Personal financial management can be intimidating. Most people are not familiar with the ins and outs of securities—of money in general—and figuring out how they work is a daunting task. Often, people end up keeping all of their money in the bank. While that cash remains safe and sound, you could lose out if interest rates do not keep up with inflation, Dhruv Arora, CEO and founder of digital wealth management platform Syfe, told KrASIA.
High-net-worth individuals may utilize the services of a wealth manager, but management fees can be exorbitant. After spending seven years leading the exchange traded funds (ETFs) distribution desk at UBS Investment Bank in Hong Kong, Arora noticed that fund products were mostly built for ultra-high-net-worth clients. He wanted to change that.
Arora believes that wealth management should be available to everyone. He realized that a digital wealth management platform could serve as an attractive alternative to low-interest savings accounts for those who prefer passive investing. The seed took root in Arora’s mind, but something was missing. “At the time, I didn’t know how to build a technology company from scratch,” the 36-year-old founder said.
Arora took a detour and served as vice president of Indian online grocery startup Grofers, leading its product design and growth teams. “My tenure at Grofers helped me understand how to build a business-to-customer product as well as take care of different aspects of business, such as user acquisition and customer experience,” Arora said. He founded Syfe in 2017, and it took the firm “12 to 18 months” to be licensed by the Monetary Authority of Singapore to conduct retail and institutional fund management activities. Arora used this time to build his team and products. In July 2019, the firm launched its mobile app and received USD 3.81 million in seed funding from UK-based VC fund Unbound.
While there are an array of similar firms around Southeast Asia, the startup differentiates itself with diverse product offerings in accordance with customers’ investment goals. Its seven investment products cover a wide range of stocks, equities, bonds, and ETFs across the world. It also provides an advisory service through its team of financial advisors.
Syfe is tapping into the Asia Pacific’s wealth management market, which is set to outpace every other region in the world in four years, doubling from 2017’s USD 15.1 trillion to USD 29.6 trillion in 2025, according to a report published by accounting firm PwC. Investors see promise in the move. Syfe closed its USD 30 million Series B funding round in mid-July. The investment was led by US-based Valar Ventures and took the company’s total capital raised to USD 52.6 million. Although Syfe has clients in 42 countries, the company only advertises its services in Singapore, according to Arora.
“The big difference between us and other players is that we do a lot of product-driven innovation and partnerships. Most players only have one product offering, but we now have seven offerings across different demographics and investment goals. Our users on average own three to four portfolios to grow their wealth,” Arora said.
Most of Syfe’s revenue comes from its annual management fee, which starts at 0.35% of the invested balance. Although Arora did not disclose Syfe’s assets under management, he did indicate that the company is not profitable yet. “Given that we have multiple products, it actually leads to multiple streams of revenues,” Arora said. “We built the entire technology stack by ourselves, so the cost of operation is extremely low.”
“We could be profitable in the next three months, but I think for startups at our stage, it’s always about finding the balance between growth and profitability. Currently, our focus is on growth,” he added.
Fierce competition could be a roadblock for Syfe’s growth. In Singapore alone, a litany of robo-advisory upstarts have emerged in the field, including Endowus, which snatched investments from UBS AG, Samsung Ventures, and Singtel Innov8 in early July. It took three years for Singapore-based StashAway, which bagged USD 25 million a Series D round led by Sequoia Capital India in April, to cross the milestone of USD 1 billion in assets under management, making it the largest player in the region by that metric.
Local banks including DBS, OCBC, and UOB have also joined the fray by offering similar services or financial planning platforms, but competition is much less of a concern for Arora. “The industry is at a very early stage, so I don’t think the competition is here yet. The question is how do we stay relevant in the market, and the key lies in innovation. It is great to have new players joining the field, even if 10% of the customers are willing to move their money away from the banks, it is still net-positive for everyone,” he said.
Read this: Robo-advisor Endowus steps deeper into Singapore’s crowded wealth management sector