Fintech 'incubator' looks for the next big idea

A trader using various devices to trade on the stock exchange. PHOTO: BLOOMBERG
A trader using various devices to trade on the stock exchange. PHOTO: BLOOMBERG

SINGAPORE - In the internet landscape where financial technology is vying for a big piece of the e-commerce pie, one Indian company is approaching the lucrative sector with a slightly different recipe in mind.

Fintech company Rainmatter calls itself an incubator where startups with innovative ideas will be nurtured to bring that next big financial investment idea to life.

Together with its parent company, the online brokerage firm Zerodha, the incubator promises to provide physical workspace, mentorship and expert feedback to anyone with a eureka moment in fintech from any part of the world, even Singapore.

"If Singaporeans smell an opportunity in the immense potential that is capital markets in India", all help will be rendered if the idea is appealing, says Nithin Kamath, the Founder and CEO of Zerodha, who also runs Rainmatter. The only catch is the idea will first be executed in India.

Of the 1.2 billion Indians, only 0.1 per cent invest in equity markets, Mr Kamath said in an interview to The Straits Times on the sidelines of IIMPact event last month.

Banking and insurance sectors are already using financial technology to their advantage in a major way. If investment trading also joins the group, there is much scope to grow, especially in India where the number of smartphone users exceeds 200 million and counting.

Rainmatter promises to help startups develop its idea, while Zerodha will provide the execution platform for exchange trading if required, Mr Kamath said. The hope is to hit upon a 'WhatsApp moment' in fintech, by essentially getting the whole world to use this new technology for investment trading, just like the free messaging app found its way in almost every smartphone in the world.

With US$6 million in their kitty, Rainmatter invites people to come with innovative fintech solutions for India.

Mr Kamath gave an example of a firm, in which he co-invested, that set up a thematic investment platform by giving users a choice of various baskets of companies whose stocks they can invest in. "When the Chennai floods happened (in India last year), some businesses benefitted, while some didn't," Mr Kamath said. Investors who chose to put their funds in a basket related to Chennai funds were essentially investing in companies which they think will benefit from the floods. If their idea works, they get returns on their capital, he said.

Other baskets like the Zika virus or the Donald Trump are also available for investment, through mobile apps or websites. If investors chose to execute this investment, they are directed to Zerodha, the brokerage firm that takes care of the backend operations. Zerodha also provides a clientele of nearly one lakh users, who can beta test the startup idea for feasibility.

Since its founding, Rainmatter has invested in seven companies and to Mr Kamath's credit more ideas keep flowing. Each week at least four startups approach the company to discuss their plans. One such, called Pi, is already partof the Zerodha ecosystem.

His initiatives in fintech gave Mr Kamath a seat on a panel at IIMPact, the congregation of alumni of the prestigious Indian Institutes of Management (IIM), who met at Marina Bay Sands in early April. The panel included DBS chief Mr Piyush Gupta, himself a fintech enthusiast.

Mr Kamath, who is married to a former Singapore Airlines stewardess, has a small presence in Singapore too. Zerodha has set up an office in the city state, looking to attract investors in India.

"Currently we are looking at attracting foreign portfolio investors based out of Singapore to come  invest/trade through us in India," Mr Kamath said, adding that India has an unexposed and untouched space in financial technology sector which can present innumerable opportunities if a right idea comes along. "It's not easy, but imagine the possibilities," Mr Kamath said.

rupsk@sph.com.sg