Nithin Kamath’s Zerodha has made a Series-A investment in Deepak Shenoy’s Capitalmind Financial Services, the latter’s first external institutional funding.
The investment was made through Rainmatter, the fintech investment arm of Zerodha.
Capitalmind recently received a mutual fund license, and its Flexi Cap Fund saw the successful completion of Rs 45 crore New Fund Offer, more than half of which came through Zerodha’s Coin platform.
As it happens, Zerodha also has an Asset Management Company called Zerodha Fund House, which runs index funds and liquid funds.
Interestingly, Shenoy, CEO of Capitalmind, was earlier a member of the advisory board of Zerodha, and the Bengaluru-based founders have known each other for 15 years.
“We have been in discussion regarding the businesses for a long time and have known each other for years now. Rainmatter’s investment philosophy has been non-interfering and there is a lot of synergy with Zerodha. We have spoken with Zerodha Fund House as well,” Shenoy told Moneycontrol.
The undisclosed investment is below the 10 percent threshold as per the market regulator Securities and Exchange Commission norms with respect to a holding company running an Asset Management Company whilst investing in another one. Rainmatter will not have a board seat.
“My conversations with Deepak about finance and technology started back in 2009, and I have always been impressed by Capitalmind's data-driven, transparent approach. This is a financial investment to support them as they build out their asset management company. In line with SEBI regulations, our stake is capped at 10%, and we will not have a board seat, ensuring their independence," said Kamath, founder and CEO of Zerodha, the country’s largest brokerage house by revenue and profits.
Capitalmind is a SEBI-registered portfolio manager known for its quantitative investment strategies. This is Capitalmind's first institutional funding round and follows its recent launch of a mutual fund business.
“Having Rainmatter invest in our vision is a powerful validation of our journey from a financial blog to a full-stack asset management firm. This capital allows us to accelerate our mission of filling a crucial market gap,” Shenoy said.
He added that the professional fee-only advisory ecosystem hasn't scaled as the industry hoped, leaving investors to navigate a complex landscape. “We aim to bridge that gap through accessible, solution-oriented products," he added.
Both companies have an ethos of investor education, with Zerodha’s educational ecosystem - spanning the Varsity learning platform, the TradingQnA community forum, and the Zero1 YouTube network - and Capitalmind’s long-standing blog, podcast and research services being key to their growth and consumer trust, the companies said in a joint statement.
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