Why we invested in smallcase again?

We are extremely pleased that smallcase has today  announced its Series B funding round. It does not happen often in VC investments that a company develops in a  way profoundly similar to that envisioned  by the  investor- and that makes it even more  satisfying.

Smallcase is the consummate player in moving the Indian market towards lower-cost, passive investing via the sleekest product and digital distribution. It does this via proprietary products (as a manufacturer) and one of a kind infra play (allowing various participants to have seamless workflows with their end clients for securities investing).  We have been invested in the business for a bit under three years ( and this is the third round we have participated in) and each year our conviction gets stronger in the business.

The company has made great strides in expanding its value canvas:

1. Distributed by brokers representing > 75% of the market and further expanded distribution envelope to RIAs, wealth management apps. Of late the smallcase gateway is integrated with market heavyweights such SBI MF (largest MF house) and Moneycontrol to enable their  clients to seamlessly transact to buy their products/recommended stocks
2. Expanded from proprietary thematic “smallcases” to active creation of differentiated portfolios by independent advisors/managers and more diversified catalog including core holding ETF like products such as “All Weather smallcase” 
3. Tickertape- the best stock information and screening app, with user numbers in the millions.

Given the acceleration and increased awareness about passive, low-cost investments, we believe the passive segment share in India is going to be quite significant, we are already seeing signs of that with the India ETF market growing ~4x in 2 years. 

By 2025, India is  looking at an equity asset base of $2.5-3 trillion.  We are optimistic that low-cost passive investments can hit a significant percent of this base, driven by visionary companies like smallcase.