Daily gold savings app Jar on Wednesday said it has raised $4.5 million from a clutch of high profile investors like Arkam, WEH, Tribe Capital and angel investors including CRED’s Kunal Shah, Xiaomi’s Alvin Tse, and Stonks’s Ali Moiz.
Jar was founded by Nishchay AG, one of the founding members of mobility startup Bounce and Misbah Ashraf, who founded social commerce startup Marsplay, which was sold to Foxy last year.
Jar’s premise is simple. It estimates that more than 900 million Indians have a bank account but only about 30 million of them make any kind of investment.
Jar wants to solve that by allowing users to start investing from as low as Re 1 and invests that money in digital gold. Gold, because it is an investment that is universally understood in India, reckons Jar. Importantly, thanks to the sentiments attached to gold, short term swings in price here are far more tolerable as compared to say, stocks on mutual funds. In other words, gold automatically attracts investors with a long term view.
Jar can also detect expenses from a user’s SMS folder and round it off to the nearest 10 to generate a spare change for each of their expenses.
For instance, if a user has spent 27 rupees on a transaction, the app rounds up that money to the nearest 10th — which is 30 rupees in this case and invests the difference (3 rupees) in digital gold. The company gets a commission from its supply-side i.e. SafeGold.
The whole process is automated, as users can also set up a recurring payment method that for now works with Paytm. And it appears that the idea is finding takers. Since its launch three months ago, the company claims that the Jar app has grown consistently by 350% each month.
However, there is more to come. The founders said gold is only the first financial instrument in Jar’s journey. They plan to expand their offerings in the near future. They said they will invest the new funds to grow their team and build more products.
Jar doesn’t have direct competitors in India but is based on an idea similar to Acorns and Stash in the US.
While digital gold is catching on in India, every startup will face the issue of trust, when handling gold for customers. They have gone about earning that trust in various ways, be it through partners (Paytm and SafeGold in case of Jar) or by earning it, which is a long road.
It’s an area that is likely to be the biggest challenge for Jar too, especially since it targets users who one could argue have found it tough to even access or trust the vast banking system of the country, per Jar’s own statement. How Jar does that, and how investors reward the firm for doing that, should be the story to watch here in time.