Amazon ramps up fintech play with smallcase investment


E-commerce firm Amazon Inc continued to ramp up fintech investments in the country by investing in capital markets-focused fintech smallcase through its $250 million Smbhav Venture Fund announced in April.  

smallcase on Tuesday said it has raised $40 million as part of its Series C funding led by Faering Capital and joined by new investors Amazon and Premji Invest at a valuation of around $200 million. Existing investors including Sequoia Capital India, Blume Ventures, Beenext, DSP Group, and Arkam Ventures also invested.

“The deal has been explored from a pure funding perspective at present. Partnering for commercial distribution (of our products) through Amazon’s platform is a future opportunity and a separate conversation. Nothing has been decided yet,” said Vasanth Kamath, founder and chief executive officer of smallcase, in an interaction with Mint.  

Amazon has invested close to $5 million, individuals aware of the discussions told Mint.

The round brings the total capital raised by smallcase to over $60 million with Faering Capital’s Sameer Shroff joining the board.

According to the company, the funds raised from the round will be used to continue building the platform, as well as for diversification into newer financial instruments including mutual funds, bonds and global equities.

The six-year startup works with capital market participants (including brokerages, advisors and digital wealth platforms) to offer investment products called ‘smallcases’.

These are model (or ready-made) portfolios of stocks and exchange-traded funds (ETFs) that are created and managed by registered financial advisors, both individuals and entities. The final investment transactions are routed through registered brokerage partners on the platform.   

“At present, smallcase witnesses close to Rs 1,500 crore being invested in stocks and ETFs through the platform on a monthly basis. We are now looking to offer a diversified portfolio to our users, while simultaneously working on integrations to launch mutual funds, bonds and global equities. Our mutual fund product should be ready for launch by the end of this year,” said Kamath in a conversation with Mint.

Since its Series B fundraise worth $14 million in September 2020, smallcase has doubled its user base to three million. The startup is also investing in setting up an offline distribution network and has acquired a network of 150 on-ground agents.  

Currently, smallcase works with more than 130 investment advisers which create these smallcases. It also works with 12 brokerages to execute trade as well as over 250 channel partners to distribute these smallcases.

“Globally, we have seen a trend of increased retail participation in equity markets and in India smallcase is pioneering digital access for retail investors through their innovative products and channel partnerships. We are excited to lead the Series C round and partner with the entire smallcase team for their next phase of growth,”  said Shroff, co-founder and managing director of Faering Capital.

Amazon has also been aggressively investing in its payments arm in India. Since January 2020, it has poured in close to Rs 2,280 crore in Amazon Pay across three funding tranches.  

Amazon Pay has secured more than Rs 5,280 crore in funding since inception in 2016, Mint reported earlier.  

In fintech, Amazon invested $10 million in invoice-led financing platform M1 Exchange this year which caters to small and medium enterprises (SMEs); and in 2018 invested $12 million in insurtech startup Acko, joining hands with the company in 2020 to offer auto insurance to its user base.