It happens with most people. They know they want to invest but don’t know where to start. How will they understand the way mutual funds or the stock markets work? Of course, research helps, but for many young Indians starting out on their employment journey, the thousands of options end up confusing them about investing, if not deterring them.
While investing is easier than ever in India today, thanks to the host of fintech and banking apps that allow for easy onboarding and investment management, what’s needed is a push to take the first step.
The Jar app, a pandemic baby founded in 2021, is built on the idea of helping Indians to make investing a habit. Founders AG Nishchay and Misbah Ashraf saw the need for more investment literacy in their own lives and in the people around them. They wanted to start the process with an asset class that Indians understand the best – gold.
The startup bagged $32 million in a Series A funding about a year after its inception, led by US investment firm Tiger Global. Here’s how the app works and how the founders plan to build on this momentum.
How is the app different?
Usually, people invest a lump sum amount in the avenue of choice or through systematic investment plans and the journey begins with looking for the right product. However, the Jar app rounds off an individual’s daily spending to help people to start investing in small amounts.
For example, if a cab ride costs Rs 232, the app rounds it off to the nearest 10, in this case Rs 240. The additional Rs 8 debited from a customer’s account is invested in gold. The app picks transaction data from the customer's SMSes and makes the investment at the end of each day. Customers can pause these investments as and when they want to.
These investments are backed by physical gold of the same amount and investors can withdraw that much gold or liquidate their investments at any time. The company has tied up with Safegold for such investments.
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Nishchay compared the habit of investing to beginning an exercise routine.
“To build a habit, you need to first get in discipline. Like if you want to start going to the gym, you have to first get into the habit of consistently showing up for a few days. Once that habit is built, half the battle is won,” Nishchay said.
However, if the gym starts with complex cardio exercises, the person is unlikely to return. The right way is to start with something simple in preparation for more strenuous exercises, which is why the founders started with gold.
“Gold is something that Indians really understand. The value of gold also has cultural significance and appeals to all societies regardless of their language or geographical barriers,” Nishchay said.
The story behind the app
In its next steps, too, the startup wants to focus on known investment avenues such as fixed deposits and recurring deposits. Later, it plans to offer loans as well as investing in mutual funds and the stock markets. This strategy stems from the founders’ experiences with savings and investments.
“I hail from a middle-class family from a tier-II city. We never had easy access to money and I started earning much earlier in life to support my family financially,” Nishchay explained. However, Nishchay himself did not start saving for a very long time.
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Ashraf has his roots in Bihar Sharif and dropped out of his studies to start Marsplay, which has now been acquired. Both of them got together to solve the problem of helping Indians start their savings journey.
“We were deeply convinced that this product will work. We wanted to make sure that building the habit is fun, relatable and non-pretentious,” Ashraf said.
The economics
The investor interest through the recent $32 million Series A funding round was led mainly by the immense potential to bring more people towards formal credit and investment. India has about 650 million internet users but only 250 to 300 million of them transact online.
In the past year, fintech companies have been at the forefront of immense global investor interest in India, led by the changes brought in by the pandemic, with more people choosing online modes to bank, borrow and invest. Despite the spike in investment options, Nishchay sees a gap in the market.
“There are no products in the market that cater to the majority of the population. The average mutual fund investment size in India is still small. So anyone with a low-paying job too can save Rs 1,500 per month. But there are no products or education avenues for them and for the younger population,” he said.
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With only one product offering currently, Jar earns a 2 percent commission from Safegold for every investment a user makes. As the platform introduces more products, the revenue profile will change.
Currently, the 4.7 million users on the platform invest an average of $400 (Rs 29,000) a year. The startup expects to onboard 100 million users by the end of 2025.
The startup’s Series A round included investors such as Rocketship.vc, Third Prime, Stonks, Force Ventures and existing investors including Arkam Ventures and WEH Ventures.
Angel investors, including Klarna founder Victor Jacobsson, Suleman Ali of Ali Capital, Shamir Karkal, founder of Sila Money, Byron Ling of Cannan Partners, Joel John of Ledger Prime and Italic founder Jeremy Cai also participated.
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