Zerodha’s Rainmatter Capital leads seed round in GrowFix

GrowFix, an alternative debt platform that allows retail investors to invest in asset-backed fixed income products, has raised $2 million (around Rs 14.6 crore) in seed capital.

The round in GrowFix has been led by Rainmatter Capital, a fund backed by trading platform Zerodha. Early-stage venture firm Better Capital also participated in the round, the startup said in a statement.

Several angel investors also took part in this funding exercise. They include Cred founder Kunal Shah, former Paytm Money CEO Praveen Jadhav, and Groww’s Lalit Kehsre.

Others include PayU’s Nitin Gupta, founders of fintech firm Smallcase, India Gold founders Deepak Abbot and Nitin Misra, WazirX’s Nischal Shetty, and Paysense’s Sayali Karanjkar.

Former IDG Ventures partner Sanat Rao, Instamojo’s Akash Gehani, Multiple Ventures’ Sanjay Ramkrishan, Livspace’s Ramakant Sharma, First Cheque’s Kushal Bhagia, Gemba Capital’s Adith Poddar and Vipul Goyal, and Haptik’s Aakrit Vaish also took part in this round.

GrowFix, operated by Fourdegreewater Pvt Ltd, was set up in January last year by Ajinkya Kulkarni, Abhik Patel, Shashank Chimaladari, and Anshul Gupta. The company says it is working with non-banking financial companies to help them raise retail capital. 

The company will use the capital to develop technology to underwrite risks, and conduct investor outreach about debt assets.

“Given the scenario where FD (fixed deposit) and debt mutual fund returns have dropped considerably, there is a huge vacuum for products that give 2-3% higher returns than FD and are less volatile than equities. GrowFix is squarely aimed at addressing this massive market opportunity,” Kulkarni said.

GrowFix says its proprietary algorithm identifies high-quality loan pools that are then enabled for access by retail investors. The company’s first product is called GrowFix Gold, which has a pool of gold-backed loans. It claims to have seen a 50% subscription to this asset in four weeks.

The early-stage investment in GrowFix represents growing interest in the investment and asset management segment of the fintech sector. Companies in this space are leveraging algorithms to offer consumers customised products and market outperformance.

For example, GrowFix is not the only fixed income-focused firm that Rainmatter Capital has invested in. In June last year, the investor bet Rs 3.5 crore (around $459,785) on GoldenPi Technologies, which provides products such as bonds and debentures to individuals and larger households.

Groww raised $30 million (Rs 220 crore) in a Series C funding round in September last year. That exercise was led by YC Continuity, with participation from Sequoia India, Ribbit Capital, and Propel Ventures.

Larger financial services players have noticed this. In December, HDFC Bank picked up a minority stake in smallcase Technologies Pvt Ltd, focused on capital markets and related infrastructure. That came after smallcase in September raised $14 million (around Rs 103 crore) in its Series B exercise.