Smallcase is an Indian startup that has made a significant impact in the investment sector. Founded in 2015, the company has grown rapidly and become a key player in the Indian equity markets. Here’s a look at its foundation story and the vision behind it.
Smallcase was started with a clear vision to introduce a new generation of investors to the Indian equity markets using technology. The founders aimed to make investing simpler and more accessible. In the early days, the focus was on creating a platform that could cater to diverse investment strategies and ideas.
The company's early days were marked by a strong commitment to innovation and user experience. The founders worked closely to develop a platform that was both user-friendly and robust. This initial focus has been instrumental in the company's growth and success.
Smallcase launched its first products in 2016, which marked the beginning of its journey in the investment space. Since then, the company has continued to evolve and expand its offerings.
The founding team of Smallcase consists of three IIT Kharagpur graduates. This educational background brought a strong technical expertise to the table, which has been crucial in developing and scaling the platform. The founders' experience and knowledge have helped in shaping the company's direction and strategy.
Vasanth Kamath, one of the founders, has been instrumental in building and scaling the business. He has emphasized the importance of a flat organizational structure, where every team member is an owner of the product. This approach has motivated the team and contributed to the company's success.
The close collaboration with other industry leaders, such as Nithin Kamath from Zerodha, has also played a significant role in shaping Smallcase's framework and approach to business.
Smallcase has undergone significant evolution since its inception. From its initial concept to its current state, the company has expanded its product portfolio and achieved several key milestones.
Initially, Smallcase focused on creating a platform that could facilitate diversified investment strategies. Over time, the company has expanded its offerings to include various types of investment products. Today, Smallcase is known for its curated investment portfolios, known as 'smallcases,' which are designed to cater to different investment goals and risk appetites.
The company has also developed a strong user base, with many users being early adopters who have stayed with the platform. This loyalty is a testament to the company's commitment to delivering the best user experience and continuously innovating.
Smallcase has grown to manage significant transactions, with over ₹90,000+ Cr transacted through its platform. This growth is a result of the company's focus on user needs and its ability to adapt to market conditions.
One of the key milestones for Smallcase was the launch of its 'Growth & Income' smallcase in 2017. This product has performed well over the years, even during challenging market conditions like the Covid-19 crisis and the Russia-Ukraine crisis. During these periods, the Growth & Income smallcase showed resilience and outperformed the broader equity smallcap market.
In addition to this, Smallcase has been recognized among Windmill Capital’s top 10 smallcases invested in 2023. This recognition highlights the trust that investors have in the company's products and strategies.
The company has also achieved significant growth in terms of its team size, with over 350 team members currently working to further the company's mission.
Smallcase has expanded its product portfolio to include a variety of smallcases catering to different investment objectives. These smallcases are curated based on diverse ideas and strategies, ensuring that investors have a range of options to choose from. The company has also introduced templates and content bins based on search terms, making it easier for users to find relevant investment opportunities[2].
The product portfolio includes smallcases focused on growth, income, and other specific investment goals. Each smallcase is designed to provide a balanced and diversified investment experience, helping investors achieve their financial goals.
Smallcase has also collaborated with other financial experts and firms, such as Zacks Investment Research, to develop market-beating strategies. For example, the Growth & Income smallcase was inspired by Kevin Matras’ book on stock screening and technical chart patterns[3]).
Smallcase's technology infrastructure is a critical component of its success. The company has invested heavily in developing a robust and scalable platform.
The core platform architecture of Smallcase is designed to handle large volumes of data and transactions efficiently. The company has migrated its microsites to Next.js to improve scalability and performance. This migration has allowed for single deployments to manage all microsites, reducing the complexity and time required for updates[4]).
The platform uses AWS’s CDN and load balancers to ensure high availability and performance. The Next.js application runs in cluster mode, preventing downtime and allowing the application to scale across multiple CPUs[4]).
This architecture enables managers and the business team to update information and deploy changes without needing developer intervention, enhancing the overall efficiency of the platform[4]).
Security and compliance are top priorities for Smallcase. The company has implemented a robust security framework to protect user data and transactions. This includes secure data storage and transmission protocols, as well as regular audits to ensure compliance with regulatory requirements.
The platform's architecture is designed to maintain web vitals score, ensuring that API calls do not hamper the user experience. This focus on security and performance has built trust among users and contributed to the company's growth[4]).
Smallcase also ensures that all updates and deployments are done in a way that minimizes downtime and maintains the integrity of the platform. This is achieved through a well-planned deployment process that includes syncing assets to the respective S3 buckets and invalidating CloudFront CDN[4]).
Smallcase has been innovative in its approach to the investment industry. By leveraging technology, the company has made investing more accessible and user-friendly. The introduction of curated smallcases has simplified the investment process for many users.
The company's use of Next.js for its microsites is a testament to its commitment to innovation. This technology allows for faster and more efficient updates, enhancing the overall user experience[4]).
Smallcase has also been at the forefront of adapting to market changes and geopolitical uncertainties. The performance of its Growth & Income smallcase during challenging times is a reflection of the company's innovative strategies and resilient investment products[3]).
Smallcase has made a significant impact on the Indian investment market. Here’s how it has grown and expanded its influence.
Smallcase has seen remarkable growth in its user base. By 2023, the platform had crossed 10 million users, marking a 30% year-on-year growth[7]. This growth is a testament to the platform's appeal and the increasing interest in investment among Indians.
The user base expansion is driven by the platform's ease of use and the variety of investment options it offers. Users can invest in ready-made portfolios curated by SEBI-registered professionals, which simplifies the investment process for new investors. The platform's popularity is also boosted by its association with Tickertape, a data source for stock research and analysis that is widely used by investors.
The growth in user base has also led to an increase in the total amount invested or transacted on the platform. In 2023, the total amount crossed Rs 65,000 crore, up by 50% from the previous year. This indicates a strong trust in the platform among its users.
Despite being in a crowded market, Smallcase has managed to carve out its niche. The Indian investment scene is competitive, with players like SAMCO, Fyers, Stockal, Kristal.ai, ICICI Securities, and Aditya Birla Capital. However, Smallcase's unique offerings and strong branding have helped it stand out.
The platform's market share expansion is also driven by its innovative products. The introduction of the smallcase Gateway has enabled seamless transactions across multiple platforms, making it easier for users to manage their investments. This innovation has attracted more users and helped the platform gain a larger market share.
Smallcase's focus on developing intuitive products and simplifying the investment experience has resonated well with the younger generation. This demographic is increasingly interested in investing, and Smallcase's approach has made it a preferred choice for many millennials.
Smallcase is committed to making investing more accessible to a wider audience. The platform aims to simplify the investment process, making it easier for new investors to start investing. This focus on financial inclusion has helped in bringing more people into the investment ecosystem.
The platform offers low-cost and transparent investment products, which is a significant factor in attracting new investors. By providing curated portfolios and detailed research through Tickertape, Smallcase ensures that users have the necessary tools to make informed investment decisions.
Smallcase's joint venture with Zerodha to launch an asset management company further underscores its commitment to financial inclusion. This venture focuses on building low-cost passive mutual fund products, making investing more affordable and accessible to a broader audience.
Smallcase has experienced significant financial growth since its inception. Here’s a look at its revenue growth, path to profitability, and investment rounds.
Smallcase has reported impressive revenue growth. In FY24, the company achieved a 2.2X revenue growth to ₹75 crore, up from ₹30.6 crore in FY23. This growth is primarily driven by transaction fees from brokers, which accounted for 85.8% of the total operational revenues.
The revenue growth is also supported by other ancillary services such as research service fees and interest on deposits. In FY24, research service fees contributed ₹5.1 crore, while other ancillary services added ₹4.5 crore. Additionally, the company made ₹7.6 crore from interest on deposits and gain on investments.
Despite the growth, Smallcase has faced challenges in maintaining profitability. The company reduced its losses by 74.4% in FY24, but still reported significant losses due to fair value changes on buyback shares and equity adjustments.
Smallcase is working towards achieving profitability. The company has implemented strategic cost cuts, which have been effective in reducing losses. However, there are uncertainties in maintaining this growth and profitability in the coming fiscal year.
The cost of employee benefits is the most significant cost center for Smallcase. Despite this, the company has managed to reduce its total expenses and improve its revenue-to-cost ratio. This indicates a positive trend towards profitability, although it remains a challenge.
Smallcase plans to expand its product offerings to include mutual funds, fixed income instruments, and retirement products. This diversification is expected to help the company achieve a more stable financial position and move closer to profitability.
Smallcase has received significant funding from key investors. The company has been backed by funding totaling $8 million and has been incubated at Rainmatter by Zerodha. Other key investors include Sequoia Capital, Blume Ventures, HDFC Bank, Amazon, and DSP.
The funding has provided Smallcase with robust financial backing and support. This has been crucial in driving the company's growth and development of new products. The association with Rainmatter has particularly fueled its early-stage growth.
The company's valuation has not been publicly disclosed, but the continuous funding and growth indicate a promising future. Smallcase's focus on developing intuitive products and expanding its market share suggests that it is on a strong growth trajectory.
Smallcase has formed several strategic partnerships to enhance its offerings and reach. Here’s a look at its collaborations with banks, merchants, and technology firms.
Smallcase has a significant partnership with Zerodha, a major stock-trading firm. This partnership has led to the launch of an asset management company focused on building low-cost passive mutual fund products. This joint venture has helped Smallcase expand its product offerings and reach a broader audience.
The collaboration with Zerodha also includes the smallcase Gateway, which enables seamless transactions across multiple platforms. This innovation has been crucial in enhancing the user experience and attracting more users to the platform[6]).
Smallcase's association with Rainmatter, a Fintech startup accelerator by Zerodha, has also been instrumental in its growth. This incubation has provided Smallcase with the necessary resources and support to develop and launch new products[6]).
While specific details on merchant partnerships are limited, Smallcase's focus on providing a comprehensive investment ecosystem suggests collaborations with various financial service providers. These partnerships would help in offering a wider range of investment products and services to users.
For instance, the platform's ability to offer curated portfolios and detailed research indicates partnerships with financial advisors and research firms. These collaborations are essential in ensuring that users have access to high-quality investment advice and tools[6]).
Smallcase's expansion into mutual funds, fixed income instruments, and retirement products also hints at potential partnerships with financial institutions specializing in these areas. These partnerships would be crucial in providing users with a diversified investment portfolio[7]).
Smallcase has a strong technology alliance with Tickertape, which serves as a vital data source for stock research and analysis. This alliance has been instrumental in providing users with the necessary tools to make informed investment decisions[6]).
The platform's use of advanced technology to enable seamless transactions and provide intuitive investment products also indicates alliances with technology firms. These alliances help in maintaining the platform's competitive edge and enhancing the user experience[7]).
Smallcase's technology interface for brokers to trade in exchange-traded products is another example of its technological prowess. This interface is crucial in facilitating smooth transactions and ensuring that users have a seamless investment experience[8]).
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