Eighteen years ago, three young boys, all under 12 years of age, were orphaned and taken under the wings of their grandmother and guardians. They survived a long and arduous war against social stigma surrounding debt, which had tragically ended their parents' lives. But, driven by the sheer will to survive, the three of them forged a bond to do the best in anything that they aspire to achieve. Two of the brothers, backed by the eldest, are now some of the youngest stock brokers in the country, and have launched their own startup, FYERS, which is an acronym for Focus Your Energy and Reform Yourself.
The Thematic Investment Platform, which is built by FYERS, is an alternative to Mutual Funds. “While the average equity diversified mutual fund has delivered 8.9% in the last one year, the average FYERS theme has delivered 18.3%”, Yashas explains. Tejas adds, “The stock market in India has evolved from equities to derivatives to mutual funds and ETFs. Thematic is the next step of this evolution”.
The duo feel that this is an efficient alternative to mutual funds and has the potential to disrupt the Rs. 16 Lakh Crore Mutual Fund Industry.
It's the first week of August 2015, and 26-year-old Tejas Khoday and 22-year-old Yashas Khoday fly to Mumbai to meet the authorities at the National Stock Exchange (NSE) at the Bandra Kurla Complex. They are anxious because they are there to get a licence to become stockbrokers, and anticipate a slew of tough questions from witty and wise stockbrokers at the NSE.
The two brothers had spent the first part of 2015 preparing for this moment. They worked 18 hour days to create an equity-based investment platform that allowed people to invest based on intelligence offered by the trading engine. The two brothers filed for the stockbroking licence in June 2015, and they were called in by the NSE to make a presentation about the company in August.
"The NSE authorities were surprised that a couple of 20-somethings had applied for a stockbroking licence and to our surprise we got our licence in less than a month," says Tejas.
The FYERS app competes with broker-led online trading platforms –like those of Kotak and HDFC, along with popular apps such as Kite, by Zerodha. There are apps like Finozen too that are trying to make investments easy, but they are focussed on mutual funds.
FYERS, on the other hand, wants to focus on equity investments. The FYERS business model is based on theme-based investments and investors can choose from a 100 different themes with over 1,500 high-value stocks being covered on the platform. FYERs makes Rs 100 based on every transaction or change in portfolio.
This new form of investing backed by analytics and algorithms, without having a fund manager handling the portfolio is new in India. It is tailor-made for the millennial generation who are looking to achieve higher returns in a hassle-free manner. Investors can choose from over 100 different themes such as Cashless Economy (investment that benefits from govt’s demonetization effort). Another theme, Core Sectors of India (investment that benefits from increase in manufacturing activity), has delivered 44.2 percent over the last year compared to 26.1 percent delivered by the best performing equity diversified mutual fund.
While the young lads have their stockbroking credentials and a future, their beginnings were not so eventful.
The eldest brother, 29-year-old Shreyas Khoday, entered business at the early age of 13 and helped his brothers get through education and create a strong foundation. "Our parents had left us a hospitality business and we ran it with a guardian, who helped us rebuild our lives," explains Tejas, adding that the only way to get past the overwhelming grief of losing parents at such a young age was to work and study hard.
While building the hospitality business they also began investing at a very young age. "By the time I was 18, I was investing in stocks and reading about the market. I got my younger brother hooked too," says Tejas.
Yashas, while completing his Economics honours, realised that he was more into algorithms and machine learning. "Being influenced by my brothers I thought I should learn economics. But I was fascinated with software and data," he adds.
The duo thank their older brother for coming through and having their back.
Their formative years were devoid of distractions, parties and trips with friends. Instead, they spent time poring over financial papers, tracking stocks and learning how to build software applications.
Days were spent in college, and evenings were busy with running the hospitality business. "It was not easy running the hospitality business. A lot of people did take us for granted and wanted to take advantage of us. Thankfully, our accountant, who has passed on now, saved us from being cheated by people," says Tejas.
When things began settling down the three brothers ventured into education. Tejas finishes his Master's in Finance and worked in a couple of stockbroking firms between 2011 and 2014 before thinking of starting a stockbroking and investment business. "The idea was to build an intelligence layer that could advice people to invest or pull out of stocks. We aimed at removing the human layer from advising retail investors," he explains. When he took the idea to Yashas and asked him if building such tech was possible, the younger brother was instantly on board.
FYERs wants to rid the fear of investing from the minds of people. The app throws notifications asking them to move in and out of stocks based on studied events or by predicting an event. The brothers say massive engineering work had gone into building a predicitve analysis engine.
"We are eventually a platform that uses massive data. For this to kick in we need investors data and correlate it to the data of external news and events," says Yashas.
The brothers have invested close to Rs 2 crore of their own money to build the business. They believe the future is in fintech and programmatic advice. Globally, there are companies like Robinhood, Bux Pulls, E Trade, AmeriTrade, and even PayPal has invested in an investment app for millennials called Acorns. Japanese payment tech firm Rakuten invested $30 million in it. So the interest in this industry is very high.
"There are several businesses that are building app trading platforms. The uniqueness of the technology and the ability to scale become important here," says V Balakrishnan, founder of Exfinity Ventures.