Trading and investments are the two terms that appeal to everyone. However, due to insufficient knowledge, brokerage charges, hefty commissions, and a reluctance to take the market risks are a few reasons why people refrain from testing the rivers.
When the world was facing the biggest global financial crisis during 2008 and 2010, the stockbroking companies experienced a downfall. While this challenge was faced by almost every broker in India, Bangalore-based discount broking firm, Zerodha was born during the same year.
Founded by the brothers Nithin Kamath and Nikhil Kamath, Zerodha is India`s first discount brokerage firm. This decade-old bootstrapped startup emerged as one of the unicorns in India in 2020.
Considered one of the most valued online stock trading solutions in the Indian fintech ecosystem, Zerodha`s journey started with a team of five people. Today, it has more than 1,300 employees.
What makes Zerodha different from other full-service brokerage firms?
Zerodha is a discount brokerage firm that does not offer research services such as buy and sell recommendations to its client. This helps them save the cost of having a research team. Hence, it passes on the profit it makes by saving funds.
“In today’s day and age, it’s no more about the big beating the small – it’s about the fast beating the slow,” Nithin says.
“The foundation of any financial services business is built out of creditability and trust. The process was time taking and it took around eight years for the company to reach where it is today. In our first year, we opened 3,000 accounts and when the cost of the product is less, people tend to be suspicious about the quality”, Nithin said.
“Luckily, we have managed to build a community around us that strives on trust, and that eventually helped us in the long run. Even today, we don`t spend money on the advertising”, Nithin, CEO & co-founder of Zerodha added.
Earlier in June 2020, the company announced an ESOP buyback plan at around 5X the booking value, thereby putting its valuation at $1 billion. According to Harun List, shared in August 2020, Zerodha was evaluated at $3 billion.
In FY19, Zerodha recorded a net profit of Rs.350 crore on a revenue of Rs.850 crore. Over the past five years, the total client base was increased by nearly 40X to 2.8 million. Even during the pandemic, it has witnessed its average monthly user addition to be increased by double.
Zerodha has also launched an incubator fund Rainmatter in April 2019. The fund was created to invest in early-stage startups. The fund has invested in more than 14 startups.
Zerodha has four registered entities: Zerodha securities, Zerodha Commodities, Zerodha Broking, and Zerodha Capital.
“If you try to be the best, you will be number One, but if you try to be unique, you will be the only One”. With a firm belief in this statement, the founder-siblings are aiming to add 5-10 million new Indian investors in 2021.
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