Traditional methods of savings are going through a paradigm shift. This is because Indians are increasingly diversifying their investment portfolios, seeking higher returns than those offered by traditional instruments like Fixed Deposits (FDs), Recurring Deposits (RDs), and gold.
One of the major reasons behind this shift is the rise of fintech startups in the country. While players like Zerodha or Groww have seamlessly connected Indians with more volatile share market investment opportunities, others like Jar or Gullak have played a key role in offering less lucrative but much safer saving avenues.
However, the challenge lies in finding Indian fintech platforms that provide a balance between secure investment options and attractive rewards. Such platforms are relatively scarce in an investment landscape often characterised by either low-risk, low-return options or high-risk, high-return ventures.
In a bid to serve this addressable market, Ahmedabad-based Parth Shah and Yaagni Raolji introduced a fintech startup GoldPe, which allows users to invest in digital gold with as little as INR 10. It also offers a chance to win a maximum of INR 10 Lakh every week upon buying digital gold worth INR 100 and above.
Launched in April 2023, GoldPe aims to “revolutionise the way Indians save” by making it a rewarding yet safe experience,” according to the company’s website.
However, this is just one facet of the investment tech platform. GoldPe can also be seen as the answer to the growing number of fantasy apps that today leave many individuals in debt, as users continue to lose money in the hope of a hefty windfall someday.
Speaking with Inc42, Shah of GoldPe said, “Through the GoldPe app, users can cultivate the habit of savings with the potential for significant rewards, all while enjoying superior economic value compared to traditional savings avenues. Even in the absence of a prize, users’ funds accrue over time, offering a pathway to financial growth.”
The startup today has a user base of 2.25 Lakh individuals, who have invested in digital gold via GoldPe and actively leverage the startup’s prize-linked savings (PLS) offering. Since its inception, the company has served around 55K winners.
The Genesis Of GoldPe
Before founding GoldPe, Shah and Raolji launched a personal finance management (PFM) app, SPAC, in 2022. Despite raising INR 71 Lakh from 100X.VC and a group of angel investors in the same year, SPAC faced closure in May 2023 due to its inability to compete with established players like ETMoney, Fisdom, and Moneysights. The app garnered only 10K downloads throughout its 1.5-year lifespan.
While the founders were brainstorming on their next move, Shah recalled his childhood years in Kuwait, when his father used to put up his savings in Kuwait’s Gulf Bank, which would allure consumers with a lottery called AlDanah Millionaire draws.
This concept (aka prize-linked savings scheme) is also common in the UK, the USA and the Middle East. Under this scheme, users typically deposit funds into a PLS account at a regulated bank. Each deposit earns them entries into periodic cash prize draws, akin to a lottery but hosted exclusively by financial institutions, ensuring legality.
Thus began the modest beginnings of GoldPe. Notably, the founders utilised the remaining investor funds to establish their new startup.
All the puzzle pieces fit together, as GoldPe’s PLS system avoids regulatory hurdles as it falls within the realm of in-app rewards. Further, since GoldPe is not a registered bank or a non-bank financial institution (NBFC), the startup banked on digital gold to initiate its PLS foray.
For this, the cofounders partnered with integrated gold player Augmont and facilitated payments through their banking partner DBS Bank to get the ball rolling.
“As a new startup, you wanted to remove all the barriers to conduct business smoothly. The only reason we chose gold was because there are very less compliances and users can start saving without any KYC requirement. Further, there is no cap for investments. With us, one can even invest as little as INR 10 to buy digital gold,” said Shah.
Fixed returns that one may get due to the fluctuation in the price of gold are independent of the winnings. Meanwhile, Shah credited startups like Jar and Gullak for educating people about the promise of digital gold, thus creating trust in the asset (Gold).
Moving on, users can invest as little as INR 100 to participate in weekly lucky draws — of course, you get to keep your gold. Every ticket has a total of six numbers. GoldPe unveils one digit every day for six days, generally announcing the winners on Saturdays. The company claims to have sold more than 10 Mn tickets. GoldPe earns a 3% commission from Augmont on every transaction. The startup fills the pot using 1% of the 3% commission it gets from Augmont.
Challenges And Way Ahead
As of now, GoldPe is faced with the mammoth task of retaining its users. This is because there are quite a few user complaints about delays they face during withdrawals.
“The delays usually occur because transactions are exclusively through Unified Payments Interface (UPI). With UPI, many times transactions get delayed or cancelled due to the recipient’s bank’s server or our banking partner DBS bank’s server being unresponsive,” Shah informed.
To address this, the startup has now empowered its users with the IMPS option to facilitate instant interbank electronic fund transfers.
The investment tech platform is also in talks with YES Bank to make their second banking partners. Shah claims that these measures would rectify 9 out of 10 withdrawal issues faced by users as of now.
On a macro level, GoldPe competes with startups like Jar, Gulak, YottaSavings and Prizepool.
As of now, the startup solely depends on the commissions it makes from the gold transactions. It plans to increase its offerings in the next six months. In addition, GoldPe is targeting to expand its network to 5 Lakh users, with 30% transacting users, in the next six months.
“If this goal is achieved, we will be introducing other asset classes. FDs will be the first asset that we plan to launch, followed by P2P lending. With the addition of each asset class, our revenue stream will grow with commissions earned from users’ purchase of assets other than the goal,” Shah added.
GoldPe’s only competitor in the PLS space is Fello, which surpassed a user base of 500K in January last year. Set up two years before GoldPe, Fello raised $4 Mn in a fresh funding round led by US-based Courtside Ventures early last year. Fello also sees users invest in digital gold to participate in weekly lucky draws.
With the lucrative PLS scheme, GoldPe aims to change how Indians invest in gold. The investment tech industry is on an expansion streak, and Inc42 estimates that the market opportunity in this space will surge to $74 Bn by 2030 from $9.2 Bn in 2022.
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