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Investors WealthTech in India as Affluent Class Grows

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Introduction Of India

In the evolving financial landscape of India, wealthtech startups are garnering significant investor interest. This surge is driven by a growing middle and affluent class eager to diversify investments, as well as the innovative solutions these startups offer, challenging traditional financial advisors for high-net-worth clients.

India

The Rise of Dezerv and Centricity

Premji Invest is in advanced discussions to lead a substantial funding round of $30 million to $40 million in Dezerv, an app tailored to offer comprehensive investment solutions to India’s wealthy. According to insiders, this funding round values Dezerv at approximately $170 million pre-money, a valuation that has more than doubled since its last funding round.

Simultaneously, Lightspeed Venture is also in advanced talks to spearhead an investment exceeding $20 million in Centricity, a digital wealth management platform. This follows Peak XV’s recent agreement to invest around $35 million in the wealth and asset management startup Neo.

Booming High-Net-Worth Segments

India’s high-net-worth (HNW) and ultra-high-net-worth (UHNW) segments are expanding rapidly. Wealth management firms are scaling up their relationship manager networks to capitalize on this burgeoning market. Currently, only 50-55% of India’s wealth management market is under professional management, highlighting significant growth potential. Traditionally, these services have been relationship-driven, necessitating a bespoke approach. However, investors believe startups can streamline these processes, offering more personalized, data-driven recommendations and catering to underserved segments of the market.

Success Stories: Scripbox and Jar

Accel-backed Scripbox is a notable success story. Over the past two years, Scripbox has turned profitable, is well-capitalized, and manages assets exceeding $2 billion. Atul Shinghal, the founder and CEO, attributes this turnaround to innovative strategies and robust financial backing.

Another startup making waves is Jar, backed by Tiger Global. Jar encourages customers to build a habit of saving, particularly targeting the $100 billion Indian gold market. Co-founder Nishchay AG reports that the average customer makes 22 investments per month, showcasing the app’s ability to foster consistent saving habits among users.

The Broader Indian Financial Landscape

India is witnessing a broader financialization of its economy, with substantial growth in sectors like insurance and mutual funds. The number of mutual fund accounts has tripled since 2015, with low-ticket-size systematic investment accounts seeing exponential growth in the past three years.

Despite this growth, India’s ratio of mutual fund AUM-to-GDP stands at 15%, significantly lower than the global average of 75%. This indicates immense potential for future expansion. Macquarie projects the mutual fund industry could sustain a growth rate of 20% for the foreseeable future. Similarly, UBS estimates a 22-25% compound annual growth rate (CAGR) in active AUM over the FY24-27 period for leading players in the wealth management sector.

Future Prospects

The affluent population in India is on the cusp of explosive growth. UBS forecasts that the number of individuals with annual incomes exceeding $10,000 will more than double in the next five years. This demographic shift provides a strong tailwind for financial services platforms targeting these emerging affluent segments.

Conclusion

Investors are increasingly betting on Indian wealthtech startups, recognizing the vast potential in a market characterized by rapid economic growth and a burgeoning middle and affluent class. As these startups continue to innovate and capture market share, they are poised to significantly reshape the wealth management landscape in India, offering sophisticated, data-driven solutions that cater to the evolving needs of high-net-worth and ultra-high-net-worth individuals.

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