Product: smallcase

smallcase is a fintech company that offers a platform for investors to invest in curated portfolios of stocks and exchange-traded funds (ETFs). These portfolios, called "smallcases," are created by experienced professionals based on themes, strategies, or objectives.

Key features:

1. Thematic investing: Users can invest in portfolios aligned with specific themes, such as "GST Opportunity," "Rising Rural Demand," or "Smart Cities."
2. Simplicity: The platform aims to simplify the investment process by offering pre-selected baskets of stocks and ETFs, reducing the need for individual stock picking.
3. Lower investment amounts: Investors can start with smaller amounts compared to traditional portfolio management services.
4. Transparency: Users can see the underlying stocks and ETFs in each smallcase, along with their respective weights.
5. Flexibility: Investors can customize their portfolios by adding or removing stocks or ETFs.
6. Partnerships: smallcase has partnered with several leading brokerages in India, allowing users to invest through their existing demat and trading accounts.

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Why did I pick smallcase for my project?

Reasons:

1. Strong growth trajectory: With 7.5 million users and expected to reach 10 million soon, smallcase is experiencing rapid growth in the Indian market.
2. Significant market penetration: 1 in every 5 active demat accounts in India uses smallcase, indicating substantial product-market fit and user adoption.
3. Consistent key metrics growth: smallcase's key metrics have grown by 40-50% in the current financial year, suggesting a sustainable growth model.
4. Extensive partnerships: The company has added 100+ partners, including leading brokerages, investment advisors, research analysts, and wealth platforms, enhancing its distribution and reach.
5. Robust ecosystem: With 150+ SEBI registered individuals and entities creating and managing smallcases, and 400+ strong business partners, smallcase has built a thriving ecosystem around its platform.
   

These factors make smallcase an attractive case study for understanding the drivers of a successful acquisition.

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What stage the company is in & why do I think so?

​Stage: Early Scaling

Here's why:

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Numbers reliant on an article dated Jan 2023 ↗️

• Revenue Growth:
• • Revenue increased over 13-fold in two years, from Rs 2.15 crore (FY20) to Rs 29 crore (FY22).
  • Transaction fees alone grew 2X to Rs 9.76 crore in FY22.
• Beyond Initial PMF:
• • A user base of 7.5 million suggests they have traction beyond the small group of early adopters.
• Investment in Growth:
• • Marketing spending represented 46.2% of their overall expenditure, totalling a 6.2X increase (Rs 60.9 crore in FY22).
  • Series C funding round in August 2022 secured $40 million, highlighting investor belief.
• Loss-making but not unusual:
• • Losses jumped 3.38X to Rs 95.53 crore in FY22, common in companies heavily reinvesting for growth.
  • They spent Rs 4.51 to earn a single rupee in FY22, a temporary imbalance typical of scaling companies.
    

Why not Pre-PMF or Mature Scaling:

• Pre-PMF:
• • Significant revenue, consecutive years of growth, and a sizable user base indicate they've likely moved past the initial 'finding the fit' phase.
• Mature Scaling:
• • Signs of mature scaling are absent: profitability, clear market dominance, and a focus on operational efficiency.
  • The 4.51:1 spending ratio highlights the need to achieve a more sustainable model, with higher earnings matching their growth ambitions.

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Defining ICPs

Note: I have narrowed down to 2 ICPs using the ICP Prioritisation Framework.

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Competitor analysis & smallcases's positioning

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To identify smallcase's top competitors and understand their strengths and weaknesses, I searched for keywords related to the use case that smallcase solves, such as "thematic investing India," "portfolio investment apps," and "stock market investment platforms."

Here's what I found:

Groww

1. Strengths:

• • User-friendly interface and easy account opening process
  • Wide range of investment options
  • Robust educational content and resources for new investors
  • Strong brand presence and marketing efforts

2. Weaknesses:

• • Limited customization options for thematic investing compared to smallcase

ETMONEY

1. Strengths:

• • Comprehensive wealth management platform offering investments, insurance, and loans
  • Personalized investment recommendations based on user goals and risk profile
  • Detailed portfolio tracking and analysis features
  • Partnerships with leading AMCs and insurance providers

2. Weaknesses:

• • Primarily focused on mutual funds, with limited options for direct stock investing
  • Thematic investing options not as extensive as smallcase
  • User interface may be overwhelming for new investors

Stratzy

1. Strengths:

• • Offers a combination of thematic investing and quantitative strategies
  • Provides a platform for users to create and share their own investment strategies
  • Incorporates machine learning and data analytics for investment insights

2. Weaknesses:

• • Primarily focused on quant strategies, which may be complex for new investors
  • Limited educational content and resources for beginners
  • Smaller user base and brand presence compared to established players

TejMandi

1. Strengths:

• • Offers a mix of thematic investing and fundamental stock analysis
  • Provides detailed research reports and analysis on individual stocks
  • Incorporates a gamified user interface to engage and educate investors

2. Weaknesses:

• • Primarily focused on stock picking rather than portfolio creation
  • Limited options for customization and portfolio management
  • Smaller user base and brand presence compared to established players

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Defining smallcase's positioning​

smallcase can further refine its positioning by emphasizing its unique combination of

1. thematic investing,
2. expert curation, and
3. portfolio customization.

Key positioning points:

• Thematic investing made easy: Invest in ideas, not just stocks

• Expertly curated portfolios designed for every investment goal and risk profile
• Unmatched flexibility to customize and adapt your investments
• Seamless integration with leading brokers for a hassle-free investing experience.

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TAM, SAM & SOM for smallcase

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I tried calculating the Total Addressable Market (TAM) using the Top-to-bottom approach:

1. Total Addressable Market (TAM):
2. • Urban population in India: 508 million. Source ↗️
   • Assuming 33% of the urban population is financially literate
   • TAM = 33% of urban population = 0.33 × 508 million = 167.64 million potential customers
3. Serviceable Addressable Market (SAM):
4. • Considering the urban population with internet access: Approximately 80% (based on 2021 estimates)
   • SAM = 80% of TAM = 0.8 × 167.64 million = 134.11 million potential customers
5. Serviceable Obtainable Market (SOM):
6. • Assuming smallcase can realistically capture 5-10% of the SAM due to competition and other factors
   • SOM (lower estimate) = 5% of SAM = 0.05 × 134.11 million = 6.71 million customers
   • SOM (upper estimate) = 10% of SAM = 0.1 × 134.11 million = 13.41 million customers

Therefore, based on the updated urban population and financial literacy rate:

• The total addressable market (TAM) for smallcase, considering the urban population of 508 million and a 33% financial literacy rate, is approximately 167.64 million potential customers.
• The serviceable addressable market (SAM), factoring in 80% urban internet access, is around 134.11 million potential customers.
• The realistic serviceable obtainable market (SOM) ranges from 6.71 million to 13.41 million customers.
• Currently smallcase stands at 7.5 million users.

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Smallcase's core marketing pitch:

Invest in ideas, not just stocks - smallcase makes it easy to invest in expertly-curated, theme-based portfolios aligned with your unique investment goals and risk profile.

Define acquisition channels:​

Based on smallcase's current stage as an early scaling product, the primary focus should be on acquiring new users and expanding market share while maintaining a sustainable cost of acquisition.

The Jobs-to-be-Done (JTBD) for acquisition at this stage would be to identify and leverage the most effective channels to reach and convert the target ICPs (tech-savvy millennial investors and HNIs/affluent investors) into customers.

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Considering the product stage and target ICPs, the following acquisition channels would be most suitable:

1. Partnerships and Integrations​

2. Content Marketing and SEO

• • Create high-quality, informative content (blog posts, articles, videos) that addresses the pain points and interests of target ICPs

3. Influencer Marketing​

4. Paid Advertising (Social Media and Search)

• • Run targeted paid advertising campaigns on platforms like Facebook, Instagram, Twitter and Google AdWords to reach potential customers based on their demographics, interests, and behavior

5. Referral Marketing​

6. PR and Media Coverage: to build trust​

7. Educational Events and Webinars: to build credibility​

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Calculating LTV:

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Given:

• smallcase charges a flat subscription fee of Rs. 100 per month for its services.
• Assume an average customer lifespan of 5 years

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Step 1:

ARPU per month = Monthly subscription fee
ARPU per month = Rs. 100

Step 2:

Frequency = Assuming a customer is subscribed to smallcase all 12 months

Step 3:
LTV = Rs. 100 x 12 x5
LTV = Rs. 6000

Note: This is just the minimum LTV that we are assuming. In reality, LTV would be much higher because of commission smallcase generates from its partner wealth managers when a user subscribes to a fee-based small case.

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the maximum acceptable CAC to maintain a healthy CAC to LTV ratio of 1:3.

CAC = LTV / 3
CAC = Rs. 6,000 / 3
CAC = Rs. 2,000
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With an average LTV of Rs. 6,000, smallcase can afford to spend up to Rs. 2,000 to acquire a single customer through performance marketing channels while maintaining a healthy CAC to LTV ratio of 1:3.

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With a maximum acceptable CAC of Rs. 2,000, smallcase can allocate a portion of its marketing budget to performance marketing channels like Google Search, Twitter, Youtube, Linkedin, Quora, Facebook and other third party ad platforms and affiliate channels like: Colombia, InMobi, PayU and more.

For the purpose of this project, we'll only focus on one key acquisition channel: Google Search.

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Narrowing Acquisition Channels: Google Search

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Let's focus on acquiring tech-savvy millennial investors as the ideal customer profile (ICP) for smallcase, given their higher product-market fit and potential for long-term growth.

Core Marketing Pitch:
"Invest in ideas, not just stocks - smallcase makes it easy to invest in expertly-curated, theme-based portfolios.

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Sample Tweaked Marketing Pitch for Tech-Savvy Millennial Investors:
"Invest smarter, not harder. Discover theme-based portfolios tailored for you and grow your wealth with just a few clicks."

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Paid Ad Strategy for Google Search Ads:

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• Keyword Targeting: Use a combination of broad match, phrase match, and exact match keywords to capture relevant search queries. For example, "thematic investing," "best investment apps," "stock market portfolios," etc. List of keywords can be found here. ↗️
• Bidding Strategy: Start with Manual CPC (Cost-Per-Click) bidding to maintain control over your bids and gradually test automated bidding strategies like Target CPA (Cost-Per-Acquisition) or Maximize Conversions as you gather more data.

• Observe affinity audiences targeting users interested in personal finance, investing, and technology. This data could be later used for targeting users on Display, Demand Gen and Youtube.
• Apply demographic targeting to reach users aged 25-34, with a focus on urban locations in India.
• When structuring your Google Search Ads campaigns for smallcase, it's essential to divide them based on the intent and specificity of the keywords. Here's a breakdown of the campaign types along with suggested keywords:
• Brand Keyword Campaign:
• • Purpose: Capture users who are specifically searching for smallcase or its branded terms.
• Keywords:
• • "smallcase"
  • "small case"
  • "smallcase investing"
  • "smallcase app"
  • "smallcase review"
  • "smallcase portfolio"
  • "smallcase pricing"
  • "smallcase vs [competitor]"
  • "invest with smallcase"
  • "smallcase themes"
• Competitor Campaign:
• • Purpose: Target users who are searching for smallcase's competitors or comparing investment platforms.
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  • Keywords:
  • • "groww"
    • "etmoney"
    • "kuvera"
    • "scripbox"
    • "5paisa"
    • "zerodha smallcase"
    • "groww vs smallcase"
    • "etmoney vs smallcase"
    • "best investment apps in india"
    • "top investment platforms"
• Long-tail Investment Keyword Campaign:
• • Purpose: Capture users who are searching for specific investment themes, strategies, or portfolio types.
  • Keywords:
  • • "thematic investing"
    • "thematic investment platforms"
    • "best thematic investment apps"
    • "invest in electric vehicle theme"
    • "best digital india stocks"
    • "electric vehicle stocks in india"
    • "women-led companies to invest in"
    • "sustainable investment portfolio"
    • "invest in renewable energy theme"
    • "best smallcap stocks to invest"
    • "best AI and robotics stocks"
    • "mid cap stocks for long term"
    • "best blue chip stocks in india"
    • "high growth stocks in india"
    • "best stocks for monthly income"
    • "low volatility stocks in india"
    • "best dividend paying stocks"
    • "value investing strategies"
    • "momentum investing strategies"
    • "best stocks for sip investment"
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