Zerodha is a financial services company in India that primarily operates as a discount brokerage firm. It facilitates stock trading and investment activities for individuals and institutional clients in the Indian financial markets. Zerodha’s core services include providing a platform for buying and selling stocks, commodities, and derivatives, as well as mutual fund investments. They also offer educational resources, trading tools, and APIs for developers. Its mission is to make investing and trading in financial markets more accessible, affordable, and user-friendly for its customers.
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Table of Contents
Brief Overview
Founded – May 15, 2010
Founders – Nikhil Kamath, Nithin Kamath
Location – Bangalore, Karnataka, India
Operating Status – Active
Operating In – Broking, Trading
Legal Name – Zerodha Broking Ltd.
About
Zerodha was established in 2010 and now stands as one of India’s largest stock brokerage firms, creating a vast user base. The company extends appealing brokerage rates for diverse investment avenues, encompassing stocks, mutual funds, and commodities. The name “Zerodha” draws inspiration from the English term “Zero” and the Sanskrit word “Rodha,” meaning “barrier.” It’s unique approach dismantles barriers for traders by levying a flat fee of 20 Indian Rupees (equivalent to approximately 27 cents) instead of a percentage-based commission tied to investment size. Notably, the company allocates a portion of its profits to support the Rainmatter Foundation, an NGO dedicated to combatting climate change.
The Zerodha Founders
Nithin Kamath – Zerodha Founder & CEO
Nithin Kamath the founder of Zerodha founded in 2010. Before that at the age of 17, he came to know about trading and at the age of 17 he put his foot in trading at that time he was also doing job at a call centre. He met Seema (his wife) and they married in 2008. After working for 4 years, he left his job and started working as a franchisee of Reliance Money brokerage firm. He was continuously trying to make a debut and finally, in 2010, he thought he was prepared to start Zerodha and they launched it.
In 2009 as a Reliance Money franchisee, They pioneered a transparent flat fee model in India’s first brokerage industry, saving traders up to 90% on fees. With a tech team joining in 2013, the startup continued innovating and now stands as India’s largest retail brokerage firm and a global trading platform.
Nikhil Kamath – Co-Founder
Zerodha founder Nikhil Kamath is a prominent entrepreneur hailing from Bengaluru, India, who recognized his role as a Co-Founder. Nikhil also found True Beacon (2020) and Gruhas with Abhijeet Pai (2021). Nikhil Kamath disliked school, finding the education system impractical. He excelled only in math. He actively competed in chess at state and national levels during his school years, said in an interview with CNBC. He dropped out after his 10th Board.
At 17, Nikhil Kamath secured a job at a call centre with a fake birth certificate. He traded stocks during the day, moved out with his girlfriend, and managed his father’s savings and his manager’s money. In 2004, he left to co-found Kamath Associates with his brother Nithin, and in 2010, they launched Zerodha, a trading platform named after the Sanskrit word for “barrier.”
The Startup – Revenue and Profit
Zerodha Story
- Nithin, the founder and CEO of Zerodha, began trading in the Indian stock market at 17. While in engineering college, he combined trading with night shifts at a call centre.
- After losing in the 2001-02 market crash, he attracted a foreign HNI’s investment and worked as a sub-broker at Reliance Money (a Brokerage firm). He excelled, acquiring numerous significant clients, surpassing the volumes of over 1000 sub-brokers.
- Another setback occurred in the 2008-09 global financial crisis, prompting Nithin to conceive the idea of creating an accessible and user-friendly online stockbroking company, which ultimately became Zerodha.
- After the launch In its first year, they’ve attracted 3,000 accounts, despite initial skepticism in India about low-cost services. To overcome doubts, they fostered a thriving community, avoiding advertising expenses.
- They introduced Varsity (Karthik Rangappa – ) for education and Trading Q&A for discussion. Leveraging technology, their Kite trading platform now commands over 10% of retail trading turnover. Additionally, they launched Coin, an online mutual fund platform.
- While others suffered, Nithin Kamath thrived, making a remarkable ~900% return by shorting the market. He asked his younger brother to continue trading, focusing on building the startup himself.
Failing to secure VC funding due to market conditions, Nithin invested his INR 1.7 Cr savings into exchange refundable deposits and office space, setting the stage for the startup journey. - According to Analyticssteps, In 2020, they invested in different firms like $400K in ImStrong Health & Wellness, ₹ 3.5M in GoldenPi, ₹27M in Walnut Knowledge Solutions and ₹100M in ERPNext.
- Zerodha, through its initiative called ‘Rainmatter,’ supports innovative Indian fintech startups. So far, Rainmatter has made 11 investments, with 7 of them being lead investments. Their most recent investment was on January 28, 2021, when they backed GrowFix with $2 million in seed funding.
“ Economic Times – With its Rs 1,000 crore infusion into Rainmatter, and around 80 investments, Zerodha becomes one of the largest Indian startups to have a tech-focused fund for early stage companies.”
Zerodha – Challenges
Zerodha distinguishes itself by not offering stock advice or market calls, a deviation from traditional full-service brokers.
The absence of comprehensive reports, be it weekly or quarterly, sets them apart in an industry where such reports are common. However, their online model lacks offline branches, resulting in occasional challenges with customer support efficiency.
Technical glitches, such as brief app outages and charting errors, have occurred due to surges in market traffic but are promptly addressed.
Zerodha – Award
Zerodha – Partners
Ditto
Ditto Insurance was founded in 2020, that provides Fintech and health insurance options, providing coverage for various needs like term life insurance, hospital treatment, doctor consultations, maternity care, and more. Its latest funding round is in 2021 for $483K.
GoldenPi
GoldenPi Technologies, a Bond trading platform, is designed to facilitate traders in the fixed income investment. GoldenPi has secured the distinction of being the first online bond platform to obtain a debt brokerage license from Sebi, fostering trust in online bond investments.
Sensibull
Sensibull is a free platform that provides options for traders to optimize their trades with limited risks founded by Abid in 2016. At present, they have 200,000 monthly active users.
Smallcase
Smallcase is an investment platform that gives ideas to users to invest in portfolios of stocks or Exchange Traded Funds (ETFs). These portfolios are created with strategies, making it easier for investors with their holdings.
Streak
Streak is a platform that provides algorithmic trading solutions for traders. It allows users to create and backtest trading strategies and execute them automatically based on predefined conditions.
Zerodha Products
- Kite: Kite is Zerodha’s trading platform for buying and selling stocks, commodities, and derivatives. It provides a user-friendly interface, advanced charting tools, and real-time market data for traders and investors.
- Console: The console is the back-office platform provided by Zerodha. It allows users to access their account statements, portfolio reports, and various financial statements. Traders can also use it to manage their funds and withdraw money.
- Coin: Coin is Zerodha’s mutual fund investment platform. It enables users to invest in a wide range of mutual funds directly from their accounts, making it easier to manage both stock and mutual fund investments in one place.
- Kite Connect API: Kite Connect API is a developer interface provided by Zerodha. It allows developers to integrate the startup trading capabilities into their own applications, websites, or trading algorithms, making it versatile for creating custom trading solutions.
- Varsity mobile: Varsity is an educational initiative by Zerodha to help traders and investors learn about various aspects of the stock market. Varsity Mobile provides access to educational content and tutorials on trading and investing on the go, enhancing users’ knowledge and skills.
Final Thoughts
Zerodha founders Nithin and Nikhil Kamath, have disrupted the Indian brokerage industry with its flat fee model, making trading and investing more accessible. Their commitment to education, innovative platforms like Kite and Coin, and support for fintech startups through Rainmatter have furthered their impact. Challenges like the absence of stock advice are balanced by their efficiency in addressing technical issues. With partnerships, the firm continues to empower Indian investors and traders, representing its mission to remove barriers in the financial markets.
References:
“Zerodha allocates an additional Rs 1,000 crore to back startups through Rainmatter“
“The curious case study of Zerodha’s blue ocean strategy“
“A Startup that Revolutionised the Indian Broking Industry“
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