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Y Combinator’s Investment arm leads $30 Mn Round in Groww

Online investment startup Groww has nabbed $30 Mn in its latest funding raising round, the Bengaluru based company announced on Thursday. New investor Continuity Fund, the investment fund operated by famous startup accelerator program Y Combinator, led the latest financing round. Existing investors Ribbit Capital, Sequoia Capital and Propel Venture Partners also reportedly participated in the round.

Before raising the latest funding round, Groww increased its authorized share capital from 5 crores to nearly 7 crores. Notably, before the advent of the latest round, Ribbit Capital had pumped nearly 50 crores in the company in June, the ROC filing showed. Ribbit Capital was allotted 2, 50,000 CCCPS shares at a nominal rate of Rs 100 each per security and Rs 1896 premium per security. However, it appears that this tranche was a part of $21 Mn round that was led by Ribbit Capital in September last year.

Groww had made a loss of approximately 23 lakhs in the last financial year, FY19. The company made revenue of nearly 16 lakhs, a drop from nearly 23 Lakhs it earned in FY18. However, a fall in revenue was accompanied by a substantial reduction in its expenses, bringing its total expenses to nearly 43 lakhs in FY19 from almost 1 crore in FY18.

The substantial reduction in the company’s expenses is an indication that its unit economics is improving.

Groww has attracted the latest round when the competition in the online investment space has intensified in the wake of Paytm Money’s entry into the stockbroking space. The company also faces substantial competition from Zerodha, which is the undisputed leader in this space. According to NSE data, Zerodha has nearly 19 lakh active traders on its platform. It is also one of the few profitable Fintech startups in the country, clocking revenue of almost 1,000 crore in the last financial year.

Experts claim that online investment platforms like Groww and Zerodha are mainly targeting millennial investors who are tech savvy. Experts add that since the traditional brick and mortar stock broking firms do not cover these millennial investors, online investment platforms are sensing a new market opportunity for them.

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