How this Zerodha-backed fintech startup is making it easy for retail investors to buy bonds, debentures

In 2016, Abhijit Roy was trying to transfer his father’s savings from a fixed deposit to debentures, a better yielding financial instrument, but he soon realised that the process was not easy. 

This hiccup was one of the reasons that led Abhijit and Samir Baran Pratihar to launch fintech platform GoldenPi. The Bengaluru-based startup enables retail investors to buy or sell bonds and debentures via an online marketplace.

Despite being high yield with better liquidity and safer when compared to fixed deposits, bonds and debentures have had few retail investors due to lack of information. Until recently, these instruments were seen as investment opportunities for high net worth individuals (HNIs) or corporate investors. 

Founders Abhijit and Samir, engineering graduates from IIT Kharagpur and Jadavpur University respectively, say they have always been keen watchers of the financial services industry even as they worked at various technology companies. 

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The changing economic landscape, falling interest rates, and the emergence of fintech created the perfect stage for the launch of their startup, the founders say. 

“We realised there was this huge group of fixed deposit owners that was extremely neglected. The idea was to make the asset class of bonds and debentures available to these retail investors,” Abhijit says.

The founders say GoldenPi’s tech stack is its USP. It helps issuers or holders of bonds and debentures to easily place offerings on the platform through a digital route. On the other hand, buyers get a simplified online channel to conduct transactions. An investor can start off with an amount as low as Rs 10,000 and there is no upper limit to the investment. 

“We have built a marketplace that is driven by pure technology to make the whole transaction seamless. We are also improving every single day,” Samir says.

The startup has so far raised $2 million in funding in a seed round, including capital from Rainmatter, the fund set up by online stock trading platform Zerodha.

In 2020, Zerodha introduced bonds via GoldenPi 2020 in beta mode. 

The beginning 

GoldenPi initially started with the idea of allowing investors to buy or sell bonds or debentures through the platform, but had to abandon this plan due to lack of adequate liquidity in the exchanges.

It then tinkered with the idea of bringing buyers and sellers of these financial instruments on a single platform, much like how ecommerce sites work.

In the beginning, the founders focused on educating retail investors about the benefits of bonds and debentures compared to, say, fixed deposits.

The biggest myth was that one needs a minimum of Rs 50 lakh to invest in bonds or debentures. 

“It was all about storytelling and revealing facts of how these were better than FD rates. We had to dispel a lot of misconceptions around this product,” Abhijit says.

Samir says, “We have completely simplified the process for the retail investor where it is seamlessly to conduct the transaction.”

GoldenPi is now a 50-member team.

Building the platform

By end of 2017, GoldenPi founders were able to persuade issuers of these instruments to list on their platform.

“They (issuers of these instruments) were very much willing to share their quotes and also break down the lots into smaller sizes,” Abhijit says.

GoldenPi says it only allows bonds and debentures that are AAA or AA-rated to be showcased on the platform.

To enable easier access to retail investors, the startup has created a tech stack that allows issuers to just plug into the platform digitally. It currently allows issuers, which have Rs 50 crore or more on their prop book, to automatically connect to its marketplace.

According to the startup, it does not undertake trading of these bonds or debentures and only facilitates the connection between the buyer and seller.

Models and traction

Today, GoldenPi has both, a B2B and a B2C model. Under the B2B model, it gets all participants in the ecosystem to be a part of its platform, including issuers and intermediaries (who buy on behalf of someone else) of these instruments. 

Under the B2C model, the startup directly reaches out to retail investors. 

GoldenPi claims to be witnessing growth in investors who fall in the 30-40 age group. “As these investors cross the age of 30 they look at fixed income instruments,” Abhijit says. 

The current volatility in the equity stock markets and the rise of initial public offerings (IPOs) in the market has also piqued investor interest. 

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The startup says it does not charge retail investors any fee but receives a commission from the issuer every time a transaction is conducted through its platform. It also gets paid every time an issuer uses its tech stack to place its products.

GoldenPi claims to have 2.5 lakh registered users as of now, with customers returning on the platform to make larger investments. 

Abhijit says, “We have seen a 4X growth in terms of volume of investment between FY21 and FY22.”

In the future, GoldenPi is looking to add more quality bond and debenture products on its platform along with inducting more players in this segment.

However, there is still a long way to go before these financial instruments achieve popularity among investors. 

“There is still a huge class of investors who still believe in FDs or LIC policies, and we need to create awareness among them that bonds can be a good alternative,” Abhijit says. 

On the competitive scenario, Abhijit believes that the presence of more players will only help in expanding this segment, given the nascent stage of this market.

The other direct competitors for GoldenPi are the likes of Bonds India, India Bonds, and financial marketplaces that offer these securities on their platform along with other products.

“Given how the equity markets are tumbling, retail investors are looking to park some of their money into fixed instruments and we would like to facilitate this transfer,” Abhijit says.