Kalaari Capital backs online brokerage RKSV with Rs 27 crore

MUMBAI/BENGALURU: Kalaari Capital, early backer of e-tailers like Snapdeal and Myntra, is leading Rs 27 crore or $4 million round in online brokerage and trading company RKSV Securities as financial technology is expected to emerge as one of the hottest investment themes in 2016. The round also participation from GVK Davix Technologies and other investors.

The deal will be the first investment in online discount brokerage space, which has several other startups like Zerodha also come up. Traditional brokerages like India Infoline, Sharekhan and Edelweiss have also come up with mobile applications to help customers transition from offline to online trading.
But venture capital investors feel that players RKSV can still corner a sizable share in this market.

"The market is at the cusp of where regulation will change through online know your customer (e-KYC), after which customer acquisition can become economical," said Rutvik Doshi, director at Inventus Capital which has backed online financial services players like Policybazaar and FundsIndia.

Mumbai-based RKSV, which is clocking in a daily traded turnover of over Rs 6000 crore across the NSE, BSE and MCX.

"By the end of the year, we see ourselves doing an average of Rs 10,000 crore of daily traded turnover. This should make up around 2-3% of the exchange turnover," said Raghu Kumar, co-founder of RKSV Securities.

On the cards is aggressive rollout of its Upstox mobile application. Capital will be used for product up gradation besides recruiting top level engineers and designers to scale the app, which is currently in beta. Kumar estimates that over 5,000 users will be active on the app within 3 months.

The brokerage was founded in 2012 the US-bred trio — Raghu, brother Ravi and their friend Shrinivas Viswanath. While Raghu is a University of Illinois graduate in actuarial science and finance, both Ravi and Shrinivas have educational background in computer science.

RKSV has attracted customers through its zero commission pricing model, with a flat charge of Rs 20 per order traded, claims to have broken even a few months ago but refuses to divulge any further details including revenue figures.

With over 50,000 active users, in the past 6 to 12 months, the firm has seen a greater level of participation on the equity segments, in comparison to other securities. "Due to the shift to the pay-per-trade model with free equity trades for investors, we are generating most revenue from non equity trades," adds Kumar.

Kalaari has backed several other startups in financial technology space like Bestdealfinance.com, an online marketplace that provides loan fulfillment services for individuals and SME’s and Instamojo, which allows users to buy and sell their digital goods.

"We believe consumer participation in the India equity markets will expand significantly over the next decade. India’s youth population is likely to see equity markets as a viable alternative to fixed deposits, gold and real estate," said Vani Kola, MD at Kalaari Capital who has joined the board of the company.

Vani Kola, MD at Kalaari Capital who has joined the board of the company, along with Bala Srinivasa.