Investment platform smallcase raises $8 M Series A funding led by Sequoia India

smallcase Technologies will use the capital raised in this funding round to build an infrastructure that will help retail brokerages and others to offer theme-based investments.

smallcase Technologies on Tuesday announced it had raised $8 million in Series A funding round led by Sequoia India with participation from existing investors Blume Ventures, Straddle Capital, Beenext Pte Ltd, WEH Ventures and DSP Adiko.

The startup was founded in 2015 by IIT Kharagpur graduates Vasanth Kamath, Anugrah Shrivastava, and Rohan Gupta. The Bengaluru-based online equity investment platform helps individuals invest in theme-based stocks and ETF portfolios (called smallcases) with their existing DEMAT accounts.

The company said it will use the funds to build a platform that will help retail brokerages to offer smallcases to their clients. With this funding, smallcase Tech will also offer tools for research firms and individuals to create their own smallcases.

The company will also look to develop infrastructure for investment advisors and advisory platforms to enable transactions in exchange-traded products. In June, smallcase founders had said they were planning to provide a CRM-based SaaS solution to advisors, helping them make different smallcases for clients to help them grow their portfolio.

smallcases are currently available on five brokerage platforms - HDFC Securities, Zerodha, AxisDirect, Edelweiss and 5Paisa – and is looking to add more partnerships in the future. 

Speaking on the fundraise, Vasanth, CEO and Co-founder said, 

“We are building smallcases as a new investment instrument class that helps you take portfolio exposure to stocks and ETFs while having no expense ratio, making them cost-effective. Since the underlying securities are held in the investor’s demat account, they have complete control and transparency into their investments. Our goal is to make smallcases the preferred investment option of the modern investor.”

smallcases are currently based on strategies like asset allocation, thematic, smart beta, and sectoral. The smallcases are created and managed by entities like research divisions of brokerages like HDFC Securities, AxisDirect, 5Paisa and independent research houses including smallcase’s in-house research team, Capitalmind and Weekend Investing.

Also read: Why Bengaluru-based Smallcase is betting big on thematic investing to outperform the market

Since its launch, the platform has garnered a total user base of 2.5 lakh investors who have transacted over Rs 2,000 crore in smallcases. In June 2018, the total number of users was 1.5 lakh.

“As retail participation in equity investments grows in India, investors are increasingly looking for easy to understand, transparent, low cost investment products,” said Harshjit Sethi, Principal, Sequoia Capital India Advisors, on why they chose to invest in smallcase.  

While speaking to YourStory in June of 2018, Vasanth had said that the average investment made by an investor cumulatively on each smallcase was Rs 50,000. Further, the company had said an average of 3.8 smallcases were bought by every user on the platform.

The platform was also witnessing a 78 percent repeat rate.

"By creating simplicity and transparency for direct investors, investment advisors and brokerage houses to offer low cost equity investing. We hope to see them at the forefront of the equity market development,” said Karthik Reddy, Managing Partner, Blume Ventures.