This fintech firm lets you invest in startups, private companies for as little as Rs 50,000

Anurag Bhatia had a knack for trading since his school days. His business took off way before his wealth management company Minance came into existence. While working at Amazon India, Bhatia gave his employees stock tips and started making some money on the side. After tasting success, Bhatia decided to take it up full time.

Bhatia, along with a friend, set up Minance in 2014, where he is the CEO and Head of Investments. Bhatia took all the help he could get from former colleagues to give his Bengaluru-based startup an organic growth right from its inception.

The five-year-old company has assets under management (AUM) worth over Rs 315 crore and its returns vary from 30 to 100 percent over a period of 1-3 years. The company charges only a performance fee of 10 percent per annum on certain services only after the customer makes a profit because Bhatia believes Minance works for the customers.

The firm recruits clients mostly through word-of-mouth. In its first month, Minance got nearly 50 clients. Today, it manages close to 3,000 customers. The first 100 happy customers became our advertisers, Bhatia said.

The aim of the company remains constant: to make investing simpler, transparent and more accessible in India. Bhatia attributes his company's growth to the long-term relationship they develop with customers and their "innovative financial products".

One such service by Minance which caught investors' attention is Private Assets, which lets people acquire stocks in startups and private companies just like venture capitalists. Here is the catch: unlike other investment companies that require a minimum investment of Rs 1 crore, Minance lets you invest as little as Rs 50,000.

"These are growth companies that are about to get listed, like Kurlon and Paytm. We either acquire these stocks from the employees of these companies or contact the promoters or their family members for the same. Another way is to contact bigger companies like Reliance Capital or IIFL and buy their investment in unlisted companies, divide them into chunks and sell it to our customers," Bhatia told Moneycontrol.

Bhatia explained that private assets are not the same as mutual funds because in the latter, investors only get a unit or NAV but Minance allots shares of the startups to retail investors based on the amount they put in.

"For example, if an investor wants one share of Paytm and he invests around Rs 20,000, in return he will get 1 share in his demat account," he said.

This product was launched two years ago and it has seen 500 percent growth year-on-year. When asked about tax implication for shareholders, Bhatia said, "An unlisted equity share is considered a long-term capital asset if it is held for more than 24 months. For long term capital gain, the tax rate is 20 percent after indexation benefit and for short term capital gain, it is taxed at the slab rate of an individual."

Another product that Bhatia is proud of is 'Assets Pay Cash', which offers up to 12 percent extra returns per year on top of the returns one would get from the fund. "Who wouldn’t want that?" he exclaimed.

Customer is king at Minance, where in-house strategists and market specialists avoid overpromising and under-delivering and are in constant communication with their clients, even when they make errors, said Bhatia.

Financial literacy has not reached the level it should in India, according to Bhatia. But his firm is not looking at introducing an educational platform anytime soon. Minance's clientele is not first-time investors. They deal with financially well-equipped investors who either bring in money and want regular income out of it, want to invest a large sum for the long term or want to invest every month and build a corpus.

After working with India's clients and capital markets for the past five years, Bhatia observed that Indian investors are very quantitative about returns, but not about risks. "If given an option between 20 percent return in a low-risk product and 30 percent return in a high-risk product, they will choose the latter just for the higher return," he said. He also found that they are not very goal-oriented and become impatient too soon.

Next up for Minance is an upgradation of their technology to make certain services automated for their customers. After providing services in investment and taxation, Bhatia now wants to delve into insurance and credit as well, covering what he calls 'the four pillars of wealth management' in India. The company also plans to open satellite offices in Pune, Hyderabad and Chennai soon.