In late 2016, months after entrepreneur Satyen Kothari sold his digital payments business, Citrus Payments, to its bigger rival, Naspers-owned PayU, for USD 130 million—suddenly catapulting him into the exclusive club of “ultra-rich” individuals—he started getting calls from wealth managers suggesting ways to invest his money.
Most of the investment pitches he received were limited to mutual funds, gold, and insurance-related portfolios, with the exception of a few wealth managers who wanted him to invest in lucrative stocks.
Kothari says it was these wealth managers and their limited investment suggestions that made him realize there was a market for an automated technology platform capable of providing better and diverse investment opportunities to professionals looking to increase their net worth.
In 2017, when he was still on the board of Citrus Payments, Kothari decided to set up his new venture, named Cube Wealth, a tech-driven wealth management firm that would partner with multiple investment funds to create a bouquet of money-making portfolios.
“We Indians, in general, have very little awareness about how and where to invest. This is why we leave our money either in banks as fixed deposits, recurring deposits, or at the most, we buy gold and real estate,” Kothari, founder and CEO of Cube Wealth, told KrASIA.
Mid-income professionals who seek new investment options often receive bad advice from mutual fund platforms or bank representatives, or are even cheated, Kothari said.
“Let’s say you have a big wedding in the family, or you want to pursue an MBA course in the next two years. Putting your money in mutual funds is not right for you, as these are long-term investments and you will lose money,” Kothari explained.
For such requirements, he insisted that Cube Wealth has better products than what any other bank will offer. The company, Kothari said, consciously goes beyond the current flavor of putting all of one’s money in mutual funds.
“We are saying that mutual funds should be just one aspect of your investment. There are multiple elements of assets where you can invest depending on the time frame, risk involvement, among other factors.”
A three-pronged approach
Kothari remembers that when he started Cube Wealth, he decided to hinge the company on three basic features—simplicity, variety, and personal guidance.
“Most people get scared when they go to the Money Control [financial portal] website and look at those daunting numbers and charts. We have tried to make our product like any travel ticket booking website or app. You tell us two to three things about your desired investment, and we give you relevant products,” he said.
Once a user commits to an investment, the company sends a weekly portfolio summary, which, Kothari said, is simple to read. “It mentions the total value of the investment and the profit/loss percentage amount. This is all you should care about.”
The company currently curates 17 investment options for its users, who can start investing with as little as INR 15,000 (USD 200) to as high as a few crores (one crore is 10 million rupees, or about USD 150,000).
The investment portfolio on Cube Wealth’s mobile app includes mutual funds, stocks, equity, and peer-to-peer (P2P) investments, among others. Recently, the company has also made stocks listed in the US and other countries, such as Apple, Microsoft, Starbucks, and a few others, available for Indian investors who can put a maximum of USD 250,000 into non-Indian stocks every year.
Although Kothari maintains he didn’t get any good investment advice, he said that he can’t stress enough on the importance of finding a good fund manager who can “take you on the path of incredible money-making.” The company has partnered with local fund managers and wealth coaches who offer tailored investment plans to match specific requirements and provide guidance regarding personal finance.
“It’s not that good advice is not available, but typically it’s available only to super-rich people. We looked at this and asked ourselves, ‘How can we combine all of this and make it available to middle-class, busy professionals?’” he said.
Revenue model
The company raised USD 2 million in October last year in its Series A round from a handful of investors, including Singapore-headquartered venture fund Beenext, Japan-based Asuka Holding, and the US-based 500 Startups.
Kothari said he is pleased with his company’s growth pace during the year, but added that probably by next year, when the company will consider expanding more aggressively, it will look to raise a new round of funding.
Currently, the firm has not rolled out a fully functional revenue model as all the services for users are free, and even the personal fund manager advice service is issued without charge.
The company currently earns commissions from funds when an investor commits to a long-term plan of around ten years. “Since we have just started, we are focusing on creating the habit among users to invest, and we teach them how and where to put their hard-earned money to build a rounded portfolio,” he said.
The only competition and challenge, Kothari said, is the existing consumer habit of investing in gold and land. Kothari added that he’s happy that other digital platforms are also working on creating new investment habits by marketing and advertising different options, and that people are now able to invest their savings online through apps.
On the flip side, he believes that Cube Wealth is different from the likes of competitors Paytm Money and ET Money, since these two companies mainly focus on mutual funds and mostly cater to first-time investors.
“Someone who has never invested will put in INR 5,000 (USD 70) in one of the mutual funds on Paytm Money. But once someone has a decent portfolio, and realizes it’s not being managed well, he will come to us. We are aiming at professionals from mid to senior management level,” Kothari said.
This article is part of KrASIA’s “Startup Stories” series, where the writers of KrASIA speak with founders of tech companies in South and Southeast Asia.
