Investment startup smallcase has raised a $14 million in Series B round led by financial services firm DSP, Sequoia Capital India and existing investors Blume Ventures, Beenext and WEH Ventures.
New investors include Arkam Ventures, a new India-focused Rs 700 crore fund, Cred founder Kunal Shah and Utpal, the CEO of Rare Enterprises that is owned by renowned investor Rakesh Jhunjhunwala.
Founded in 2015 by Vasanth Kamath, Rohan Gupta and Anugrah Shrivastava, "smallcases" are model portfolios of stocks and exchange- traded funds (ETFs) that are created and managed by registered individuals and entities and accessible to retail investors.
The smallcase platform is integrated with India’s largest brokers, including Zerodha, HDFC Securities, Kotak Securities, 5Paisa and AxisDirect, to offer "smallcases" to their clients.
Smallcase CEO Vasanth Kamath estimates there are about 2 million users and about Rs 5,000 crore has been transacted in smallcases.
Earlier this year, smallcase launched its gateway offering, which helps any app to provide stock, ETF & smallcase transactions in a native, secure and compliant manner. Eleven apps and platforms, including Moneycontrol, SBI Mutual Fund, Nippon AMC, Kuvera, have integrated the smallcase gateway to power stock & ETF transactions.
While smallcase has, so far, operated by selling its platform and service to brokerages, making it a business-to-business firm, it also wants to reach out to consumers directly.
“Many consumer and retail investors still don’t know about us, so increasing awareness by reaching out directly is a focus, which is why we also launched our own app in April,” Kamath told Moneycontrol.
In the next few years, Kamath thinks direct transactions can grow to about 25 percent of its overall business, indicating brokerages and other wealth management platforms will still be a priority.
“The desire to shift savings from banks to capital markets is hindered by high costs and structural issues like undersupply of passive investment options. As an active investor in middle India themes, with insights into evolving fintech, we believe smallcase will usher in the shift to passive investing in India through its scalable technology and unique business mode,” Arkam Ventures managing director Rahul Chandra said. Disclosure: Moneycontrol has partnered with Smallcase Technologies to invest directly from its platform.