Zerodha was founded as a barrier-free trading platform in May 2010 by Nikhil and Nithin, the Kamath brothers, and is based out of Bengaluru, India. Zerodha is India’s biggest online broking firm responsible for pioneering the discount broking model in India.
The name is derived from two words, ‘Zero’ and Sanskrit work ‘Rodha’ meaning barrier. The company offers retail and institutional broking, trading and distribution services. They are the titans of digital brokerage firms in India and are also extremely tech-savvy, involved in creating their market data research and analysis tools that help traders be informed and make the right decisions on their trades.
Their product line includes their trading platform Kite, Kite Connect API for developers, Account management system Console, and a wide range of other tools. These make the firm an attractive option for retail as well as institutional traders. Their Financial education system Varsity and Cloud-based Market alert tool Sentinel helps them stay informed about the market. They also have Quicko their tax filing system for traders and Kill Switch, a risk management system for retailers.
As a free trade space that advertises zero barriers and discount broking, Zerodha offers its services at rates attractive enough to capture the lion’s share of the market, especially online. The company follows a volume-based approach to conducting business and generating revenue, where it reduces its commissions and other charges to attract maximum users to its platform, especially retailers. They charge 0.03% or Rs 20, whichever is lower for each inter day and F&O trade, as well as Rs 300 annually for account maintenance. They are the largest stockbrokers in terms of clients, and this is primarily due to their low charges and commission.
The benefit of this model is that the low charges attract more users and this generates more revenue. The crucial point to note is that unless you pull more users than your competitors, the company will lag in income. However, as the first discount broker in the country, Zerodha already has established standing in the country and has amassed a large volume of users which benefits their growth as time passes. The company employs unique strategies and utilizes cutting edge tech to help its users, and spends no money on marketing. This speaks to the goodwill and clout they enjoy in the marketplace. Currently valued at $3 Billion, it contributes to over 15% of the country’s retail stock volume, clocking in at over 6 million users every day.
By capitalizing on the opportunity to be first, and utilizing their volume-based business model, Zerodha has achieved rare success as a bootstrapped FinTech startup. From its accelerated growth during Covid-19 to winning awards and achieving unicorn status in 2020, the company is on a fast track to unprecedented growth. The growth of Zerodha post-Covid comes riding the coattails of the equity market rally after their crash in March 2020. During this rally, Zerodha saw a massive surge in retail investors, reaching almost double their usual numbers pre-Covid. Such growth has also come with many achievements, prominently the ET Startup Of The Year Award for 2020. The company also became the shining beacon of excellence for bootstrapped startups, going unicorn and beyond in 2020. Currently, it is valued at $3 billion, facilitating 15% of India’s retail scene. The company seems to be on the fast track to success, all from bootstrapping.