"People in India are over-saving and under-investing. E-commerce companies are probably taking care of the first problem. We want to take care of the second.", said Srikant Meenakshi about FundsIndia, a digital-only investment platform. Through their mobile and web apps, users can open an account and make short-term or long-term, general-purpose or goal-oriented, tax saving investments.
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Though they are currently known more as a mutual funds platform, users can also invest in corporate fixed deposits, stocks, and gold. They help investors pick investment options which are pre-packaged and ready to invest, on the go. They have different categories to fit investors with varying risk appetites, time frame, and goals, and also across different age profiles.
From idea to execution
FundsIndia was founded by C R Chandrasekar and Srikanth Meenakshi in 2008. They officially launched the platform in 2009. The founders studied at Hyderabad Central University, where Chandrasekar was two years senior to Srikanth. After university, Chandrasekar went to Virginia Tech, and Srikanth left for Oregon to do a Masters’ degree.
They ended up in the east coast of the US, and managed to stay in touch over the years. They were both in the financial services industry,working in IT. Chandra founded a company in the US, which provided solutions for managing retirement portfolios, and moved to India in the mid-2000s. Srikant moved back here in 2008, and they then got together to start a company in the financial services sector.
They found that the mutual fund industry was an untapped market at that time, and held great promise. Chandra is the CEO and senior partner in the enterprise, while Srikant manages the customer aspects of the business as the second in command. They currently have 228 employees, spread across different cities, out of which 180 are based in Chennai. Srikanth adds:
We got truly lucky with some of our early employees – D B Balachandran to head operations, N Vijayaraghavan to lead technology, and Sudhindra Ratnakar to take care of our equity business. These are folks with a lot of relevant experience and background, and they have been with us right from the start.
The average age of investors on their platform is 31, with the age group of 28-35 being the biggest demographic. But they also have investors in their 70s and 80s actively investing as well. The top 15 Indian cities account for about 65% of their transactions while the remaining 35% is distributed across tier 2 and tier 3 cities. FundsIndia monetizes through revenue on asset retention, or how long people stay invested on their platform.
They don’t see much activity in the online space currently, but they see platforms like Aditya Birla’s MyUniverse, and Ifas, trying to enter this sector. Srikant added: “Everybody is our competition, and nobody is our competition. It’s a weird situation. CitiBank and ICICI are our competitors in that they deal in mutual funds too. But not many are focussing on the online space now.”
FundsIndia offers customization by using technology-powered advisory services. An investor with them can ask investment-related queries through multiple channels and they provide unbiased free advice to the person. Srikant added:
We also learned that people use technology differently, and our solutions need to be flexible to accommodate the capabilities of different people. About three years into the business, we realized the need to establish a human advisory team (not in person, but over phone/email), to get people going and staying invested.
They noticed that whenever their advisory team spoke to customers over the phone about their investment plans, people would willingly disclose relevant information about themselves to ensure they got the right advice. Srikant observed: “This told us two things – that there is demand in the market for good advice and such a platform as ours, and not being face-to-face is not a shortcoming in this digital age.”
FundsIndia specializes in systematic investment plans (SIPs or monthly investments) in mutual funds. They have a flexible paperless SIP process on their platform. Investors can build their own SIP portfolios with their tools. They have also ensured that their platform requires minimal paperwork, to the extent mandated by laws (if at all) for the customers.
Market size and traction
Through research FundsIndia found that the level of financial repression in India was quite high. Srikant added:“The market for our services is every single person with a PAN card and who holds a net-banking account. The penetration of financial instruments for investments in India (outside of bank fixed deposits) is quite low, less than 10% in total, and that leaves a huge opportunity for them to be tapped.”
They had significant traction in the initial years of their business, and at this point in time, they have about 70,000 investors on their platform. They manage more than INR 1,200 crore in assets (Assets Under Management). Srikant added:
To paraphrase Bill Gates, an investment portfolio for every household is what we are aiming for. Every family needs a retirement portfolio, and most of them need to save for their kids’ higher education needs and medium-term goals like buying a house.
FundsIndia recently completed their Series C round of funding by raising Rs 70 crore, led by Faering Capital, with participation from their existing investors – Inventus and Foundation Capital. Their focus is on three dimensions – platform, products, and services. On the platform side, their push is towards better optics and usability. They currently have an android app that is seeing good traction, and they are working on releasing their iOS app soon.
FundsIndia found that they had a high retention rate for their platform, but the current challenge is getting people to know about them.Hence their focus is on brand-building and marketing efforts.
On the product side, they are planning to add the National Pension System (NPS) investment onto their platform, given the new tax benefits given to it by the government.On the services front, they are enhancing the platform to integrate advisory services more seamlessly into the product so that all forms of advice – both automated and human – are available instantly at all times.