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What is Upstox API?

• Upstox is one of largest stock broker in India with over 15 million customer base.
• It has multiple verticals as offerings to its users which are:
• • Mobile App to trade and invest
  • Web platform to trade and invest
  • Learning Vertical - called as Uplearn
  • Upstox API

• Upstox API allows users to trade and invest in stock market by the application created by the user or when a user wants third party platform interface. Here, user do not use Upstox app / web platform to transact through Upstox platform

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What is the job to be done with API based trading?

• There are traders who trade using a strict rules / strategy that they have designed and developed
• The user needs API trading because:
• • User need to immediately enter or exit the trade based on the signal generated as per the rules defined and market condition i.e No scope of delay and such trades cannot be manually executed as manual execution can result in delay
  • Risk Management is intact where emotional bias cannot be considered and the entry and exit of trade is based on rules set, thereby incorporating discipline trading
  • User do not need to continously monitor the market as the entry and exit point of trade is predefined
  • The no of orders placed are lot higher than a typical user placing orders manually. Usually it is 3X-5X to normal user, hence manual order execution is not possible
• Typically only day or intraday trader use API based trading. This product does not fit the investor use case

What is the stage where the product is?

• Upstox is relatively in the mature stage. However, the API product is recently launched in 2023. The product is in early scale.
• API users account for 1-2% of active users at Upstox
• Industry standards for each broker is 1-5% of total active users at a broker level
• This is a niche segment and with the introduction of AI, growing knowledge base and awarness of API trading and growing passion for trading specifically from Covid times has led to high growth in this segment

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What is Upstox Value Proposition?

• Upstox API are the most stable API among the competion. Low Latency
• 0 Subscription cost
• No Brokerage Charged till 31st Aug 2023
• Support for 10 language SDK
• Option Chain enabled in API (Useful for traders using table of option data)

Problem Statement:

• Upstox was late entrant to introducing API in its product line. Due to which, some users already migrated to other brokers and hence, not easily switching to Upstox as there is not strong unique proposition compared to competition
• Discoverability needs to be solve as users are not aware that Upstox has API as product
• API is relatively new space in Trading. A large base of new trades does not have product awareness of API based trading and its advantage

We look to solve the discoverability as key objective to drive acquisition.

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Calculating the TAM

What will be the TAM for Upstox API taking the top down approach?

• Total India Population : 143 Crores
• Total No of Pan in India : 8 Crores
• Total no of Demat account in India : 13 Crore

• Total Active Investor in India who atleast placed one order in a year : 4 Crores
• Users who trade (short term) from the total active investor base - approx 15% : 0.6 Crores
• We have got a reference for possible number of traders in India reported by SEBI where it stated that there were around 45 lacs traders trading Futures and Options segment - https://www.livemint.com/market/stock-market-news/only-1-out-of-10-f-o-traders-made-profit-in-fy22-average-loss-stood-at-rs-1-25-lakh-11674656908641.html
• Extrapolating the rise of new demat account and considering SEBI did not reported traders in cash segment, the estimate is that there are 0.6 crores who are daily / positional traders and can look to automate their trades
  

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• Of the 60 lakhs crores trader base, there are two type of traders
• • Discretionary Trader: User who trade with naked eye i.e have no systematic setup that can be automated
  • Non Discretionary Trader: User who has a trading strategy that can be coded or translated to machine with instructions i.e there a logic when to enter and exit a trade

• We don't have any data of any source to give a split of discretionary and non discretionary trader.

• Basis the assumption of interaction with multiple traders, it seem fair to take 20% of users who can have discretionary setup. It means that total of 12 Lakhs can move to automated trading.

ICP

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• We know that the ICP 2 (Freelancer / Working professional / casual traders) and ICP 3 (Full time traders) are the kind of cohort which is largely a broad segment. Here the TAM is relatively large compared to ICP 1 (Founder of Prop funds) and ICP 4 (Influencers)
• We here observe that the ICP 2 and ICP 3 has a good mix of High and Medium attribution for TAM and Scale. Our Acquisition strategy should be concentrated on these 2 ICPs where high volume of users can be acquired.
• However, ICP 1 (Prop Funds / Fintech Platform Founders) & ICP 4 (Influencers) cannot be ignored. They influence the the category of API users as they are experts in this field and has high trust / influencer factor. For them, we need to partner along with them to build trust among ICP 2 and ICP 3

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Channel Decision Framework

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• We need to consider SEO and Paid Ads as primary channel for customer acquisition
• • SEO - Because the cost is low and scale is decent
  • Paid Ads - Even though the cost is high, effort is low and scale is high. Another deciding factor is that channels are highly relevant as user spend most time on these social media channel
  • Partner and Referral have high scale but the effort is too high. Plus lead time will too high when relatively compared to other channels

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Acquisition Channels -

1. Organic - SEO Search

• API Trading is a niche segment . While dissecting keywords, we did not find large search volumes for API trading related keywords
• However, it is a low cost strategy to acquire user. Here, SEO needs to be optimised on certain generic keywords only such 'Algo Trading' Software' and can be used on Upstox brand keywords.
• Competitor keywords needs to be avoided as it is difficult to get outcome. Keywords on use case product to be avoided as well since there is negligible search volume

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Paid Ads

• We need to find an appropriate CAC to experiment paid ads & for which we looked at the LTV number. We took the data of the entire base of churn users to get the accurate LTV
  

LTV observed : 893 INR per user

• Interesting Stat observed for Churned users:
• • Average no of days that user traded is 5 days which is too low since this is a product used largely on recurring basis
  • Possible users for Churn could be (in order of highly possible scenarios):
  • • Users facing loss in trading
    • User lack of knowledge / expertise to leverage this product
    • Product experience is not great
    • User moving to competition, though its Less Likely for a new user

• Max CAC* to be spent = 1 *LTV = approx 900 INR *Continue with this CAC till the product move to mature phase

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Experimental Budget for 3 Months : 15 Lacs per Months

We do a equal split among three channels to find the best channel mix.

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Channel Split​

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Campaign Objective:

• Increase the adoption of API among new and existing customers
• Get the API as product visible among the trading community especially for Non Upstox users

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Campaign to be Targeted to Users with following traits:

• Age : 20 - 60 years
• Tier and Tier 2 cities
• Higher Income group
• Interest (Any one)
• • Trading and Investment
  • Algo Trading
  • Financial News
  • Competitor Channel such as Zerodha, Dhan, Angel one etc
  • Users who have top 10 broker app installed

Youtube Content Targetting - Where do we need to show the Ad?

• Top influencers channels speciliasing in Trading such as Puskar Raj Thakur, Ghanshyam Yadav, Saketh Ramakrishna etc
• Business New channels such as Zee business, NDTV profit etc
• Channels with Algo Trading Content such as https://www.youtube.com/watch?v=_Ykgl07qZ1o&pp=ygUMQWxnbyB0cmFkaW5n
• Competitor channel such as Zerodha, Groww etc

Google Ad Campaigns - When do we show the ads?

• Search Terms: "API trading platforms". "Automated Trading", "Stock market API" etc.
• Websites: Financial New websites, trading blog, forum related to algo trading
• Apps: Trading app, Financial apps

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Ad Formats

• Video Ads (Youtube):
• • Short video of API features
  • Testimonial of users sharing the possibilities with Upstox API
• Image Ads (Twitter, Google Display Network):
• • Creatives highlighting API features
  • Creative sharing the possibility from API i.e Discipline Trading, Take trade while you are working, test your trade strategy with historical data etc
• Text Ads (Google Search Network):
• • Copy highlighting API features with a CTA to sign up now to automate trade

Examples of Ads

• YouTube Script
• • Intro: An User is frustrated for losing money due to a trade as he could not manually watch the market live as he was called in by his boss for a meeting
  • Problem: Share the challenge of manual trading
  • Solution: Share the marketing pitch to trade with automation with predefined rules- Without the need to monitor market actively
  • Call to Action: Callout to experience Upstox API and trade with no stress

• Image Creative

Image: A happy face of trader with trading setup in the background with highlights of API features

HL: Automate your Trades with Upstox API
Body Text: - Free Brokerage until 31st Aug 2024

• • • • • • Fast - Low Latency
          • 0 Subscription cost
          • Support up t 10 SDK for languages such as C, python, Java etc

Product Partnerships

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• API is a hard core technical product and can require technical skill of coding to create automate systems for rule driven trading. India has roughly 15-18 million of users who can code. Estimated from number of github accounts* and added another 30% to get a rough number of 18 million.
  (Source: https://indianexpress.com/article/technology/india-overtakes-us-in-developer-count-github-report-9019364/
  
• In this 18 million coder base, we estimate only 0.5% might have interest, time and knowledge to algo trade i.e SOM is 90 thousand of codes who might have interest in trading as well This is too small number to rely on this cohort. It is required to support non technical users with tools to automate trade. Hence product partner is required.

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• Algo Platforms: Product Partnership with Algo Platforms is key to driving high SOM for both ICP 2 (Casual trader) and ICP 3 (Full time trader) as there is a wide offering by newly emerged Fintech to offer No code tools / platforms where user do not need to code to algo trade.
• • Users need to have advanced trading knowledge to define their trading strategy in a drag and drop templated offered by Fintechs such as Algotest which is connect to user's demat account through Upstox API

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• Learning Institute: Upstox shall partner with Quantinsti and NSE academy who offer online learning program about Algorithm trading. Users can be imparted with advance trading skills and trained with coding skill if they share an interest

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