The Indian middle-class, which has traditionally seen savings as a key metric for its financial health, is now slowly looking at investments as a viable route to financial security and well-being. Several industry experts have noted that this changing attitude starts with investment in mutual funds (MFs) as it is a relatively safe investment option with small amounts of investments possible.
This behavioural change has prompted several fintech startups to build businesses around the growing interest in mutual funds. While there are many fintech startups offering online investment options in mutual funds, stocks, bank and company fixed deposits, and advisory services around it, Sqrrl does it with a twist.
Offering goal-based investments and customised portfolios, Sqrrl helps individuals make money on the tiny savings, akin to the squirrel saving food for the winter months.
Sqrrl offers a feature where, as Samant Sikka, co-founder of Sqrrl, explains, “Every time an individual spends money, the amount is rounded up to the next `100 and the difference is invested. If someone takes an Uber to work and the bill is `190, `10 is saved. If she goes for a coffee and the bill is `282, `18 is saved.” The rounded-up money is invested in liquid funds as per the user’s choice. The money can also be withdrawn anytime by the user.
Sqrrl has 3,40,000 users in India from across more than 600 cities and towns. It implements a freemium business model where parts of the platform are free-to-use while value-added services require a payment. The company also plans to sell insurance and other investment products like deposits.
Sqrrl had raised $1 million in pre-series A round of funding from Equanimity Venture Fund in January 2018. Sikka said that the company is in talks with two investors for its next round of funding. According to Sikka, most startups focus much more on customer acquisition rather than customer experience but his approach will give equal importance on customer experience. It offers a user-friendly format that removes the confusion of first-time investors with its inituitive layout.
Several fintech executives have said that the lack of financial education in India is probably the biggest hindrance to the industry. Sikka agrees and says Sqrrl is available in the vernacular form in order to communicate and connect with users better.
However, Sqrrl operates in a space which is seeing increasing investment and hence competition. Sqrrl’s rounding-off feature rivals Zerodha-backed Balance’s feature called ‘Roundups’ which collects a customer’s savings with loose change from transactions and invests them. Apart from that, Wealth management platform, Kuvera, which is one of Sqrrl’s direct competitors, raised $4.5 million in its Series A In April.
Again, Zerodha’s Coin, PayTM Money and Scripbox are among the many fintech startups that also offer investments in mutual funds.