Warren Buffett, one of the most successful investors in the world, has a personal net worth of USD 82 billion, making him the third richest person in the world. He inspired and terrified 23-year-old Smriti Tomar, CEO of wealth management company InvestoAsia, at an inflection point in her life.
When Tomar was an undergraduate studying engineering, she wanted to build a wealth management company that used blockchain technology to help people invest in foreign countries.
However, she had reservations too. Buffett had famously said, “Bitcoin has no unique value at all.” He also did not think too highly of Bitcoin’s underlying technology—blockchain. But the instinct to follow her passion got the better of her. Tomar founded InvestoAsia in late 2018.
Recently, the company was selected by the Hong Kong government to represent India at this year’s HKSTP Elevator Pitch event at the Hong Kong Science and Technology Park.
KrASIA spoke with Smriti Tomar, CEO of InvestoAsia, to hear about how she set up her company and her future plans.
KrASIA: Why did you set out to build InvestoAsia?
Smriti Tomar (ST): In October 2017, during a student exchange program between India and South Korea, I learned about a student from South Korea, Joon, who wanted to invest in India. When I started to do research to find out how Joon could invest in India, I realized, much to my shock, the road to foreign investment was littered with tedious processes that were difficult for an outside investor to comprehend. There were roadblocks such as hefty trading fees, liquidity risks, long application process times, account opening fees, brokerages, currency risks, and advisory fees, among others.
This hardened my resolve to set up a company that would help others like Joon invest by bridging the gap using blockchain technology. I wanted to build a solution from scratch that was borderless, operational 24/7, highly liquid, easy to join, thematic funds-enabled, and affordable. I worked on that with my team. By November 2018, a digitized securities offering was available through my company InvestoAsia.
Kr: Can you talk about how you set up the company after completing your studies at the National Institute of Technology?
ST: In my late teens, I was trading stocks using my father’s demat account as I did not have one. And I did well. At this phase, I wanted to help others invest and equip them to build a passive income.
After graduating from NIT, as part of a student exchange program, I went to Korea and stayed there for three months. After returning to India, I got a job with Citibank. Though I was a working professional, I was consumed by the urge to start my own venture to help others invest, and I did a lot of research. I started to learn about blockchain technology too. And then I developed a software application, for which I filed a patent—it covers how to use blockchain in capital markets, investments, securities, and how to trade on blockchain. We incorporate distributed ledger technology, artificial intelligence, and machine learning into our products and solutions.
Kr: What were the challenges that you had to overcome while building the platform?
ST: Between October 2017 and November 2018, I faced regulatory challenges. I liked how people could invest from India to China and vice versa. The stringent rules for foreign portfolio investment, foreign direct investment, and checks on investors were a hassle, and a lot of money was needed to wade through these regulations. It can be hard if you are not a high net worth individual.
The other challenge was that the blockchain technology we had designed didn’t find many early adopters, as this technology is still nascent in India. The Indian government does not endorse blockchain as much as, say, the Singapore government. The third challenge was a lack of financial awareness in India, especially concerning personal investments. People still put money in banks and fixed deposits, and don’t really utilize the money.
Kr: How is blockchain incorporated in the company’s operations?
ST: The company is using blockchain to issue securities on the platform, to create a digital footprint of every investor so that the process is more secure. Further, we are exploring remittance solutions with banks. Our long-term plan is to enable peer-to-peer trading over blockchain as well. But all of this will not be launched in India given the government’s unclear stance on blockchain for now. It is suitable for other marketplaces like South Korea.
Kr: What are the processes that a user needs to go through to use your services?
ST: We have a simple user interface. When an investor comes on board, there is routine KYC and verification. We then incubate his or her bank account and sync it to our platform. There is a monthly auto debit, after which he or she can automatically have access to a portfolio of solutions related to funds and stocks. Our experts also create a customized portfolio solution based on the investor’s risk appetite. We have all types of customers—from the novice, to people who have invested extensively in India and now want to train their sights overseas, as well as high net worth individuals.
Kr: What is your flagship product?
ST: Besides providing solutions to our customers to simplify investing across borders, we have products for personal finance too. Our unique selling proposition is the integration of these two demands. Our flagship product is Stack Finance. It helps a newly employed person or even someone who is in college with managing their personal finance concerning savings, credit cards, shopping expenses, and investments in Indian and international stock markets. We believe this could be something revolutionary.
Kr: How big is your team?
ST: We are a seven-member team sitting in Delhi and Bangalore. In a couple of months, three of us will shift to Hong Kong. I take charge of operations and investment. Others are distributed over technology and finance, like blockchain developers and fintech experts, respectively. We have an advisory board with experts from finance, technology, bureaucracy, and legal matters, with experience in international markets. They all have contacts of the who’s who in financial circles, which will be extremely beneficial for us when we scale up our company.
Kr: What are the strategic reasons for setting up an operation in Hong Kong?
ST: Hong Kong is the financial hub of Asia and it makes good business sense for a financial company to be based there. Also, lots of international funds are listed on the Hong Kong Stock Exchange and it would give us maximum exposure to Asian stock markets. It is the only country after Australia to provide virtual banking licenses. We also want to be a virtual bank in India in the future. Sitting in India, it is very difficult to invest in China and Hong Kong. This is what we would like to facilitate after setting up our base here.
Kr: How different is the Indian market compared to others?
ST: The Indian market is closed when compared to other markets like the US or Europe. China is even more closed than India. We are looking at growing from Asia outwards, because 18 out of the 25 emerging economies in the world are in Asia. The fact is the Asian economy will dominate the world in the coming years.
Kr: Who are your customers and competitors?
ST: We have customers largely from India and South Korea. Right now, we have nearly 50,000 registered users on our platform. Traditional banks, discount brokers, and interactive brokers are our competition. However, we are also collaborating and partnering with traditional banks to generate users for them. We can’t operate single-handedly without banks and have plans to provide our customers with savings accounts, credit limits, and further on have envisaged tie-ups with non-banking financial companies too. Currently, virtual banks or neobanks—which are branchless banks that operate online and provide services at a much more affordable, faster, and convenient manner than traditional banks—are the flavor of the season, which we have taken note of and have set our sights on too.
Kr: What are your plans for the future?
ST: We are working on product line preparation, operational efficiencies, and automation. And are waiting for an advisory license from India and Hong Kong. The plan is to increase financial literacy in India so that more people make better use of their dormant money by investing. We want to innovate until everybody is investing.
In India, there are only 5.6–6 million investors. That’s a very small percentage of the population. However, growth in India would mean that by 2026, there would be 80 million investors in the country, according to statistics I am privy to. We want to have 2–3 billion assets under our management by the time we are fully operational in the next 5–6 years. We have future plans to expand to South Korea, China, Thailand, Vietnam, the US, and Europe.
Kr: Why are there so few women in the top echelons of finance?
ST: Women are a bit risk-averse when it comes to financial investments. They need to push the risk button and take the leap. Basically, women lack the confidence and courage to climb the ladder here, unlike men, because of social conditioning. Lack of exposure and opportunities are other reasons. I would like to help other women by developing an incubator to give women awareness, investment opportunities, and mentorship.
This article is part of “Women in Tech,” a series by KrASIA that highlights the achievements of women who are a driving force behind South and Southeast Asia’s tech startups.
The interview was edited for brevity and clarity.