In just eight months, an Udaipur-based online mutual fund distribution start up floated by Virendra Ranawat has acquired close to 2000 clients. Surprisingly, all these clients are first time investors with an average SIP ticket of Rs.2500. Currently, it has assets under advisory of Rs.12 crore as on February 2017.
We caught up with the company’s co-founder Virendra Ranawat who had joined the Tata group after completing his B.Tech and MBA. In 2008, along with his brother Lokendra Singh Ranawat, he floated a digital marketing firm called Cognus Technology. This start up is into providing customized software services and online marketing solutions for clients in UK, USA and Australia. “This venture has helped us learn the true essence of a self-owned business,” said Virendra.
On a friend’s recommendation, Virendra invested Cognus Technology’s money in liquid funds to manage cash flows. To his surprise, the fund delivered 9% returns in a year as against 4% in savings account. The performance of this fund fascinated him and he started in-depth research in mutual funds.
The Cognus success inspired Virendra to look at other business opportunities. While he did not have any concrete business ideas, he started SIPs in mutual funds in order to raise capital for his new venture.
Ranawat shared his investment experience with his friends and family members but surpringly, none of them heard about mutual funds. This was the ‘eureka moment’ for him. “None of my friends were aware of mutual funds. When I explained the concept of mutual funds to them, they all found it worth investing. This is how we got started with MySIPOnline.”
However, before venturing into the mutual fund distribution business, Ranawat undertook market research and found that lack of awareness was the key reason for people not investing in mutual funds. Sensing an opportunity, Ranawat started his online mutual fund distribution venture in July 2016.
When asked why he had gone for online distribution model, he said, “I have seen distributors wasting time in collecting forms and cheques and submitting them to R&T agents. These mundane jobs can be done with the help of technology. Instead, IFAs should add value to their offerings by providing services like financial planning. In my view, the digital platform helps distributors to reach out to large number of people without any geographical barriers that too with value added services like financial planning.”
Virendra does not believe in spending money on Google adverts to create visibility. Their team of three experts works on search engine optimization (SRO) to ensure that their portal is on the first page when anyone searches for SIP on search engines such as Google and Yahoo.
Another way of generating organic traffic is through social media. His company runs various social media campaigns where they post articles and creatives on mutual funds on Facebook, Twitter, WhatsApp and LinkedIn. For instance, they promote liquid funds in the first week of every month as many people get salary by the time. In this campaign, they encourage people to put a portion of salary in liquid funds to earn better returns compared to bank savings account. Similarly, his company is currently running a campaign on tax savings through mutual funds.
All these activities have helped his company get 40,000 visitors every month. Though the conversion rate is low currently, the company has kept the operating and acquisition costs in check. Recently, the company has introduced eKYC service to increase the conversion rate.
Of 2000 clients, over 50% of them are in the age group of 25-35, 30% in the age group of 35-50 and rest are above 50 years of age. Virendra said that most of his clients are from IT background. In addition, half of his clients are from south Indian cities like Bangalore and Chennai. “We have a lot of clients who work in IT companies. In my experience, these clients expect a platform where they can manage their investments in a simple way. We always try to provide them an easy to use interface through our website,” said Ranawat.
When asked about how he engages with 2000 odd clients, he said that his company has dedicated relationship managers to each client. “These relationship managers stay in touch regularly by updating them on portfolio and guiding them on the latest features available on the website,” added Ranawat.
Currently, the company has a team size of 30.
Virendra aims to get two lakh visitors every month by the end of this calendar year through digital and content marketing activities. He plans to break even in 14 months. In addition, his company aims to charge a nominal fee as a portfolio review fee going forward.
Virendra’s story is an example of how advisers can leverage technology to break geography limitation and reach first-time investors.