Although hundreds of millions of people in India have a bank account, only a small fraction of this population invests in any financial instrument.
Less than 30 million people invest in mutual funds or stocks, for example. In recent years, a handful of startups have made it easier for users, especially millennials. to invest, but the number has largely remained stagnant.
Now an Indian startup believes it has found the solution to tackle this challenge and is already experiencing good initial traction.
The startup’s eponymous Android app, from six months ago, lets users start their savings journey for as little as 1 Indian rupee.
Users in Jar You can invest in multiple ways and get started in seconds. The app works with Paytm (PhonePe support is in the works) to set up a recurring payment. (The startup is the first to use UPI 2.0’s recurring payment support.) They can set any amount between 1 Indian rupee and 500 for daily investments.
The Jar app can also collect users’ text messages and save a small amount based on each monetary transaction they make. So for example, if a user has spent Rs 31 on a transaction, the Jar app rounds it to the nearest 10th figure (Rs 40 in this case) and saves Rs 9. Users can also manually open the app and spend whatever amount they want to invest.
Once users have saved some money in Jar, the app invests it in digital gold.
The startup is using gold investments because people in the South Asian market already have immense confidence in this asset class.
India has a unique fascination for gold. From rural farmers to the urban working class, almost everyone keeps the yellow metal and flaunts their jewelry at weddings.
Indian households are estimated to have a stash of more than 25,000 tons of the precious metal whose value today is roughly half of the country’s nominal GDP. Such is the demand for gold in India that the South Asian nation is also one of the world’s largest importers of this precious metal.
“When you’re thinking about bringing the next 500 million people into institutional savings and investments, the onus is on us to educate them on the effectiveness of the other instruments that are on the market,” Nishchay said.
“We want to give them the instrument they trust the most, which is gold,” he said. The startup plans to eventually offer several more investment opportunities, he said.
The founders met several years ago when they were exploring whether MarsPlay and Bounce could have any synergies. They kept in touch and, last year, during one of their many conversations, they realized that neither of them knew much about investing.
“That’s when the dots started to connect,” Ashraf said, drawing stories from her childhood. “I come from a small town in Bihar called Bihar Sharif. During my childhood days, I saw my family deeply troubled by debt due to poor financial decisions and no savings, ”he said.
“We both understand what a typical middle class family goes through. Someone who comes from this background never had means in the past but their aspirations are endless. So when you start winning, you immediately start spending it all, ”Nishchay said.
“The market needs products to get them started,” he said.
That idea, which is similar to Acorn and Stash’s game in the US market, is starting to make its way. The app has already racked up about half a million downloads, the founders said. Investors have taken notice, too.
On Wednesday, Jar announced that he had raised $ 4.5 million from a group of high-profile investors, including Arkam Ventures, Tribe Capital, WEH Ventures, and angels such as Kunal Shah (founder of CRED), Shaan Puri (previously on Twitch), Ali Moiz. . (founder of Stonks), Howard Lindzon (Founder of Social Leverage), Vivekananda Hallekere (Co-Founder of Bounce), Alvin Tse (of Xiaomi) and Kunal Khattar (Managing Partner of AdvantEdge).
“More than 400 million Indians are about to adopt digital financial services for the first time in their lives. Jar has created an application that is ready to help you, with several intuitive ways, including gamification, to start your investment journey. We love the speed at which the team has been running and how fast they are growing each week, ”said Arjun Sethi, co-founder of Tribe Capital, in a statement.
Transactions and AUM on the Jar app are increasing 350% every month, Nishchay said. The startup plans to expand its product offering in the coming days, he said.