Saturday, Dec 03, 2022

Grow Creating Customised Financial Strategies For Investors To Invest In Startups

Outlook for Brands

Grow Creating Customised Financial Strategies For Investors To Invest In Startups

The capital markets are a risky business which is why, first and foremost, Grow helps to understand and determine in specific terms what exactly is the monetary amount of risk the client is comfortable taking.

Mr Amandeep Singh Uberoi, CEO & Founder, Grow
Mr Amandeep Singh Uberoi, CEO & Founder, Grow

Tell us about your professional journey so far
During the pandemic, I had made up my mind to secure all necessary certifications, approvals, etc. so that I could pursue this in a legal and professional manner. Hence, as soon as the second  Covid-19 wave subsided, I headed to Mumbai to apply for the requisite registrations, licenses, certificates, etc. 
After receiving the same in the third quarter of the last financial year, I made it a point to keep the firm bootstrapped and raise and reach the fund management targets for the year in an organic manner, deliberately not taking any financial support from my father or family. Fun fact: My father was on the waiting list for the previous quarter!

I think God was kind that he bestowed me with opportunities, so much so that I completed my fund management target for FY 2021-22 a quarter early. This also played a huge part in connecting me with like-minded individuals who have a similar goal and vision, and, most importantly, realistic expectations regarding capital, market conditions, etc. 

Also, I think this has been made possible by a single-minded vision to not budge on our ideologies whilst negotiating with clients, and resisting the temptation in the mind of a 23-year-old to reject cheques with an ample number of zeros, for the simple reason that our ideologies didn’t match. This has culminated in a pool of clients who apart from being financially savvy are stalwarts in their respective fields. As contractual obligations bind me from revealing specifics, some of our clientele who have invested in a personal capacity include a CFO of a fintech unicorn, and the son of a cabinet minister in the Central Government, amongst others.

What inspired you to do what you are doing right now?

Coming from a traditional business family with manufacturing interests in various domains, I had strangely always been inspired by the financial markets at home and abroad. So much so that I used to skim through financial magazines from a young age—devoid of any formal knowledge, mind you—more in hope than expectation, that my young mind would be able to decipher some of that complex financial jargon. The fact that my family had production units working even when they weren’t present—essentially meaning that systems were in place to make sure production was being carried out even when they were asleep—made me question, “Why couldn’t I do that with money itself!”

This is why when the time came to select a field for further studies, I was so single-minded and determined in my approach that even though my friends and peers were busy applying to any and every college under the sun, I only applied to four colleges that were offering specialised financial courses, both nationally and internationally. And in retrospect, I am indebted to the wise words of my father, who advised me to start by studying the Indian markets first, which helped me choose our financial capital, Mumbai, over cities such as New York and Boston. 

I have always been a very passionate, all-in or all-out kind of person with regards to everything I do in life, and this is why when I chose something as formalised and professional as wealth management and capital markets, I was grateful to my family for supporting me in this endeavour.
My father was very realistic in his advice and told me that, even though he was an active investor in the markets and would make sure to diversify his investments using this asset class, he wouldn’t be able to guide me as well as he would have, had I opted for, say, something more on the lines of our traditional businesses. He pointed out that the financial world is a zero-sum game and I will have to compensate for what I lack in experience—being a complete outsider in this dog-eat-dog world—with work ethic and passion. 

This also made me realise that, surprisingly, and even in the 21st century, financial markets were still being considered a gambler’s paradise and borderline frowned upon even in the relatively educated strata of our society. Some of my immediate peers and friends would still consider markets as casinos and would want their money doubled instantly—as if there was a genie at work at the NSE office!

This is when I realised that instead of just investing money for people, it would be more important to educate them on the same, so that they can treat this as a business, and explore and dive into its myriad possibilities. 

Share a brief USP of the firm and what makes you stand out from the competition
We have formulated our company in such a way that it will be easier to list how we are similar, compared to how we are different!
1.    We have NO FIXED COSTS. Period. No hidden charges whatsoever. Grow makes money when and only when our client makes money.
2.    We are not limited to equity markets only. We diversify in a range of products and asset classes depending upon the client’s risk-taking ability, quantum of capital, etc. 
3.    Early-stage startups and revenue-based financing for established startups have always been limited to HNIs , VC funds, PE investors, etc. However, at Grow we can partake in these investment models with smaller ticket sizes and get a taste of the VC pie.
4.    We are not a broking house and don’t intend to become one. Every client has a dedicated person assigned to them to keep them abreast of where, when and why their money is being invested, because apart from making them financially secure we want to educate them towards financial literacy.  
5.    No two client strategies are ever the same. Everyone has a different goal and we cannot expect one strategy for everyone to achieve their individual goals. 
6.    We are not a know-it-all company, we are just financial enthusiasts who are willing to learn—and simultaneously earn—every day, hence we are more than happy to understand and inculcate any suggestions or investment ideas the client may have and try implementing them in our way.

Market expectations post-pandemic, and future outlook
I hate to be the bearer of bad news for the new-gen Corona Investors—as they are being coined in industry jargon—but I believe the party is well and truly on its way towards an ending. This in no way means we are doubting our country’s growth capabilities but I do strongly believe that after an unprecedented bull run, one fuelled heavily by retail investors, a breather is long overdue, and it’s required as well. I believe the multiplier effect of a low base whilst showcasing results would start to wane and a clearer picture would emerge.

Commodity prices that have hit unprecedented highs and have had a huge impact on input costs, should stabilise. The ongoing Ukraine-Russia war will also be a big deterrent to any impending bull runs, while sanctions and dearth of certain raw materials will negatively impact some sectors of our economy as well.

However, in the long run, I strongly believe India is going to be at the forefront of economic growth this decade. Industrial opportunities aplenty supported by our burgeoning status in the world economy, makes us one of the better placed countries to capitalise and prosper.

What kind of opportunities is Grow introducing which will enable investors to experience the VC life and invest in startups at different stages of growth, both in India and abroad?  
With unprecedented levels of inflation and rising input costs, safe havens like FDs and mutual funds are essentially reducing our real income. Hence, Grow is introducing a new-age portfolio of investments wherein through our exclusive partners, our clients can diversify their investments into new-age companies and startups even before they hit the equity markets. 

Through revenue-based financing for cash-flow positive companies, Grow enables its clients to invest in a different asset class altogether which helps mitigate their portfolio risks and ride this wave of volatility smoothly. This offers relatively higher returns with monthly or quarterly liquidity as per the investor’s preference. This also enables them to partake in the success story of some of their favourite new-age companies, whilst having skin in the game and getting regular returns on their investments. 

Traditionally, this route of investments was limited to HNIs and ultra HNIs, and financially astute people with a limited pocket size couldn’t benefit. So, we have plugged this gap by allowing investors to get higher returns with negligible risk, as this is based on revenues generated by the firm and not on their profitability, which might fluctuate for certain companies given the current uncertain conditions.

How does Grow create tailor-made financial strategies for each and every client, taking into account factors like their appetite for risk-taking, holding period, and financial goals with respect to the amount invested? 
The capital markets are a risky business which is why, first and foremost, at Grow, we help understand and determine in specific terms what exactly is the monetary amount of risk the client is comfortable taking. Basically, we fix a maximum drawdown in percentage terms, and make sure the percentage is such that even if the worst were to happen, the client isn’t losing sleep over it. Because, never should monetary returns supersede peace of mind and this is a principle which enables us to keep our risk in check and make rational and systematic investments, not emotional ones. 
Let’s take a hypothetical situation, wherein we have two individuals with the same amount of capital but they are at different stages of their life. A person in his 40s having, say, 50L to invest would have different investing goals, targets and criteria than a 25-year-old having the same 50L to invest. However, the deciding factor would be each having completely different mindsets. 

Hence, it would be sheer foolishness—and borderline misuse of their capital—if we invest both of their corpuses in a similar manner. Reward should be proportional to risk and hence in this hypothetical situation, suppose the 25-year-old is less averse to risk: at Grow, his investments would be diversified and structured in a way wherein he would have higher overnight exposure, less capital allocation in non-risky assets such as bonds or debt funds, and his strategies would be formulated in such a way that he would profit more than the 50-year-old whilst adhering to his maximum drawdown percentage.

However, that doesn’t mean the 50-year-old would just be a passive investor, because in the case of mutual funds or FDs, he too would have positive expectancy, i.e. his R:R would still be greater than 1:1. And, he would be able to profit off market cycles whilst maintaining a higher security of capital as compared to the other investor, and this would be in sync with his less aggressive mindset in terms of investments and financial goals.