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 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 have completely different mindsets.
Hence, it would be sheer foolishness—and borderline misuse of their capital—if we invest both corpses in a similar manner. The 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 ratio would still be greater than 1:1. And, he would be able to profit off market cycles whilst maintaining 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.
Your thoughts on the investment opportunities for Millennials looking at the current market scenario.
I possible couldn’t stress the importance of starting early, I made my first equity investment when I was 18, and I still feel I could’ve started earlier! Why I strongly feel so is because when we are young our risk-taking appetite and ability is greater as compared to when we grow older.
This is why I feel diversification amongst asset classes is the best and most efficient way to understand what financial instruments we are comfortable with, instead of investing a lump sum initially in a single asset class, it’d be prudent to invest smaller amounts once is comfortable losing in different asset classes. This helps them understand price movements, market conditions, why prices moved and did they move the way they thought they would etc. This would give them a proper understanding of Risk management, position sizing etc.
With prices already way off their ATHs, now would be a good time to begin for a Millennial and as most of them have already been bitten by the “Shark Tank bug” they can also look to diversify their investments in new-age start-ups through new age products like revenue-based financing and their debt funding etc.
Will Investment in Crypto prove to be a long-term gain for investments?
The fact that Covid-19 brought on this new wave of Corona- Investors who had only ever seen a bull market, be it Indian equity or Crypto are in for a rude awakening. I have personally seen financial statements of people making multi-fold returns in Crypto, i.e. 15x-25x. More than the returns what was more detrimental was that they wrongly believed this to be the norm, to the extent that a casual crypto investor wasn’t even satisfied with a 100% return and yearned for more! These people need to understand that the Covid-19 crash in the markets was a black swan event, a flash sale on the markets worldwide. And sales don’t last all year round! So now when the biggest of currencies are down a minimum of 60% from their highs, the “Crypto high” is also subsiding.
This I believe is a perfect time for introspection, if a person is in it for the long haul, has even basic knowledge of the underlying technology and blockchain in general, and finds a project or currency aligning with his beliefs, I feel an investment of an amount there are comfortable losing could prove to have a good risk. However, someone who is just in it for the quick bucks and working on tips and recommendations from “Crypto Influencers” is a mere pawn in the grander pump and dump scheme of things.
I have personally been investing in Crypto since early 2019, and have been an Ethereum buyer every month since, albeit in a SIP mode. This has only and only been facilitated with profits generated from my equity and trading returns and not once have I put in my capital directly. This has helped me have some skin in the Crypto game, whilst keeping my risk in check. I have only invested in Coins I know about or have researched about. Meme-coins as they are called are good for the adrenaline but bad for your bank account. Hence, as with every other investment, if you do your research, and keep risk in check, I do believe it’s a punt worth taking, but long if you’re in it for the long run.
That being said I am still sceptical about Crypto fanatics considering this as a proper currency or as means of exchange. At max, I think this could be a millennials way of being a store of value, but even for that to happen, volatility needs to subside considerably and there needs to be some form of global acceptance, which currently looks a bit farfetched. Some of Crypto’s new age aspects like NFTs, staking, proof of chain etc, have path-breaking potential but even they would require a larger form of acceptance to truly flourish.
Will investing in Equity offer high returns looking at the volatile market?
Equity markets, globally, are in a downward spiral after the humongous 1 sided move last 2 years. Indian markets, specifically have been surprisingly fuelled by the Retailers. With talks of an impending recession in the US, and rising commodity prices brought on by the Russia- Ukraine War, we have more reasons to be cautious than optimistic!
That being said, legacy companies, ones that have been present for generations are available at throwaway valuations because of the global scenario. Warren Buffett once said that it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.” SIP Investments in market leaders and companies with promising potential is encouraged at this point in time and I strongly believe that once the global gloominess subsides, the market will factor in the true valuations of these behemoths which will invariably mean higher returns for the investors.
