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India’s FinTech Cube Wealth expands asset management biz in UK, Hong Kong

Satyen Kothari, Founder, Cube Wealth

Cube Wealth, an Indian FinTech start-up for financial planning and wealth management, is entering the global markets in this quarter (July-September) of 2019. The plan is to set up a tech-enabled asset management company in the UK, Hong Kong, and Switzerland to start with so that customers in those markets can get access to some leading fund managers in the emerging markets, including India.

Satyen Kothari, Founder of Cube Wealth, told IBS Intelligence that the idea is to be creating a democratic wealth creation platform for everybody across the globe. At present, it manages investment portfolios and provides investment advice from SEBI and the Reserve Bank of India registered advisers.

The Mumbai-based startup, which started last year, helps the users plan their finances and works on a subscription model, where a user pays an investment adviser, from whom Cube collects a commission in the range of 0.5 % to 1 %.
“This quarter, we are entering the international market, and we plan to partner with channel partners, banks, and fund houses in those markets. We are doubling down on marketing and sales and investing both time and money,” said Kothari, who was also one of the founders of payment solutions company Citrus Pay that was later acquired by Naspers-backed PayU.

The company wants to be the TransferWise of cross-border investments. TransferWise, valued at $7 billion, is a UK-based money transfer service launched in January 2011 by Kristo Kaarmann and Taavet Hinrikus. The company supports more than 750 currency routes across the world and provides multi-currency accounts through a simple app.

Kothari bets big on the international market, especially in Europe and the US, where the retail investment penetration in the stock markets is as high as 55 percent compared to a mere 5 percent in India, which is lowest in the world. Besides, unlike in India, the customers in those markets are already financially educated, but they want to know how to invest better.

“It is a big push for multiple international markets because we feel there is a big gap in how an investor gets access to invest in an emerging market. They can either buy a fund of funds, mutual funds, ETFs,” he added.

There are challenges for customers of a country if they want to invest in stock markets of other countries, and that is what Cube Wealth intends to solve. For example, a private bank in the UK would pitch customers typically in the $2 million to $5 million brackets. Cube Wealth would solve help customers with fewer incomes to be able to invest in stock markets with the help of its technology.

“These are the same problems we are solving for India as even here the fund managers cater to the UHNIs,” he said.

Cube Wealth has raised about $2 million in a Series A round from Singapore-based venture fund Beenext, Japan-based Asuka Holding, and 500 Startups, a US-based early-stage venture fund. The startup is now looking to raise funds from some strategic investors that might include big players in the FinTech, banking, or wealth management segment.

The start-up has built an in-house engineering team for the global market needs, who can work in close collaboration with business and product teams, said Kothari, a Silicon Valley veteran with degrees in design, computer science, and entrepreneurship from Stanford University.

Kothari believes in running Cube Wealth very frugally. “We went live in India for just above a year, and with zero marketing, we have got an incredible amount of customer support and traction,” he said, adding that the growth in customers has been 50% quarter on quarter.

The company is managing over USD 10,000 of the portfolio through a multi-asset approach as against just having a mutual fund platform. In total, the company’s investment managers across the asset class manage over USD 2 billion in the Indian market alone through partnerships with brands such as Purnartha, ace investor Rakesh Jhunjhunwala’s Alchemy Capital, Ambit, Motilal Oswal and P2P lending platform Faircent among 11 others.

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