The Indian stock market landscape is majorly comprised of retail investors (about 2.5 crore people), who are non-professional investors. They generally invest smaller amounts by buying and selling securities or funds such as Mutual Funds and Exchange Traded Funds (ETFs), which gives them smaller returns. While the ultra-rich, or institutional investors enjoy the benefits of more avenues/assets with better yields and lower-risk options, the retail investors had no access to it. They have a huge need for investment options that lie in between low risk-low return, like Fixed Deposits or Debt Funds, and high risk-high return, like stocks and equity mutual funds.
Wint Wealth strives to bridge this gap by introducing retail and HNI (High Networth) investors to high-interest rate, asset-backed fixed income products which were earlier accessible only by the institutional investors.
Wint Wealth was founded in January 2020 by Ajinkya Kulkarni, Ex-VP, Mswipe, Abhik Patel, ex-Growth Head, Shop101, Shashank Chimaladari, ex-Tech lead, Shop101, and Anshul Gupta, ex-Director and Head of Products, Northern Arc. Now let us dive into this startup story.
In his previous stint at MSwipe, Ajinkya Kulkarni and his colleagues used to discuss the various investment opportunities over lunch. They saw one of their friends opening an FD in a relatively new and unknown bank for higher returns. They were frustrated with returns of mutual funds and liquid funds, and the decline of the FD rates. Ajinkya and friends started researching if there is a way to invest in assets with better yields and lower-risk options which was accessed by institutional investors alone, and why such opportunities were not readily available for retail investors. They realized that there were a certain set of high yield debt instruments that were only accessible at very high minimum investment amounts (greater than Rs.1 Crore). They worked around it and figured out a way to bring the minimum investment amount down in these opportunities (to as low as ₹10,000). They decided to focus on debt assets which can be fairly standardized and risk profiles can be understood well. Also, they aimed to properly educate the investors about them, since these debt products are relatively different from what everyday investors are used to. This led to the launch of Wint Wealth.
Wint Wealth is building assets that are:
- Bankruptcy remote
To make this happen, they are currently working with Covered Bonds, which is a fairly new concept and witnessing upsurge in the Indian market. Investors in covered bonds have the right over a pool of assets held by the issuers, primarily NBFCs, in case of a default. NBFCs want to diversify their source of capital, and Wint Wealth brings them retail capital. The startup charges the NBFC that they partner with an annual fee of 1-1.5% of the issue size for each asset.
Wint Wealth launched its first asset, Wint Gold Aug20, which had a pool of gold-backed loans where retail investors could invest in and get a 10 percent pre-tax returns. Since then, it launched four other assets. Its latest upcoming offering is Wint Wheels Jul21 which offers 9.25 per cent p.a. pre-tax returns. The fact needs to be taken into account that it is not advisable to invest your emergency fund or your life savings on these assets as the returns of 9-11% come with equivalent risks. Though Wint Wealth tries its best to mitigate risks, there are some risks involved. Another fact to be noted is that these assets do not serve as an alternative to Fixed Deposits.
Opening an account with Wint Wealth is very simple – one would just need to sign up on the company website and submit their Demat account details. Once you review and assess the portfolio where you wish to invest, you can transfer the money on their website and the company will transfer the portfolio holdings to your Demat account.
Wint Wealth recently raised $2 million seed funding led by Zerodha’s fund – Rainmatter Capital with participation from Better Capital. The round also saw participation from Kunal Shah of CRED and others. The funding will be used to develop technology to underwrite risks, educate investors about new-generation debt assets.
“Investors are actively looking for high-interest rate products for reasonable risk. Given the scenario where FD and debt mutual fund returns have dropped considerably, there is a huge vacuum for products that give two to three percent higher returns than FD and are less volatile than equities. Wint Wealth is squarely aimed at addressing this massive market opportunity by creating high-interest rate products for these investors. This round of investment will help us develop technology to underwrite risks and educate investors about new-gen debt assets.”
– Ajinkya Kulkarni, Co-founder and CEO
The retail participation in Indian stock markets is rising, says a SBI report, pointing out that 44.7 lakh retails investor accounts have been added during the two months of this fiscal. Per Nithin Kamath, Co-founder and CEO of Zerodha, Wint Wealth can be a great stepping-stone to bring in a lot of first-time retail investors into the capital markets.