Pune-based fintech startup Zambala is an aggregation platform for US and Indian market investors that enables them to buy or sell stocks through its app. It also provides advisory and monitors their investment.
Keen on stocks, but want to ride the big ones? Pune-based Zambala helps Indians broaden their investment options, enabling them to invest in stocks of US-listed tech giants. What's more, you can invest as low as $400 to $500 in US stocks and Exchange Traded Funds (ETFs).
Zambala is an AI-powered marketplace for Securities and Exchange Board of India (Sebi)-registered brokerage houses and market experts, where retail investors can connect. It spares the investor of broker commissions and other fees, and is free of cost.
The startup claims to be the first platform that brings FAANG and HRITIK stocks under one roof. FAANG is an acronym for Facebook, Amazon, Apple, Netflix, and Google; whereas HRITIK stands for HDFC Bank, Reliance Industries Limited, Infosys, Tata Consultancy Services, Hindustan Unilever Limited, IndusInd Bank and Kotak Mahindra Bank.
Launched as Zenwise Technologies by Amitabh Srivastava and Achal Darbari in 2016, the Zambala Stocks app was rolled out on August 15 this year.
Zambala (symbolising wealth in Buddhism) also provides advisory for the US and India markets. It also helps open a Mutual fund (MF) account online, and keep track of all investments.
Achal's father was a client of Amitabh Srivastava, an investment banker, in late 1990s. It was the time when share certificates were getting dematerialised. Amitabh started his career with Stock Holding Corporation (SHCIL) and then moved from the custody business to retail business. “That’s how I started interacting with retail investors and also met with Achal’s father,” says Amitabh. He left SHCIL in 2002.
Achal completed his MS in Finance in the US and worked as an assistant trader. He joined Ernst & Young in 1999 and in 2003 came back to India and joined Amitabh to start an algorithmic trading company. This was their first entrepreneurial experience, but the company wound up in 2008. Later, Amitabh joined Barclays in Chennai, and Achal joined Golden Source, a software company.
In January 2016, the duo was attending an event in Pune where they met a retail investor who spoke of a rogue broker/advisor who had led him to lose money. Amitabh and Achal spotted an opportunity and launched Zenwise Technologies in August 2016, to help Indians invest in US stocks and make informed decisions. Apart from the two co-founders, the startup has 10 employees and most of them are involved in the technology development.
What the product does
Zambala is an aggregation platform and operates through the app, which is available on both Android and iOS platforms. “We have brought all the stakeholders under one platform. Brokerage firms are for execution and market experts are supposed to provide the advisory for which we have given them both web interface and mobile applications. The moment the market experts come out with their advisory, they release it through our app and their advice will be visible to all the users. There will be no time lag between one user to another,” says Amitabh.
The users can buy or sell their stocks depending on the advisory through four brokerage firms listed on the platform – Zerodha, Phillip Capital, Arcadia Stocks and RKSV Securities. It is also in talks with a few other brokerage firms to get listed on the platform.
Zambala provides two categories of market experts – while one is empanelled, others are public experts. The empanelled experts include Prakash Diwan, Neeraj Puri Goswami, AssetTripler, and Vipul Ratan.
The platform has various packages and subscription services (that vary from Rs 15,000 to Rs 1,00,000 per annum) where users can get in-house analysts’ advisories and also neutral market experts. Zambala charges brokerage firms a fee whenever a new account is opened. Also, every time a transaction concludes, an infrastructure fee is charged by Zambala to brokerage firms.
“We have experts like analysts from Barclays, Goldman Sachs, Nomura, etc., with us and over 100 experts for the US market,” says Amitabh.
As per the Reserve Bank of India (RBI) rules, an Indian citizen is allowed to invest up to $250,000 across the globe in real estate and stocks per year. Amitabh says, “This is a big sum for the Indian market. We don’t come under regulatory authority as we are just a facilitator and a marketplace. Our participants are all Sebi-registered.”
Recalling the reason they started trading in the US stocks, including various ETFs and MFs, Amitabh says:
“Many parents want their children to study in the US. But by the time the child grows up, the savings made by them would be insufficient due to rupee depreciation. Now, by investing in US stocks, they would have got a better return because of the exchange rate.”
Zambala has associated itself with US brokerage firm ChoiceTrade to facilitate investments. ChoiceTrade is regulated by the US Securities and Exchange Commission (SEC) and FINRA (Financial Industry Regulatory Authority). One can invest in the US stock market by providing documents such as KYC documents and bank statements.
Challenges, competition and market
From idea to execution, it took two years for the founders to launch the app. From getting the brokerage houses to Sebi-registered market experts and developing the technology was a challenge. “Meeting and making the brokerage houses understand our products was a herculean task,” recalls Amitabh.
Other players, including banks, facilitate Indians to invest in US stocks. While the threshold level for investing is as high as $10,000, Zambala allows everyone to invest as low as $100 in the US market but advises to start with $400-$500.
Amitabh says, “Brokerage firms could have become our competitors. But now they are our partners.”
According to Standard Chartered’s Emerging Affluent Report 2017, about 43 percent of people in India use digital financing tools to make financial decisions. About 42 percent still depend on friends and family as the main source of information to plan their finances. The survey shows that digital tools were the go-to option for day-to-day management, budget tracking and planning, says Achal.
“The total depository market in India is close to 28 million accounts in NSDL (National Securities Depository Limited). This is just the tip of the iceberg as retail equity market is yet to evolve in India,” adds Achal.
“We are at a very nascent stage. After launching the app two weeks ago, we have seen around 2,000 downloads till now,” says Achal. Zambala is targeting a revenue of around Rs 16 crore by 2021, and is looking for external investments.
“We are looking for growth stage funding. Till date, we are bootstrapped. We are in talks with a couple of investors,” says Amitabh.