Companies

Amazon invested in Smallcase after four years of tracking the fintech start-up

Yatti Soni Bengaluru | Updated on September 01, 2021

Amazon sees Smallcase as a new differentiated way for Indian consumers to invest in the equity markets, says the fintech co’s CEO Vasanth Kamath

Amazon’s investment team has been in touch with Smallcase, since the very first year of its operation before participating in the company’s $40 million Series C round through Amazon SMBhav Venture Fund.

“We met Amazon's investment for the first time in 2017 through one of our early investors and we have been in touch for the past four years. It was pretty early days at Smallcase and we were still building our business model, our platform at that point of time,” founder and CEO, Vasanth Kamath told BusinessLine.

Talking about Amazon’s interest in the company, Kamath added that over the past few quarters, smallcase has been growing rapidly and Amazon has also started looking at financial services more deeply. “Even though our journey has been there for the last five years. Three years back at this time, we were working with just one broker and one smallcase creator, but over the last three years we've gone from one broker to 12 brokers, and from covering 5% of the demat accounts to 95% of demat accounts. So we have grown 8x on all metrics since January 2020,” he added.

Also read: Amazon invests in fintech start-up smallcase

Smallcase is a technology company aimed at streamlining the stock investing experience for both investors and brokers. “Portfolio investing is a very broken process and this is what we have simplified with smallcase,” said Kamath.

Simplifying portfolio investment

It usually takes about 30 minutes to an hour for an investor to place orders for a basket of 10 stocks or so. And once they have placed these orders, they will have to track them individually and not as a portfolio. Tomorrow, if they have to remove two stocks, it will again take them the same number of clicks, and time. This is what smallcase is trying to simplify.

There are about 130 different fund managers, and research analysts who can create their own smallcases on the platform depending on the demands or interests of their clients. Some of the examples of smallcases include all weather investing, low investment amount, top 100 stocks and many more. These fund managers and research analysts are not part of smallcase and are instead using the app to help their investors. smallcase has a 200 members team and a majority of them are into product and engineering.“We have created a new format of productionising research and advisory in stock, smallcase. It is essentially a portfolio of sorts but we call it smallcases. So research providers can create smallcases, brokers can offer smallcases, and offline agents can take small cases to their clients,” said Kamath.

In the past few months, the company has seen the average age of its user base go down to 28-29 in March 2021 as compared to the 31-32years average age, three to four years back. Which shows that more and more young people in the 20-25years age range are joining the platform. Further, about 50% of the company’s user base today comes from beyond the top 15 cities.

Till now, the company claims to have done deep custom integrations with 12 brokerages, the publisher platform is being used by over 125 established and emerging investment managers and the Gateway API being leveraged by more than 50 digital wealth and distribution platforms. The recently raised capital will be used by the company to continue launching more investment products for the retail investor, to create additional value for Smallcase’s partners and enhancing the platform and its capabilities.

In terms of strategic partnership with Amazon, Kamath added, “we are still working through a lot of details and very early to say what the partnership would be like. But right now it is a financial investment from their side, they see Smallcase as a new differentiated way for Indian consumers to invest in the equity markets.”

Published on September 01, 2021

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