Groww raises $251 million at $3 billion valuation, will look at adding government bonds and derivatives

Groww Founders (L to R) Neeraj Singh, Harsh Jain, Lalit Keshre and Ishan Bansal

Just six months after turning unicorn, mutual fund and stock investment platform Groww said on October 25 that it has raised $251 million in a Series E funding round, tripling its valuation to $3 billion amidst the unabated funding boom in Indian startups.

The round was led by US-based investment firm ICONIQ Growth and also saw participation by Alkeon, Lone Pine Capital, and Steadfast.

Groww’s existing investors Sequoia Capital, Ribbit Capital, YC Continuity, Tiger Global, and Propel Venture Partners were also participants in the round.

How the funds will be used

Groww plans to use this fundraise to extend its reach to under-penetrated geographies, strengthen its team, and scale tech infrastructure. The company also plans to continue making significant investments in spreading financial education and awareness.

“We will look at adding government bonds and other fixed-income products. We are also launching derivatives. Plus, there is a lot more to build for our mutual funds vertical itself,” the company’s co-founder and CEO Lalit Keshre said in an interview with Moneycontrol.

Founded in 2016 by four former Flipkart executives – Lalit Keshre, Harsh Jain, Neeraj Singh, and Ishan Bansal – Groww’s platform helps users invest in stocks, mutual funds, exchange-traded funds, IPOs, US stocks, futures and options, and gold.

Competitive landscape

Groww competes with players such as Zerodha, Uptox, Paytm Money and Angel Broking. New players like Dhan and Fisdom too are entering the stockbroking space with an aim to build a user base of one million in the next year.

However, despite the rising competition, Keshre is betting on the low penetration of Indian stock markets as a growth opportunity for all players. The company is also bullish on the mutual fund growth story in India and expects it to become a 100 million user market soon as penetration and awareness increase.

“It is not like a win-lose kind of a situation. If a new player enters, they are expanding the market. We are talking about six to seven names but India had 50 players earlier. Even in mutual funds, India had 40 funds already. I feel good about the future focus on customer markets like India, the long term is going to be very exciting,” he said.

In May this year, Groww had also announced the acquisition of the mutual fund arm of the Indiabulls Group for Rs 175 crore. The startup received the Competition Commission of India’s nod for the acquisition in September.

Investor perspective

Speaking on the investment, Yoonkee Sull, partner at ICONIQ Growth, said, “The financial services market in India is already large, growing rapidly, and ripe for disruption. During the last couple of years, Groww has demonstrated that they are ready to seize that opportunity through strong accelerating momentum predicated on strength of technology.”

“Driven by an exceptional product-oriented team, Groww is already amongst the leading investment platforms in India, showcasing strong unit economics and customer cohorts,” he added.

In its last Series D funding round in April, Groww had raised $83 million led by Tiger Global, and existing investors Sequoia India, Ribbit Capital, YC Continuity, and Propel Venture Partners. The startup currently has a user base of over 10 million users across its offerings.