Vardhan Koshal (centre) and other cofounders of Tortoise (Photo: Ashish Sharma)
WHEN 23-YEAR-old Rakshit S first heard about an app that enables users to digitally squirrel away small change every day, it was serendipity at work. He had landed a job at a medtech company in Mysuru a couple of months ago. After celebrations with friends, ₹14,000 well spent on a banarasi sari for his sister on her engagement, and the first installment of his ₹25-lakh student loan, there was precious little left. “As a middle-class family from a small town, Nanjangud, we have always had conversations about saving, and I really wanted to put aside some money from my first cheque,” Rakshit says. Jar, India’s first fintech app to leverage the magic of UPI autopay for daily microsavings, was just the push he needed to commit ₹100 a day, besides saving the change from rounding off UPI transactions to the nearest tenth rupee. (Despite what you may have read on LinkedIn, UPI is not killing the toffee business, no more than it can end small change saving.) “It didn’t seem significant at first. But before I knew it, I was on autopilot, committing more and more in daily savings,” says Rakshit, who has saved ₹1.4 lakh over the past eight months. The ‘auto’ part is key to any small savings scheme, especially one that serves a generation that values convenience and simplicity and would rather be nudged by an app than by a parent or a bank relationship manager.
“Gen Z has high aspirations and low disposable incomes. While many of them are not often eligible for credit, it may surprise you to know that a vast section of young people simply don’t want to incur a debt, especially not to buy a phone or a luxury watch,” says Vardhan Koshal, Tortoise cofounder
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Jar, which allows users to invest their savings in digital gold in under a minute—with options to liquidate or convert to physical gold—is one of many fintech innovations to reinvent old asset classes to make them accessible as well as attractive to young investors. Founded only in May 2021, Jar has grown to over 10 million users, and seems to have found the pulse of those under 35 years of age who are underserved by traditional financial products. “We started with gold because of Indians’ comfort level with the asset,” says Nishchay AG, cofounder of Jar. From his experience as a director at Bounce, a shared scooter company aimed at the youth, AG knew young people were looking for hassle-free products and simple communication. “We built the product for the middle-class young Indian, someone who watches Amazon Prime, orders from Swiggy and buys on Flipkart, and likely lives in a tier 2 or 3 city. Existing financial products were all full of jargon and entirely in English. At Jar, we are culturally aligned to their everyday lives—we nudge them on shubh muhurats, for instance, and we are available in Hindi, Telugu, Tamil and are working on many other languages as we speak,” says AG.
Jar’s success lies in building good, recurring saving habits for its users, and giving them a foot in the door to investing. “The average middle-class person saves about ₹75,000-₹80,000 a year and we believe that 30-40 per cent of it is happening on Jar for many of them. They start small, but once they achieve the first set of goals—say a 5g or 10g gold coin—the time they take to achieve the next goals is significantly less,” AG says. For most users, the Eureka moment comes three-to-six months into the savings journey, he says. “That’s when they realise, this is working for me. After that, it’s amazing to watch how aggressively they save.” The app is careful not to push users too far. “People who are climbing the economic ladder are usually under a lot of pressure from society. I have been that middle-class guy, the beacon of hope for the family. I know that the last thing someone like that needs is more stress about money. At Jar, we want to make saving easy and comfortable—you lead the way, we only give you that small push to set bigger goals for yourself in life.” For users like Rakshit, whose goal for the next six months is to save ₹40,000 a month—a third of his salary—and explore mutual funds, securities and other assets, Jar could become a one-stop-shop for financial planning. The Jar app also has a social feature where you can compete with friends over the quantum and frequency of your investments.
“No creation is good or bad. We are building a marketplace of creative stocks for Gen Z and we intend to offer web series, films, comedy shows and other creative investments in the years to come,” says Prashan Agarwal, CEO, FanTiger
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For a majority of young urban Indians, financial planning is one of the main struggles of adulting in today’s world, alongside building healthy habits, navigating relationships and setting career goals. A new class of fintech startups is addressing this gap in financial education, and they speak the language of the youth, with butter-smooth user interface, easy or no KYC, and thoughtfully designed triggers to encourage good investment behaviour. The average age on threedots, a gamified social investing startup, is 25, and 90 per cent of users have never invested before. CEO Rishu Garg and his cofounders from BITS-Pilani are only 27-28 themselves. Garg, who has worked at the discount online stock brokerage company Groww, says they launched threedots in January 2021 to guide the ever-young fresh entrant into the markets. “We are a Covid startup. We understand Gen Z social behaviour, and we wanted to build for those who were newly entering the markets but were being swayed by the carefree high-risk-chasing-big-outcomes trend on trading platforms. The challenge is to make finance and investing interesting to this generation,” says Garg. On threedots, you can play stock market games, take a quiz, and run simulations before you put in any real money. You can also chat with your friends and follow finfluencers on the platform with the assurance that the content has been scrutinised for errors and false claims. “We give users a safer setting where they learn about markets before testing the waters. It takes most first-timers about two days on the platform to warm up to the idea of investing,” says Garg. While the average ticket size is small, a third of the 1.5 million users on threedots have made a trade.
Wealth as a business is slow to scale as trust-building usually takes years. Gen Z, however, has been known to trust experts, friends and people who inspire them, and this makes brand-building for Gen Z an exciting exercise with high growth prospects. “Young people are looking for cues and trends all the time. After school and college, the 20s are a wilderness where we have to find our way alone,” says Harshit Shinde, a 24-year-old electronics engineer from Mumbai. “There is greater anxiety among young people today about being a well-rounded, functional human being than ever before, and an important part of this is finance. I know we are labelled as the buy-now-ask-later crowd, but it’s a false assumption.” A software developer, Shinde lives in Pune in a flat he shares with two others. “For as long as I lived with my parents, I didn’t save or invest. Now, for the past two years, I have invested almost all my disposable income in mutual funds, a few stocks, and some upcoming asset classes.” According to a study by Viral Fission, a youth community platform, zoomers, or those born after 1997, are more inclined to save rather than spend, with 32 per cent choosing to save. While the public markets are more accessible than ever, many first-timers are rightly wary of stock market vagaries and would rather invest smaller sums in safer assets. Shinde says he has invested in bonds, digital gold, mutual funds and Exchange Traded Funds (ETFs), all via new-generation platforms like Jar, Zerodha and Wint Wealth.
“We understand Gen Z social behaviour, and we wanted to build for those who were newly entering the markets but were being swayed by the carefree high-risk-chasing-big-outcomes trend. The challenge is to make finance and investing interesting to this generation,“ says Rishu Garg, CEO, threedots
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Wint Wealth is a debt asset platform launched in 2020 that allows users to invest sums as low as ₹10,000 in fixed-income debt securities that are now available to independent investors in India. Ajinkya Kulkarni, CEO and cofounder of Wint Wealth, knows well who his target user is—a young professional, earning well and looking for stable returns before a home loan strikes him or her. They have a few lakh rupees in the bank, and understand the value of 3-4 per cent extra return compared to FDs. “We want to build 10 products for people who think 10 per cent return is great. The typical investor at Wint has been in the market for a couple of years, and is in their 30s, although we have investors as young as 20, who come from families where investment is a topic of dinner table conversation,” says Kulkarni. Wint Wealth has racked up ₹500 crore in cumulative investment so far.
Young investors are increasingly interested in diverse asset classes including debt, pre-IPO startup equity, supply chain and lease finance, even real estate and gold, says Sridhar Sirugudi, Associate VP, investments and fintech, at Pravega. This is an early-stage fintech and SaaS-focused fund that has backed startups aiming to democratise access to gold and commercial real estate: SafeGold, a digital gold marketplace that powers Jar, and PropertyShare, which offers retail investors an opportunity to make fractionalised investments in high-return commercial real estate by reputed builders. “To build an attractive new investment product, you can either create a new asset class or make an existing one more accessible, and frankly, a new asset class is like a new religion,” Sirugudi says. With a bit of financial alchemy, however, traditional assets can be spun into bite-sized products. Nikhil Aggarwal, founder, CEO and resident alchemist at Grip Invest, a multi-asset platform for new-age retail investors, first built a fractionalised lease financing product in 2020 because he believed young people would want to take fixed-income bets on cool startup brands like Blue Tokai and Furlenco. “In one year, we enabled ₹100 crore in investments, but our customers wanted more asset classes at low ticket sizes. We have since introduced inventory financing, fractionalised corporate real estate, startup equity, revenue-based financing, corporate bonds and other products that offer 8-16 per cent across the yield curve, with tenures ranging from one to 60 months,” says Aggarwal, who was a consultant for the World Bank, and vice-president at Morgan Stanley where he worked in capital markets advisory and mergers and acquisitions. While asset-specific specialists cater to larger investors, Grip Invest works with them to fractionalise these assets. “We have even been approached about financing wine-making in Spain, and fractionalising investment in artwork,” Aggarwal says.
Rescuing complicated financial products from the obscure backwaters of institutional and fringe investing and turning them into a bewitching value proposition for Gen Z is no easy feat. Ask Prashan Agarwal, cofounder and CEO of FanTiger, which offers users—‘fans’—a chance to disrupt the business of music by funding artists they like. On FanTiger, they can buy fractionalised NFTs, priced at a few hundred rupees, of music created by established as well as up-and-coming artists in return for a 50 per cent share in royalties from a song, besides money-can’t-buy privileges like listening parties, video calls, even lunches and bowling experiences with the artist. “No creation is good or bad. It is up to fans to like something, and if they do, to allocate a part of their portfolio to invest in the creator economy,” says Agarwal, who headed Gaana for five years before stepping down last year. A song takes three-to-six months to start yielding returns, so it is early days yet for the months-old startup, which claims to have a fan network of 200,000. It has launched seven songs across genres, with over 5,000 NFTs sold already. “We are building a marketplace of creative stocks for Gen Z and we intend to offer web series, films, comedy shows and other creative investments in the years to come,” Agarwal says.
“Existing financial products were all full of jargon and entirely in English. At Jar, we are culturally aligned to their everyday lives—we nudge them on shubh muhurats, for instance, and we are available in Hindi, Telugu, Tamil and are working on many other languages as we speak,” says Nishchay AG, cofounder, Jar
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Then there are entrepreneurs who are simply reinventing the wheel and fitting it on a nice new ride for Gen Z. Tortoise, a 15-people startup, borrows a deceptively simple idea from gold savings schemes to help young people save towards buying a phone or funding a holiday. With over 100,000 users on the platform, Tortoise is turning the buy-now-pay-later concept on its head, and encouraging people to save towards a goal. “Gen Z has high aspirations and low disposable incomes. While many of them are not often eligible for credit, it may surprise you to know that a vast section of young people simply don’t want to incur a debt, especially not to buy a phone or a luxury watch,” says Vardhan Koshal, cofounder at Tortoise. Tortoise is currently focused on iPhones and plans to diversify into travel and other categories. “A hundred people walk into a store; 20 buy a phone, most of them on EMI. The remaining 80 have bought the dream of making that purchase in the future. We are not competing with banks offering EMIs. We are an exit door solution—we offer the merchant a sensible way to engage with the customer who doesn’t buy right away.” The popularity of save-now-buy-later plans on Tortoise and other apps like Hubble are revealing Gen Z to be far more financially prudent than we think them to be. It will be interesting to watch this generation, that has come of age at a financially turbulent time, shape the markets in the years to come.