Why not raise money as Zerodha?
Nithin Kamath
Founder & CEO at Zerodha & Rainmatter. Learning at Rainmatter foundation. Views are personal. Nothing here is advice.
Right now, is probably the stupidest time for fintech firms like @zerodhaonline to be raising money. It is quite crazy the number of folks reaching out & the different deals. We might regret it in the future, but we are not raising & here are the counterintuitive reasons why.
We don’t need the money, so there’s no point in raising money just because someone is ready to give it to you. We are profitable, have zero debt. And we don’t spend on marketing and advertising which is probably the single biggest reason for folks raising money.
We don't want to grow just for sake of growth with random businesses. We want to build things around our core competency, do it well. We are partnering with great founders for any adjacent opportunities through @Rainmatter and fostering innovation in a highly regulated market.
Our business performance is directly linked to the fortunes of the stock market. The hotness of our industry can disappear overnight with a 20% fall in the markets. Even the best ads in the world can’t get people to invest in a bear market. As a founder, it is hard to take on the investor obligation to continuously keep growing in an industry like ours.
Building a business requires a moat. Be it a better product, deeper pockets (investors), or the ability to stay customer focussed at all times. In an industry like ours, what is right for the investors (VCs) is hardly ever right for the customer (more trades, loans, etc).
Our bet is that in a fight of deep pockets, the ability to do what is right for the customer will be our edge. For eg, the focus now is to help traders be profitable using Nudge. Each nudge reduces our trading volume or revenue but is the right product for the customer.
But yeah, all of these theses may be wrong. But the freedom of not being obligated to an investor is much more valuable than the biggest cheque. And having the option to say all of this is probably a moat in itself. ??
Research Team, WR
1 年Nithin Kamath Amazing write-up, loved it - when you say-"We don't want to grow just for sake of growth with random businesses". Majority of folks (including us) are chasing growth for the sake of growth. I guess brutal investors, urge to prove oneself and may be somewhat lack of courage resulting in that scenario...but cannot blame because that's the way market functions.
Senior Executive at Mankind Pharma Limited
1 年Today 10000 loss Nithin Kamath sir by your application fault
SOC LEAD
3 年Nithin Kamath Nikhil Kamath Congratulations. you will become billionaire (worth financial asset $10 billion dollars) after 5-7 years when Zerodha will have 2 Crore Demat accounts. And one more thing Rainmatter
Sr. Sales Engineer at GET - Gulf Equipment & Technology
3 年Thanks for sharing
Caffeinated ?? | Looking for Mentors ????♂?
3 年This is will be nice post for a TBT when you have a VC onboard in future :p ohh wait, this will be probably taken down then! In any case, this article does makes sense in more than one