Upstox is a financial technology startup that offers users novel investment options. Upstox promises to enable its clients to make better investing decisions with the maximum ease through its tech-driven, rapid, and simple stock trading and securities brokerage services.
Furthermore, the firm promises a zero brokerage model that is meant to use smart design and technology, which would dramatically reduce expenses for the company while also benefiting end-users. Upstox, based in Mumbai, is driven by the goal of disrupting the brokerage sector by lowering the expenses incurred by online trading platforms, hence making stock trading more efficient and cost-effective.
Success Story
Ravi and Raghu Kumar have always had a passion for stocks and trading. Ravi had a tiny account since he was in elementary school, and Raghu joined him while he was in college. They traded throughout and recalled that, while trading on a PC was enjoyable, algorithmic trading piqued their interest early on. Soon after, they realised their calling and relocated to India, where they founded RKSV.
Though they continued to employ algorithmic trading methods, their only goal was to develop a retial brokerage service. This was ultimately realised in 2012, when RKSV successfully entered the retail broking market and opened its doors to the general public. In May 2016, the firm was renamed Upstox.
Upstox, which began its journey in 2009, is currently listed among the top five brokerage firms in India, as well as the second-largest discount broker in terms of active clients.
Upstox is a 100 percent online broker that specialises in stock, derivatives, currencies, commodities, mutual funds, IPOs, GSec, and bonds.
Business Model
Trading stocks on stock exchanges is not free. You must pay a commission to the broker as well as a small cost for the transaction itself. The brokerage commission is often determined as a percentage of the deal’s total value. Upstox does not use the typical strategy, instead charging flat fees, which results in significant cost reductions. This is why Upstox is a disruptor in the brokerage market. Upstox believes in charging no commission, whether it is a flat charge per transaction or a monthly fee. As a consequence, the consumer saves more money.
Is this, however, an indication that the Upstox brokerage firm is losing money? No.
To achieve its zero brokerage charge concept, Upstox designed a revolutionary business strategy: an online-only firm model.
Upstox has a single central functioning site in Mumbai’s Lower Parel, whereas other brokerage firms have hundreds, if not thousands, of locations around the country. As a consequence, its operational costs are maintained to a minimum while being effective.
Revenue and Growth
Upstox boosted its annual revenue by 99.6 percent to around Rs 154.7 crore in FY20. Upstox has the second-highest number of active users among all stockbrokers, according to data from the National Stock Exchange (NSE), with over 1.85 million active clients. According to the statistics, Upstox generated 80.7 percent of its income through brokerage and associated services fees charged to users on its platform. Their revenue climbed by 104.05 percent to Rs 124.9 crore in FY20.
RKSV Securities’ share trading platform achieved substantial growth, but it came at a cost. During FY20, the Tiger Global-backed company expanded its operations by 2.01 times, while its annual spending increased by 3.11 times to more than Rs 187 crore.
Employee benefit spending climbed 2.5X to Rs 32.4 crore in FY20, from Rs 13.09 crore in FY19. Salary expenditures for directors accounted for 25% of these expenses and rose by 3.7X during the same time period.
Upstox’s advertising and promotion spending climbed 6.6 times to Rs 47 crore in FY20, from Rs 7.1 crore in FY19. In addition, the Indian Board of Control for Cricket has signed a two-year sponsorship agreement with Upstox to become an official partner of the Indian Premier League. The contract is expected to cost the company Rs 45 crore every year, according to reports.
Also Read: Zerodha – From A Crazy Idea To Biggest Retail Broker Of India
Funding and Investors
Upstox has raised around $54 million in three fundraising rounds. The startup received a $25 million investment round headed by Tiger Global Management on November 25, 2021. This financing aided Upstox in reaching a unicorn value, making it India’s 40th unicorn business in 2021.
Future Plans
Disruption and evolution are constants in technology, and the company’s co-founders believe the next stage in that evolutionary process is to become the country’s preferred destination for all banking and financial offers.
Upstox’s ambitions are lofty, with the business aiming for over 300 million members on its network by the middle of the decade. Rather of poaching from the competition, it seeks to do so by emphasizing quality.
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