With direct experience working at Citibank for over a year, NIT-Bhopal graduate Smriti Tomar recognized something she already knew – it takes a long time to innovate at large companies.
“There is a full-fledged protocol that they have to follow,” says Smriti.
Since her teenage years, she has always been intrigued by finance and invest areas. She also realized that most of her friends found investing to be a complicated process, as regularly monitoring portfolios and market movements, as well as managing investments, was a demanding process.
So, the 25-year-old decided to jump in to tackle this problem for people her age who might not be able to take the time in solving the lack of knowledge and time in space. of investment. Founded in 2021, based in Bengalurudevelops and builds products to enhance personal finance experiences.
“While we knew we had to start early, we didn’t know how to start and where to start,” said Smriti, founder and CEO of Stack Finance. Your story.
Besides Smriti, the founding team includes co-founder Tushar Vyas (also Chief Business Officer), as well as Vidit Varchney (Chief Operating Officer), and Yashwardhan Pauranik (Product manager).
What does StackFinance do?
The startup released an app that automates investing for everyday retail investors.
“It got us thinking about a solution or product that we’d like to use — something that takes care of all of our investment hassles, with minimal manual effort,” she says.
The app offers tailored investment strategies for its users–retail investors–with globally diversified portfolios, based on their risk appetite and objectives.
Explaining with an analogy, Smriti says that users get everything on the plate and they can choose the type of diet they want to have. Stack does it for investing.
The startup offers users automated investment strategies and portfolios based on their risk appetite, goals, and the amount of money they want to invest.
The team launched the app in December 2021, after operating it in closed beta mode throughout November 2021.
Since then, he has incorporated approx. 75,000 users.
“Most users got hooked up through word of mouth, as well as referral and reward programs,” says Smriti. Only around 25% of users signed up because of digital marketing, which has been passive.
Although users of all ages can use the app, it mainly targets millennials.
“We’re basically riding this wave of explosive retail investor participation right now in India, which is mainly driven by young millennials and Gen Z,” says Smriti, adding, “So we want to tap into that audience and take advantage of their loyalty. ”
Many current users of the startup happen to be first-time investors.
Stack has a sizable user base in Tier II and Tier III cities. This is another area the startup is looking to tap into.
With new investors and new markets to tap into, Smriti says user education is also crucial. According to a survey by the National Center for Financial Education, only 27% of Indians are financially literate.
“We believe that with better financial awareness and education efforts, we can improve that number as well,” she adds.
The user journey
The startup believes in direct communication with users. Upon registration, users receive a video from the founder to help them understand how the app works, which Smriti says helps them establish a connection.
The app also helps in setting goals and strategies. It offers several goals depending on the user’s needs, such as savings for vacation, education, home, retirement, etc.. It also allows users to create custom stacks.
The app also presents users with a series of questions, which help the startup detect its time horizon and personality, based on its revenue or risk appetite.
It also verifies details about their age, source of income, profession, etc. by partnering with two mutual fund companies.
With a defined target amount, Stack creates a portfolio of different asset classes – which could be equity, debt or gold. He plans to add and diversify into cryptocurrencies soon.
Users can decide how often they want to invest.
Once the onboarding process is complete, users can link their UPI or net bank accounts to the app to start investing.
The startup also continues to adjust the portfolio based on external developments, for example, market performance. It also encourages users, motivates them not to miss their regular investments and rewards them.
Stack also gives users a brief explanation about the logic behind the wallet for them and how it works.
“We don’t want to be an empty box,” says Smriti. “This awareness also helps us spread the word.”
“We don’t charge users any fees or anything else,” she notes, adding, “The ultimate goal is to focus on user acquisition and grow assets under management ( AUM) thanks to their investment.”.
Recently, Stack raised 4.5 million dollars in a funding round led by investors including Y Combinator, Harvard Management, Goodwater Capital, Soma Capital, Uncommon Capital and Earlsfield Capital.
The startup competes with Scripbox and INDmoney for its advisory and portfolio management services. It adds a layer of “robot advice” – automated investments based on the user’s finances – on platforms such as Zerodha, smallcase and Groww.
With a large young population in the country, India is a big market for Stack, the majority of whose users are young, first-time investors. According to Statista, the country has an average age of 28.4, which suits the fintech startup well.
According to the IBEF, the country’s financial literacy rate among its young and adult population has increased over the past two years, due to a variety of factors, including recent advances in technology and media coverage.
“Individual participation in the Indian stock market has increased significantly over the past two years as more and more new investors have moved away from traditional means of investment and entered the stock market in search of higher returns” , says IBEF.
Over time, the company plans to be a financial broker, creating its own funds and switching to AUM. After obtaining an asset management company (AMC) license, it plans to earn through management fees and an expense ratio based on these funds, which would be a replica of the funds it recommends to its users.