Guys, Firstly congrats. The app looks sweet. With all the Coin by Zerodha talk happening, my keyword alert engine has been buzzing. I couldn't keep quiet. :)
About buying mutual funds or anything else in demat form, anyone who has used demat accounts will know is a lot more convenient. Yes, Franklin will come soon, but almost all the others are already there. Setting up SIP without NACH, flexibility to move from one demat to another, single portfolio view across all asset classes, easy inheritance to nominee/dependents and more. But yeah, this is up for debate. :)
My question for you though is a little tricky, and I am asking this to every startup building a business around MF in India -especially the direct MF kinds.
How will the business make money?
For Zerodha, selling MF is not the main business. After getting to 150 crores of AUM in 2.5 months selling direct MF (maybe the fastest any online platform has gotten this much AUM ever in India), I am not sure if there is a viable standalone business model to run this at Rs 50/month or say Rs 30/transaction or even upto Rs 2000/year that some other direct MF platforms are charging. I can run it because MF contributes to less than 0.5% of our business and there is no acquisition cost or running cost since this is extension to how we settle stocks in demat. If cost of acquisition is between Rs 500 to Rs 1000 (considering minimum advertising/salary and doing full KYC), and you take 1 to 2 years or more to just recover that cost. How will the business sustain? Is the plan to sell advisory at a higher fees like others, if yes how much?
Have been in this for 20 years, I can also tell you that when markets starts to trend down, people stop investing. Won't your transaction fees model put stress on your balance sheet then?