• surajit bhowmick

Groww Business Analysis (SWOT Analysis)

Contents: 1) Business Model 2) Future Plans 3) Valuation Analysis 4) Groww Funding Details

5) Revenue model and Revenue generate

6) Current Affairs

7) Technology at Groww

8) Conclusion

Groww Business Analysis (SWOT Analysis)

Business Model :

Lalit Keshre, Harsh Jain, Ishan Bansal, and Neeraj Singh quit their jobs at Flipkart to start a venture that could make investing easy. They called this venture Groww and started operations In 2017.

NextBillion Technology which runs the online investment platform Groww. Groww provides several services to retail investors including share broking, investment in gold, FDs, and mutual funds.

The most popular service used by investors on Groww is mutual fund distribution.

Groww added stocks in the early half of 2020 and the same year launched digital gold, ETFs, Intraday trading, IPOs in quick succession.

Today, more than 1.5 crore users across 900+ cities across India trust Groww for their investment needs.

Groww has strong comparative such as Zerodha, Paytm Money, Up stock, etc. has been scaling at a quick pace as they gain popularity amongst the new earning class of millennials.

Future Plans :

Groww will be launching deposits, US stocks, sovereign gold bonds, Futures and Options, and other derivative products in the months to come. Financial education content has been a critical focus for Groww from its inception.

In the next two years, the company plans to launch a slew of financial education initiatives aimed at millennials and expand the market for financial services.

Valuation Analysis :

The Bengaluru-based company is now valued at over $1 billion with fresh funding. The Groww is backed by world-class investors such as Sequoia Capital India, Y Combinator, Ribbit Capital, Kauffman Fellows, Kairos, and Propel Venture Partners. As per PitchBook, there is a total of 12 investors.

It is the second fintech firm to join the unicorn list after CRED and the fourth startup to become a unicorn member.

As of 1st May, 2021 more than 50% of the equity share capital of NextBillion (Groww) is held by BillionBrains Garage Ventures Private Limited (BillionBrains), and the remaining equity share capital will continue to be held by the Promoters. BillionBrains is a wholly-owned subsidiary of Groww Inc., a company based in Delaware, USA.

Groww Funding Details :

In April 2021, Groww raised $83m in the Series D round. Tiger Global Management led the fundraising with the participation of Groww’s existing investors – Sequoia Capital India, Ribbit Capital, YC Continuity, and Propel Venture Partners.

In September 2020, Groww raised $30m in Series C, led by YC Continuity. The round also saw participation from existing investors Sequoia India, Ribbit Capital, and Propel Ventures.

In September 2019, Groww raised $21.4m in Series B funding round from US-based VC firm Ribbit Capital. The round also saw participation from existing investors Sequoia India and Y Combinator.

In January 2019, Groww raised $6.2mn in a Series A funding round led by Sequoia India. American seed accelerator Y Combinator, Propel Venture Partners and Kauffman Fellows also participated in the investment round.

The company had earlier raised $1.2 million in Pre-Series A led by Insignia Venture Partners, America’s Lightbridge Partners, and Kairos fund.

Groww had raised seed funding from CureFit founders Mukesh Bansal and Ankit Nagori along with Y Combinator in January 2018.

Revenue model and Revenue generate :

The investment platform Groww has an activity customer base of 10 million-plus. Indeed, they get a commission from the funds they sell but that's also a very intricate process.

The first and foremost point to keep in mind for a fintech company like Groww is to build the customer base. To reach the right target audience, Groww uses technology which in turn reduces their operating cost. People generally don't switch between these kinds of apps; so once the right customer base is created, they are likely to go for a long haul without diverting.

The company has recorded a healthy surge in earnings which jumped 4.7X to a little over Rs 1 crore in FY20 from only Rs 20.14 lakhs in FY19.

Operating revenue had grown 3.25X to Rs 52.05 lakhs while it earned another Rs 48.24 lakhs from financial assets.

The most popular services used by investors on Groww is mutual fund distribution which made up 54% of the operating revenue

The company pumped money into its operations to accommodate for the increased scale and as a result, its total expenses shot up 20.3X to Rs 8.92 crore in FY20 from less than Rs 45 lakhs in FY19. Groww spent Rs 8.92 to earn a single rupee of operating revenue during the fiscal ended in March 2020.

With scale, the operational costs surged across the board and Groww’s annual losses jumped 34.4X to Rs 7.92 crore in FY20 from a loss of Rs 23 lakhs in FY19.

Current Affairs :

Indiabulls Housing Finance announced it will exit the mutual fund business to focus its management bandwidth and consolidate capital towards its core lending business.

To this end, the housing finance company said it will sell its entire stake in mutual fund subsidiary to Nextbillion Technology, a part of the Groww Group, for a sum of Rs 175 crore.

Under the deal, Groww will acquire Indiabulls Asset Management Company Limited (IAMCL) and its trustee, Indiabulls Trustee Company Limited (ITCL).

Technology at Groww :

Groww leverages technology at each user touchpoint to provide a hassle-free experience. Right from onboarding, KYC, to showing relevant funds to investing, the entire flow is automated and paperless, involving minimal manual intervention.

For instance, the account creation process on other platforms and banks may take several days, but Groww’s 100% paperless onboarding employs the use of ML and AI-based algorithms to verify personal details within seconds, making the process seamless and instant for users. This means that users aren’t being bogged down by a complicated and time-consuming manual process.

Conclusion :

Even after the loss-making company in FY20, the company has successfully raised funds in its series D. The Groww is backed by world-classes investors which shows that it has the potential to grow in the future.

Millions of young Indians have taken to stock trading during the pandemic, raising hopes that the appetite for equities in the world’s second-most-populated nation is finally growing. Active investor accounts rose by a record 10.4 million in 2020, according to the data from the country’s two main depositories. Retail ownership in more than 1,500 companies listed on the National Stock Exchange of India jumped to 9 percent in the third quarter of 2020, the highest since March 2018.

From the above data, we can say that Groww has a lot to go.

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