This story is sponsored by Dell
ORO Wealth, a young Mumbai-based bootstrapped startup operating out of Powai, is a 10-member team which includes four of its co-founders. Even though it’s a small office, the dynamic energy levels and excitement is visible.
This excitement has risen a notch higher ever since it began to be recognised at various industry forums, media interviews and startup contests. ORO Wealth won the first round of the Startup Challenge powered by Dell, which saw more than 500 early stage startups applying for the contest. The contest is a platform for entrepreneurs to bring their potential business ideas to market and an opportunity for early stage startups to present their business ideas in a supportive yet competitive environment and get greater exposure.
ORO Wealth was selected as the winner of the first round of the Startups Challenge by a jury comprising Ritu Gupta, Director – Marketing, Consumer & Small Business, Dell India; Sahil Kini, Principal, Aspada Investments and Madanmohan Rao, Director – Research, YourStory.
Congratulations to the winners!
The third round of the contest is on! If you are an early stage startup, apply for the Startup Challenge powered by Dell.
According to Ritu Gupta, “In the Startup Challenge we are looking for business ideas that are innovative, have a clear vision for business growth, future potential, social impact and have the capacity to be a game changer in the industry. At Dell, we believe that the startups of today will be the growth engines of tomorrow’s economy and the source of future job opportunities.”
Nitin Agrawal, Vijay Kuppa, Yogesh Powar, and, Swati Aggarwal, the four co-founders, share the story of ORO Wealth and why they are starting to make headlines in the Indian financial sector.
Talking about developments in the Indian financial sector, Nitin says, “Wealth in India is growing, yet penetration of financial products remains very low. For instance, Mutual Funds AUM (Assets Under Management) in India is 7% of GDP as compared to a global average of 37%. A key reason is that financial advisory is largely offline limiting its reach beyond Tier 1 cities. Offline advice also leads to non-uniformity of experience – some advisers may be good, many are not. Also, the industry is mainly commission-based which often leads to mis-selling. Technology is also not leveraged enough to make the entire experience of investing easy for the customer.”
These are some of the focus areas that ORO Wealth is aiming to address. Through its web and mobile-based wealth management platform, ORO Wealth enables retail investors and offline intermediaries to access high quality advice and investment services. Nitin says, “By building online, automated tools which can provide high-quality, unbiased advice uniformly at low costs, we are enabling deeper penetration of financial products.” But ORO Wealth’s claim to fame is that they are India's first zero-commission investment platform. What this means is that retail investors can come to ORO and transact in direct mutual funds plans.
A key factor that is enabling the startup achieve its stated objectives is technology. Nitin says, “Technology is an integral element of our offering. It is only through technology that we are able to solve the twin problems of poor distribution economics and lack of standardisation plaguing the investment products industry. While we have a great product, technology makes our solution scalable and enables us to take it to investors even in smaller cities. Further, the intuitive technology that is being used at the front-end of our product, is making people – who so far have been used to just face-to-face interactions – comfortable with the idea of making investments online.
Nitin has worked at Deutsche Bank in Equity Structuring in their London and Singapore offices. In his role at Deutsche Bank, he designed and sold several billion-dollar investment solutions to some of the biggest global investors. So we ask Nitin why is a zero commission model an interesting value proposition for retail investors and how does it fit in ORO Wealth’s monetisation roadmap.
His response is, “Not paying commissions translates into higher returns for end investors and helps them avoid the biased advice that often comes from commission-based sellers.” He adds, “Instead, they can use a small part of the commissions they have saved to buy ORO's advisory tools and experience the difference that truly low cost investing and unbiased advice can make to their returns.”
ORO Wealth’s monetisation strategy can be derived from its transactions platform plus value-added services – where investors can come and transact in (purchase, redeem, switch) zero commission (direct) funds from multiple AMCs (Asset Management Companies) in one place. Its various value-added services such as fund screener and portfolio tracking are available to users of the transactions platform, which they can use for free. The second part of its monetisation strategy is its ORO advisory services. ORO currently offers mutual fund advisory services and is planning to launch stock advisory services soon. Investors can pay for these advisory tools on a pay-as-you go basis. Nitin says, “All of these tools suggest only direct funds and the fees are a fraction of what you save in commissions. So the advisory is actually self-paying.”
Nitin explains that they are also taking these tools to retail investors by partnering with existing financial intermediaries who already have an established client base. This has helped them to lower their customer acquisition costs and also scale quickly.
Founding ORO Wealth
The founding team, Nitin, Vijay, Swati, and Yogesh, come with an institutional investing background. When they looked at making investments, they saw a huge difference in the way retail investing works. Vijay says, “The kind of conversation that our relationship managers had with us, the way our friends and relatives were investing, made us realise that there was an opportunity which was sort of untapped.” Swati says they really wanted to get the basics right with minimum hassle for the end investor – unbiased evaluation of investments, building a diversified portfolio and ensuring that we lose as little as possible to fees and commissions. This, was just an idea in December 2014. The next few months saw the co-founders working on the idea of ORO Wealth, and they finally launched the startup a year later in January 2016.
And, in a span of just eight months ORO Wealth has received over 2,500 registrations, without any marketing spend. Vijay says, “So far, our key focus has been on developing the product. Now since we have laid a strong foundation, we are actively looking to raise funds to further accelerate product development and spread investor awareness about our product”.
Talking about how ORO’s offerings have continued to evolve since its beginnings, Vijay says, “At ORO, we believe that it is best to listen to the customers. Initially we started as a transaction platform in direct mutual funds for DIY investors but a lot of people wanted to take advisory services. So then we launched an automated advisory tool.” It was customer feedback, based on which ORO began building a portfolio health analyser and also the stock advisory offering.
Making investing in direct funds easy
The ORO Wealth team believes that they are currently the best platform available for buying direct funds. Nitin says, “If you compare ORO versus AMCs, RTAs, and any other free ways of accessing direct Mutual Funds, you will see how ORO offers several advantages. ORO offers users access to 25 AMCS which together account for more than 90% of industry AUM. Also, AMC websites and RTA apps offer limited coverage – on AMC websites, investors can only buy funds from that AMC. RTAs allow investors to buy direct mutual funds from those AMCs which are serviced by them. But given that the large AMCs are nearly evenly divided between them, an investor would need to have accounts with both of them. While, Mutual Funds Utilities (MFUs) allows you to buy direct fund from all the 25 AMCs but it is mainly a platform for distributors and lacks several features which are important for retail investors.”
The other factors that make ORO an ideal option for consideration are: dedicated customer care that ensures that the retail investors’ paperwork and transactions go through smoothly even without the commissions; its value-added services like portfolio tracking, fund screener and ORO advisory, among others. But the key value proposition remains “ORO’s no-strings attached pricing. Investors can transact on ORO (and enjoy our other services) by just paying a small, one-time convenience fee. There are no annual subscriptions, no running fees and absolutely no obligation to buy our wealth management services,” explains Nitin.
Challenges, entrepreneurial journey and the excitement
So what are some of the biggest challenges that a startup like ORO Wealth is facing?
And, the answer, according to the co-founders, is “low awareness among investors.” Yogesh explains, “Many regular fund platforms market themselves as ‘free’ which they are not by any stretch of imagination. The key for us is to raise awareness which we are doing on an ongoing basis through various investor awareness workshops. SEBI regulations which will make it mandatory for mutual fund houses to disclose commissions to the end investors will become effective from October 2016 and should give a big boost to our efforts.”
In addition, ORO Wealth also faces some of the same problems faced by other financial product providers in India, the co-founders say. This includes making people understand the importance of investing and building trust for a new platform. To address these hurdles, the team believes that content marketing and education will play a pivotal role.
Yogesh says, “Apart from the business-specific challenges related to ORO Wealth, entrepreneurship brings challenges of its own. Despite the growing acceptance of entrepreneurship, leaving the safety of a monthly pay check is still a big deal.” Nitin adds, “Also, when you work in a large corporate everything is structured. From that to the unstructured word of a startup is liberating but also intimidating.”
A big reason why they applied for the Startup Challenge powered by Dell is because it offered “greater exposure both in front of investors and in front of our potential customers,” says Swati. “Winning has once again validated that we are doing something right. We hope this early success will be a stepping stone for us to achieve more,” she adds.
Apart from the excitement of the win, ORO Wealth is also brimming with energy because of a partnership with two large financial institutions which the startup will announce shortly. Nitin says, “This will boost our growth further, especially with respect to customer acquisition.”