Fundraise to drive international expansion and reshape the investment research industry
Smartkarma, Asia’s largest provider of independent investment research, today announced it has closed a Series B round of financing led by Sequoia India, which brings the company’s total funding to US $21 million.
Smartkarma is disrupting the traditional model of investment research, which has long been dominated by investment banks. It is a model in a state of flux: banks are under pressure from regulators to improve pricing transparency and resolve inherent conflicts between their research and investment banking departments. Many investment banks are also downsizing research desks due to cost constraints, resulting in a decline in the depth and breadth of coverage of certain stocks, assets and sectors.
Smartkarma’s platform connects investment managers with a large community of experts and analysts, and a wealth of independent, unbiased research. The company has seen rapid adoption since the launch of its platform in 2016.
- Over 400 independent analysts covering more than 2,400 companies across 15 Asian markets, now contribute to Smartkarma’s cloud-based platform.
- Insights are published daily with active minute by minute discussions, where themes and ideas are debated, discussed and questioned among a community of experts, in real time.
- Over 150 leading institutional asset managers have subscribed, including sovereign wealth funds, global asset managers, hedge funds, boutiques and family offices, worldwide.
- The top 10 clients alone have over $13.5 trillion under management.
The company was founded in Singapore in 2014 by Raghav Kapoor, Jon Foster and Lee Mitchell who, together, have over 35 years’ experience in equity research, marketing and sales. Kapoor and Foster were also co-founders of Aviate Research, which was acquired in 2010 by Religare Capital Markets.
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Existing investors, including Wavemaker Partners, Jungle Ventures and Spring Seeds, joined the Series B round led by Sequoia India. The continued support of these leading venture capital firms underscores Smartkarma’s future growth and market opportunity.
“The traditional equity research model has been broken for a while. Smartkarma is empowering independent researchers and creating a new paradigm of transparent pricing in this industry.” said Shailendra Singh, Managing Director of Sequoia Capital (India) Singapore Pte Ltd. “The early success of the company is a strong testament to their innovative business model, and the team at Sequoia is excited to be part of this journey.”
Smartkarma will use the funds to consolidate its leadership position in the Asia Pacific region by strengthening its network of independent Insight Providers, augmenting the tools and features on the platform, as well as offering further services beyond the published content currently available. The additional funding will also support Smartkarma’s international expansion. In September, Smartkarma launched a UK office, which will serve as a hub to build out its independent research analyst community in Europe and support its buy-side investor clientele.
Smartkarma’s expansion comes at a time when the EU is rolling out MiFID II, banking legislation that will force transparency around the supply and payment for research. That legislation, which comes into effect in January 2018, requires investment banks to charge for research, which has long been bundled with trading commissions and other services fees. Institutional investors are seeking innovative research solutions as the deadline for compliance with MiFID II approaches.
“We are immensely proud of the innovative ways Smartkarma is reshaping the investment research industry and the voice we are giving to independent Insight Providers. We recognized early on that the market was fractured and there was an opportunity to reinvent how research is created, shared and used in order to drive an unconflicted and efficient industry,” said Jon Foster, Co-founder and Chairman of Smartkarma. “This round allows us to extend our global reach and insight offerings to bring true value to investors.”