Growth at a loss is now the most valued investment platform, although some of its peers are making profits
- It plans to use the latest funding to expand its technological infrastructure and extend its reach to under-penetrated regions.
- Groww had reported a turnover of 1 crore in fiscal year 2020.
- It competes with for-profit companies Zerodha and AngelOne in this area.
The wealth management and investment platform Groww tripled its valuation to $ 3 billion, after its $ 251 million round of funding announced on Monday.
The Series E funding round was led by Iconiq Growth, with participation from new investors Alkeon, Lone Pine Capital and Steadfast. Sequoia Capital, Ribbit Capital, YC Continuity, Tiger Global and Propel Venture Partners also participated in the round. The development was first reported by mint.
Groww is the most valued venture capital (VC) funded investment platform in India after this fundraiser.
But what are these valuations based on?
Zerodha – which has the most users and offers – is not even in the race because it is a bootstrapped company. Over the past two years, Zerodha has granted herself a valuation of $ 1 billion in 2020 and $ 2 billion in 2021 in order to buy back employees’ shares and give them returns.
Nitin Kamath, co-founder and CEO of Zerodha, believes the valuations he gave himself could be conservative.
While there is nothing wrong with chasing valuations, but without being profitable, it is difficult to weather downturns in the economy. So this tax arbitrage could potentially create less resilient companies, which is not good for our economy in the long run 5/11
– Nithin Kamath (@ Nithin0dha) May 28, 2021
Groww’s valuation is also double that of publicly traded companies such as AngelOne (formerly Angel Broking), which has a market cap of 10,700 crore ($ 1.4 billion). AngelOne has 5 million registered customers, according to its website.
Groww is also the only startup among the three companies valued at over $ 1 billion. It is also the one with the the least income during fiscal year 2020.
The financial statement for fiscal year 2021 is not yet publicly available. Business Insider reached out to Groww for details on its financial performance in fiscal year 21. However, the company declined to comment.
Upstox’s subsidiary RKSV Securities is also a player in the field, although valued at less than $ 1 billion. The company had achieved profitability in fiscal 2019, but reported a loss of 37.99 crore in fiscal 20 after a two-year profitable period.
Upstox, backed by Rata Tata, has two subsidiaries RKSV Securities and RKSV Commodities, RKSV Securities being the larger one.
Groww seeks to extend its reach
“Groww is already one of the leading investment platforms in India, featuring a unity economy and strong client cohorts. We are excited to be part of its vision to be the premier financial platform for Indian consumers, ”said Yoonkee Sull, Partner at Iconiq Growth.
Groww plans to use this funding to expand its technology infrastructure and expand its reach to under-penetrated regions. It will also use the capital to create financial education and awareness of investment products.
The company – founded by four former Flipkart employees Lalit Keshre, Harsh Jain, Ishan Bansal and Neeraj Singh in 2016 – has already enabled its clients to invest in US stocks through its web platform.
The company claims to have over 2 million users on its platform, with nearly 70% of its users coming from Level II and III geographies.
|Society||Launch year||User base in 2021|
|To grow||2016||2 millions|
Source: media reports
Groww has raised nearly $ 393 million to date from reputable investors like Tiger Global, Y Combinator, Sequoia Capital India, Ribbit Capital and others. It was valued at $ 1 billion in April 2021.
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