Zerodha, an Indian investech unicorn, has announced a joint venture with investech platform smallcase to enter the mutual fund business through the launch of its asset management company (AMC). Zerodha received approval from the Securities and Exchange Board of India (SEBI) in September 2021 to start its asset management company. The collaboration will focus on building low-cost passive mutual fund products for India. The upcoming AMC will be a joint venture between Zerodha and smallcase and will use learnings and shared values from both companies to build an enduring fund house. The Indian fintech ecosystem is estimated to have a $2.1 Tn market opportunity by 2030, growing a CAGR of 18% between 2022 and 2030. Of this, the investech market is projected to reach $74 Bn in market size by 2030 from $9.2 Bn in 2022. Zerodha has been profitable since its inception in 2010 and has continued to grow its revenue and net profit over the years. In FY22, the company’s net profit surged by 87% YoY to INR 2,094 Cr, while its operating revenue grew by 82% to INR 4,963.7 Cr during the year. Vasanth Kamath, the co-founder and CEO of smallcase, said in a tweet that the principles of simplicity and transparency that have been successful in helping millions of demat account holders build a healthy long-term portfolio in the last six years could also be applied to mutual funds. He added that the upcoming AMC will be a joint venture between Zerodha and smallcase and will use the shared values and learnings from both companies to build an enduring fund house.
Smallcase was founded by Vasanth Kamath, Rohan Gupta, and Anugrah Shrivastava. The company is backed by Sequoia and has raised $40 million in a Series C funding round from investors such as Faering Capital, Amazon SMBhav Venture Fund (ASVF), and Premji Invest in 2021. smallcase enables retail investors to invest in portfolios of broker-partner stocks and exchange-traded funds (ETFs).