investment suggestions and financial plans that are customized to their unique financial needs. The big difference between us and other players is that we understand that suggestions that stop at a broad asset mix are of limited value to end users. Thirdly, Investopresto’s social features allow users to see where their friends are investing. Users love this since investing is essentially a social activity offline. It is one thing to see a fund manager recommending a stock or an investment product on CNBC or ET Now and something entirely different to know that your best friend has invested in that stock since he thinks that it will do well.
A major challenge for them is to scale their user base. “It is always harder to go from 20k to 200k users than it is to go from 0 to 20k users. However, the market is big and the numbers in India are huge. So, it is a matter of time,” adds a confident Ashwini.
Finally he reveals his formula for forming a great team, “I would be lying to you if I said that finding good people is easy. It is not. The key is to invest both time and money in finding and retaining talent. You can’t outdo large companies when it comes to paying high salaries, but you can do something that they can’t – allowing folks to work on stuff that they love and letting them work without meddling. Equity, stock options and plenty of freedom – that is the formula that seems to work for us.”
Investopresto and Zerodha, the startup we recently covered, are partners. Also, Investopresto is supported by the following funds: Crystal Horse Investments(main Investor), Thymos Capital, and Media Development Authority (arm of the Singapore Government).
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