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Is Indian investing app Groww worth its $1bn valuation?

India-based fintech startup, Groww, reached a valuation north of $1bn last week, after its latest round of funding raised $83m.

The online investment platform enables users to open an account electronically to invest in stocks, mutual funds, exchange-traded funds (ETFs), gold and initial public offerings (IPOs). The firm’s focus is attracting millennials – over 200 million people in India make digital transactions, but fewer than 15% of those invest in mutual funds and stocks, reports TechCrunch’s Manish Singh.

Fintech is the theme of the moment, after rising to the top of our investment theme performance screener last week (ending 9 April) with a 4.03% gain. Represented by the Global X FinTech ETF [FINX], its 39 holdings include Square [SQ] at 9.48%, Afterpay [APT] at 6.58%, and PayPal [PYPL] at 5.94%.

$83million

Amount Groww raised in latest funding round

  

What is Groww?

Headquartered in Bangalore, Groww was co-founded in 2016 by CEO Lalit Keshre, along with Harsh Jain, Neeraj Singh and Ishan Bansal. The quartet are all former executives of Indian e-commerce company, Flipkart. Groww, which is still privately owned, has seen incredible growth over recent months, having been valued at just $250m after the previous funding round in September last year.

The startup has gained over 15 million registered users, two-thirds of whom are first-time investors, reports TechCrunch. Groww says it has added almost 7 million registered users in the last six months alone, and has 4 million active monthly users.

The app offers every fund currently available in India, according to TechCrunch. Its stockbroking business, Groww Stocks, was launched last year, with 2 million trading accounts already opened, reports Mint’s Tarush Bhalla.

15million

Number of Groww's registered users

  

Groww hits unicorn status

Groww’s latest “Series D” financing round, last Wednesday, propelled the startup to unicorn status, in what is the world’s second-largest internet market, reports TechCrunch. Notable current unicorns (private firms worth at least $1bn) include Ant Group, Robinhood and SpaceX. The $83m Groww raised last week takes the total accumulated through four rounds of funding to $142m.

Groww is already the eighth Indian startup to earn unicorn status this year, according to TechCrunch, and incredibly, the fourth inside a week, joining social commerce company Meesho, fintech firm CRED and e-pharmacy company PharmEasy.

The valuation of India’s fintech sector is predicted to triple to between $150bn and $160bn by 2026, according to a recent study by Boston Consulting Group and the Federation of Indian Chambers of Commerce & Industry, reports Mint. The study found that, of 2,100 fintech startups across the country, almost 70% were set up within the last five years.

 

What’s next for Groww?

Groww now has “the fuel for longer-term thinking and faster growth,” says Keshre, and said the firm will use the funds to expand its product range, recruit engineers and invest in education initiatives targeted at first-time investors. It has already conducted investment workshops in several small cities.

Over 60% of Groww users are from smaller Indian cities and towns, and 60% of those users have never made these types of investments before, according to Keshre, reports TechCrunch. The coronavirus pandemic has accelerated the startup’s growth, with many people having more time to explore the investment world. “Only around 25 million people in India are investing in stocks or mutual funds. We will continue working to change this,'' says Keshre..

“Only around 25 million people in India are investing in stocks or mutual funds. We will continue working to change this” - CEO Lalit Keshre

 

The fintech firm’s CEO adds: “We started Groww almost five years ago to make investing accessible and transparent to everyone in India. We have made good progress, but it feels [like] we have just got started.”

The untapped potential in fintech across India is tangible, and Groww looks well set to take advantage.

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