How this techie's startup is making profits by building real-time risk management solutions
An increasing number of tech-enabled platforms are helping investors use smart tools to make better choices on the risk-prone stock market. Mumbai-based fintech startup Nerve Solutions found its sweet spot in this “risk-prone” ecosystem by developing tools that can be used by large financial services companies as well as professional traders.
Started by 34-year-old Mihir Malani in 2018, Nerve Solutions offers APIs and developer tools to help companies, startups and individuals effectively adopt technology in financial markets and accelerate product development.
Algo is the way forward
In tech-enabled platforms, algorithm trading has taken the financial market by storm. According to a study by the National Institute of Financial Management (NIFM), around 50 percent of total orders at both NSE and BSE are algorithm trades on the client side, and on the proprietary side, more than 40 percent of the total orders placed at both exchanges.
This has seen the emergence of many startups in the algo trading ecosystem like Kuants, Quantopian, Amibroker, Streak, etc. Yet, Mihir stresses that Nerve Solutions stands apart from the other startups as it not only provides technology capabilities for algorithmic trading and automation, but also provides complex risk management tools to monitor real-time risk and performance of stocks.
“With the contribution of algo trading to overall trading volumes increasing day by day, the need for sophisticated risk systems has been on the rise. Nerve Solutions has been able to solve this problem with the help of its proprietary risk management tools,” says Mihir.
The company offers various tools - n.Prime, a real-time risk management system, which provides risk managers a single dashboard to monitor and control enterprise-wide risk. Mihir claims that the tool is the only autonomous risk system in the market which performs risk-reducing corrective actions in real time with minimal to zero human intervention.
Among the other tools are n.Image, a low latency API for margin calculation, which allows computation of margin requirements for trading accounts as per exchange guidelines, n.Feed, an API to handle market data coupled with a big data solution to help users in back-testing and strategy development. The company also provides Plug n Play APIs to let users build their own options trading products for mobile and the web.
“These APIs allow companies to build and manage new offerings on top of their existing infrastructure, significantly reducing their go-to-market timelines at a fraction of the cost,” Mihir explains.
“The idea was to provide a level playing field to all those looking to adopt financial technology, and do not have the knowledge,” Mihir adds.
Techie who struck upon an idea
Interestingly, Mihir is among the earliest entrants in algorithmic trading in India. He entered the Indian fintech space 10 years ago when he set up the algo trading desk at Motilal Oswal Securities, India. Most recently, he was part of Edelweiss Broking, India as head of risk, where his expertise in algorithmic trading shone.
Mihir realised he could use his in-depth knowledge to fuel his own aspirations of becoming an entrepreneur, and solve the various industry gaps he had encountered.
Inspired and with a vision, he quit his corporate job in 2016 and started working on his startup idea.
Keeping abreast with the market by working with various market participants as a consultant on market technology, Nerve Solutions officially started in 2018 with the seed capital of Rs 25 lakh scooped out of Mihir’s own savings.
Today, bootstrapped with investments of Rs 60 lakh, Mihir wants to continue as a bootstrapped startup.
The business end of things
The startup's revenue comes from licensing of B2B, B2C and B2B2C financial technology products that are all developed by Nerve Solutions in-house.
“Most of our offerings fall under the B2B2C category with financial services companies as our main clients who use our solutions to offer smarter technology-enabled products to their end clients,” Mihir says.
“We also develop customised technology solutions for companies with peculiar problem statements,” he adds. Nerve Solutions converts one-line problem statements from its clients into complex fintech solutions today, he says proudly. Mihir holds an engineering degree in Information Technology from Thadomal Shahani Engineering College.
Profitable and ready to look further
The startup began acquiring clients immediately and revenue flowed in quickly. In a year, Nerve Solutions had more than 14 clients, mostly large financial services companies in the region.“Our current client base spreads across India and UAE,” he adds.
“We have been acquiring a new client every quarter and are seeing 100 percent client retention since inception,” he adds.
Nerve Solutions’ revenue has increased by 30 percent year-on-year, and Mihir expects the trend to continue over the next 24 months. The company turned profitable this year.
Funding and plans ahead
“We aim to substantially increase our client base before we consider raising funds, which would be done with the goal of expanding globally,” Mihir says.
Laser-focussed on building more tools, products, and doubling the client base over the next 12 to 18 months, he adds, “We want to expand to the Middle East and South-East Asia and consolidate our client base.”
The larger objective of enabling financial services companies of all sizes to focus on product development without building a domain specific in-house team is what Mihir is optimistic about.
(Edited by Suruchi Kapur Gomes)