Even though hundreds of millions of people in India have a bank account, only a tiny fraction of this population invests in a 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 to invest, especially millennials, but the number has remained largely stagnant.
Today, an Indian startup believes it has found the solution to this challenge – and is already seeing good traction at the start.
Nishchay AG, former director of mobility startup Bounce, and Misbah Ashraf, co-founder of MarsPlay (sold to Foxy), founded Jar earlier this year.
The startup’s six-month-old eponymous Android app lets users start their savings journey for as little as 1 Indian rupee.
Jar users can invest in a number of ways and get started in seconds. The app works with Paytm (PhonePe support is ongoing) 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.
Jar app can also glean users’ text messages and save a small amount based on each monetary transaction they make. So, for example, if a user spent 31 rupees on a transaction, the Jar app rounds that to the nearest tenth (40, in this case) and saves nine rupees. Users can also manually open the app and spend whatever amount they want to invest.
After users save money in Jar, the app invests it in digital gold.
The startup uses gold investments because people in the South Asian market already have immense confidence in this asset class.
India has a unique fascination with gold. From rural farmers to the urban working class, almost everyone hides the yellow metal and sports jewelry at weddings.
It is estimated that Indian households have a reserve of more than 25,000 tons of precious metal, the value of which today represents about half of the nominal GDP of the country. The demand for gold in India is such that the South Asian nation is also one of the world’s largest importers of this precious metal.
Jar’s Android app (Image credits: Pot)
“When you plan to bring the next 500 million people into institutional savings and investments, it behooves 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 offer several other investment opportunities over time, he said.
The founders met several years ago as they discussed whether MarsPlay and Bounce could have synergies. They kept in touch, and last year, in one of their many conversations, they realized that neither of them knew much about investing.
“This is when the dots started to connect,” Ashraf said, drawing stories from his childhood. “I come from a small town in Bihar called Bihar Sharif. During my childhood, I saw my family deeply in debt due to bad financial decisions and lack of savings, ”he said.
“We both understand what a typical middle-class family goes through. Someone who comes from this background has never had the means in the past but their aspirations are endless. So when you start making money, you immediately start spending it all, ”Nishchay said.
“The market needs products that will help them get started,” he said.
This idea, which is similar to Acorn and Stash’s game in the US market, is starting to gain traction. The app has already racked up around half a million downloads, the founders said. Investors have also taken note.
On Wednesday, Jar announced that it had raised $ 4.5 million from a group of leading investors including Arkam Ventures, Tribe Capital, WEH Ventures and angels including Kunal Shah (founder of CRED), Shaan Puri (formerly at Twitch), Ali Moiz. (founder of Stonks), Howard Lindzon (founder of Social Leverage), Vivekananda Hallekere (co-founder of Bounce), Alvin Tse (from Xiaomi) and Kunal Khattar (managing partner at AdvantEdge).
“More than 400 million Indians are on the verge of adopting digital financial services for the first time in their lives. Jar has created an app that’s ready to help them – with several intuitive means, including gamification – start their investment journey. We love how fast the team has performed and how fast they are growing every week, ”said Arjun Sethi, co-founder of Tribe Capital, in a statement.
Transactions and assets under management on the Jar app are growing by 350% every month, Nishchay said. The startup plans to expand its product offering in the coming days, he said.
