Sequoia India leads Series B funding round in investment research firm Smartkarma

Smartkarma, an investment research startup, has closed its Series B financing round led by Sequoia Capital India, the company said in a statement on Monday.

Existing investors Wavemaker Partners, Jungle Ventures and Spring Seeds also participated in the round.

The company didn’t disclose the amount it mopped up but said the latest round brings its total fundraising to $21 million (Rs 135.8 crore).

A report in Bloomberg stated that Smartkarma secured $13.5 million (Rs 87.5 crore) in its Series B round.

The firm's platform connects investment managers with a large community of experts, analysts, and researchers.

Operated by Smartkarma Innovations Pte Ltd, the Singapore-based company was founded in 2014 by finance professionals Raghav Kapoor, Jon Foster, and Lee Mitchell. Kapoor and Foster were co-founders of brokerage services firm Aviate Research, which was acquired in 2010 by investment banking firm Religare Capital Markets.

“The traditional equity research model has been broken for a while. Smartkarma is empowering independent researchers and creating a new paradigm of transparent pricing in this industry,” said Shailendra Singh, managing director of Sequoia Capital India, in the statement.

Smartkarma will use the funds to consolidate its leadership position in the Asia Pacific region by strengthening its network of independent insight providers, augmenting the tools and features on the platform, and will offer services beyond the published content currently available.

The additional funding is also expected to support Smartkarma’s international expansion. In September, it launched a UK office, which will serve as a hub to build its independent research analyst community in Europe and support its buy-side investor clientele.

Smartkarma’s expansion comes at a time when the European Union is rolling out Markets in Financial Instruments Directive (MiFID II), an EU banking legislation that will force transparency around supply and payment for research. The legislation, which comes into effect in January 2018, requires investment banks to charge for research, which has long been bundled with trading commissions and other services fees. Institutional investors are seeking innovative research solutions as the deadline for compliance with MiFID II approaches.

“We are immensely proud of the innovative ways Smartkarma is reshaping the investment research industry and the voice we are giving to independent insight providers. We recognised early-on that the market was fractured and there was an opportunity to reinvent how research is created, shared and used in order to drive an unconflicted and efficient industry,” said Jon Foster, co-founder and chairman of Smartkarma.

Others startups that provide financial robo-advisory services include WealthApp Financial Advisors Pvt Ltd, which in December 2016 secured Rs 3 crore ($440,000) in angel funding from NuVentures’ managing partner Venk Krishnan and Daksh eServices co-founder MJ Aravind.

Scripbox, Tauro Investment Advisors, Goalwise and WealthTrust are other players in the robo-advisory segment. In July, Bengaluru-based Scripbox.com India Pvt. Ltd secured its Series B funding round led by Omidyar Network. Goalwise secured $1 million in angel funding in March and Tauro secured seed funding from TracxnLabs and other angels in February.

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