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How Grip is Building India鈥檚 Largest Alternative Investment Platform - YouTube
Channel: Backstage With Millionaires
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at this point in the 21st century it's possible聽
to live completely within the sharing economy聽聽
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you don't need to own anything you can find聽
an apartment or a pg on stanza living or聽聽
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zolo somewhere close to where you work you can聽
rent furniture and appliances from ferlenco or聽聽
[14]
rento mojo you can get your subscription water聽
from drink prime and then if your office is聽聽
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close enough you can hop on a ulu and get there聽
without walking or if you need to travel further聽聽
[23]
there's even e-bike subscriptions now too you聽
can rent an electric two-wheeler long-term聽聽
[27]
with evs or zip electric and of course you've聽
also got ride healing companies like ola and聽聽
[32]
uber and while you're sitting in your cab you're聽
not going to watch a dvd or listen to a cd or a聽聽
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song that you bought on itunes you're going聽
to pull out your phone and watch netflix or聽聽
[41]
listen to gl7 or spotify and this is basically聽
normal for a lot of us right this is just how we聽聽
[47]
live our lives why buy something that's probably聽
going to end up depreciating in value over time聽聽
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when you can just rent it or subscribe to it聽
you don't want to be tied down to a car loan聽聽
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or a mortgage or boxes and boxes of stuff you聽
want to be unburdened you want to be mobile and聽聽
[63]
liquid and this is a powerful idea it's attractive聽
it's exciting which is why the sharing economy is聽聽
[70]
a two billion dollar market right now and it's聽
not just something that individual consumers are聽聽
[75]
gravitating towards companies are also beginning聽
to adopt this asset light model this is why sas聽聽
[80]
has become so huge in recent years software as聽
a service companies don't want to build software聽聽
[86]
in-house they want to subscribe to it and it's the聽
same thing with offices companies like wework and聽聽
[92]
indiecube are offering plug-and-play enterprise聽
office solutions and if you want to take care聽聽
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of your employees commutes there's plenty of fleet聽
management companies like everest fleet but now we聽聽
[101]
have an interesting question to answer what if you聽
want to provide these services what if you're a聽聽
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startup founder and you want to build a company to聽
meet the needs of india's rapidly growing sharing聽聽
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economy i gave the example of yulu earlier but how聽
do you create a fleet of thousands upon thousands聽聽
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of electric scooters another example would be聽
stan plus a 15-minute emergency response service聽聽
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with a fleet of 900 ambulances or if we're聽
talking furniture then how do you create an聽聽
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inventory of thousands of tables chairs sofas and聽
beds like ferlenco well the conventional path of聽聽
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course is to raise funds from investors you go and聽
meet with a few dozen or maybe 100 vcs and try to聽聽
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convince them to let you give them stake in your聽
company in exchange for capital but nobody wants聽聽
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to give up equity in their startup and so the next聽
idea that comes to mind is borrowing from the bank聽聽
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and a lot of startups do this and maybe you have聽
to put up some collateral your house for example聽聽
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but that's one way to avoid giving up ownership聽
in your company but what a lot of people don't聽聽
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realize is that there's a third option and no it's聽
not borrowing money from family and friends it's聽聽
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called lease investing and i know that that term聽
probably doesn't mean anything to you but don't聽聽
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worry it'll make sense soon and to illustrate聽
how this actually works and why it's needed i'm聽聽
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going to tell you guys a short story because this聽
way of financing a vehicle fleet or an inventory聽聽
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hasn't always been a thing the year is 2009聽
and a young mba graduate by the name of nikhil聽聽
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agarwal has just started his career at hsbc bank聽
from there nikhil will end up at morgan stanley聽聽
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where he's able to work with startup founders and聽
helps them to take their companies public and this聽聽
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experience inspires him he decides that he wants聽
to jump into the world of entrepreneurship himself聽聽
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leaving the investment banking space behind to聽
start a disruptive company in transportation聽聽
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this startup was called cello and it would go聽
on to become india's number one bus transport聽聽
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technology company building chella was an exciting聽
time in nikhil's life he learned a lot about聽聽
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mobility on the ground about the ins and outs of聽
transportation in india for everyday people it聽聽
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was a micro view a master class in getting people聽
from point a to point b but after spending about聽聽
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three years getting cello up and running nikhil聽
realized that he also wanted to gain insight into聽聽
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the macro view he wanted to understand mobility聽
from a global perspective so he handed the reins聽聽
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over to his co-founders at cello and joined the聽
world bank as a consultant and he's still there聽聽
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to this day but and this is where things start聽
to get interesting during his first few months聽聽
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at the world bank one of the biggest problems聽
that he identified in the global mobility space聽聽
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was scalability service startups like cello聽
need tons of capital in order to build fleets or聽聽
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inventory without this capital they just can't get聽
off the ground quickly enough to be competitive聽聽
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and as somebody with experience on both sides of聽
the investment space nikhil knew that india was聽聽
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full of investors looking for exciting new places聽
to grow their wealth and this is where the light聽聽
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bulb moment happens nikhil thought why not just聽
combine these two problems and create one solution聽聽
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connect retail investors with startups that are聽
trying to finance a fleet or inventory no need for聽聽
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a bank loan no need to trade equity for venture聽
capital instead mcgill realized that he could聽聽
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offer startups a sort of crowdfunded investment聽
solution in the summer of 2020 in the middle of聽聽
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the covid19 pandemic nikhil launched this solution聽
this inventory financing lease investing platform聽聽
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along with his two co-founders ashish jindal聽
and vivekulati it's called grip and it's india's聽聽
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largest alternative investment platform but聽
how does it actually work and more importantly聽聽
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how can you as a startup founder or as a retail聽
investor participate well let's take a look at聽聽
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an example so earlier i mentioned zip electric and聽
they're one of india's leading eevee as a service聽聽
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platforms they have a fleet of over 2 000 scooters聽
across 10 indian cities but they didn't buy all聽聽
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of these scooters themselves if they had it would聽
have cost them close to 10 groupies for the entire聽聽
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fleet so this is where grip comes in they enabled聽
zip electric to secure funding so that they could聽聽
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build this fleet first zip electric paid grip ten聽
percent of the amount that they needed to build聽聽
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this fleet so let's say one crore rupees this was聽
a security deposit kind of like how a bank would聽聽
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take collateral and then grip went out and raised聽
money from investors on zip electric's behalf once聽聽
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they'd gotten commitments from enough investors聽
for the amount that zip electric needed to build聽聽
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its fleet grip created a special purpose vehicle聽
an llp that pays for and owns the fleet that's why聽聽
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i said earlier that zip electric didn't actually聽
buy their fleet of electric scooters and they聽聽
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don't own it either their investors the ones who聽
paid for the fleet and the ones who make up this聽聽
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llp are the ones who own it and for this ownership聽
they get fixed monthly returns up until the day聽聽
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that zip electric finishes paying for the fleet聽
themselves and by the time that happens their聽聽
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investors through grip will have made a pre-tax聽
irr that's internal rate of return of up to 22聽聽
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now you might be thinking to yourself that this聽
sounds like a really good deal for the investors聽聽
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but what about zip electric well the great thing聽
here is that zip electric starts making money聽聽
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right away while their investors are enjoying聽
fixed monthly returns zip is enjoying the revenue聽聽
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from their eevee as a service platform which聽
more than covers the cost of the financing that聽聽
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they've raised in a nutshell this is a win-win for聽
everybody zip gets their fleet for a fraction of聽聽
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the price up front and all they have to do is pay聽
a small monthly emi and investors get their money聽聽
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back with a decent return and unlike with angel聽
or vc investments grip investors don't need to聽聽
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wait for months or years to see this return they聽
get paid every month in 2021 after the success聽聽
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of zip electric's first funding round with grip聽
they signed a deal to finance an additional 750聽聽
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electric scooters now i use this example because聽
it's a success story for zip electric for grip聽聽
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and all of the investors who participated that聽
being said though this definitely isn't a one size聽聽
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fits all nikhil agarwal himself for example聽
says that grip shouldn't be someone's first聽聽
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investment platform it's mainly intended for聽
people who already have some experience with聽聽
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investing but if you know your way around fds聽
stocks or mutual funds and you want to diversify聽聽
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your investments once you've already built a聽
strong portfolio then grip might actually be聽聽
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a good fit as you can see from grip's website聽
they've openly publicized an average irr of 21聽聽
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this means that grip isn't just taking into聽
account the interest that you get on your聽聽
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investment but also the fact that you're seeing聽
part of your return every single month and at聽聽
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the very least this monthly return protects聽
you from the erosion of inflation which is聽聽
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about six percent every year here in india but if聽
you're smart you can actually take that money and聽聽
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reinvest it somewhere else too or even with grip聽
for that matter so that your roi is making you聽聽
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even more money now the big question is what聽
happens if something goes wrong over the company聽聽
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that you've invested in via grip if a startup聽
like for example zip electric can't afford to pay聽聽
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you and the rest of the llp back well that's where聽
the 10 security deposit that i mentioned earlier聽聽
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comes in and grip is going to be monitoring the聽
company closely they'll be keeping an eye on its聽聽
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finances so that they'll be able to try and stop聽
things from going wrong but even if something does聽聽
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go wrong the llp that you the investor are a part聽
of still own the assets and that's independent of聽聽
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grip or the company that you've invested in聽
through grip so grip can with your permission聽聽
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easily reassign those assets to another leasing聽
partner or simply sell them on your behalf and聽聽
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get you your money back but realistically that聽
scenario isn't likely to happen because since聽聽
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march of 2022 grip has facilitated investments聽
worth 200 crore rupees through their platform聽聽
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and so far there haven't been any defaults聽
ultimately these kinds of investment opportunities聽聽
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both within india and around the world have聽
historically only been options for hnis that's聽聽
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high net individuals grip is one of the few聽
platforms that enables regular everyday people聽聽
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retail investors to invest in these kinds of聽
companies many of them startups with as little as聽聽
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10 000 rupees and they're just getting started too聽
griff is on a mission to provide retail investors聽聽
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with investment options that have never been聽
available to anybody outside of the wealthiest聽聽
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10 of indians in fact they're planning on piloting聽
several new investment products this year in 2022聽聽
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and just like the democratization of leasing聽
as an opportunity for retail investors聽聽
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several of their new products are going to聽
be industry first they're planning to grow 5聽聽
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x to 1 000 rupees in total transaction value聽
by the end of 2022 and it's gonna be really聽聽
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exciting to see what they come up with in the next聽
couple of months but anyways guys that's enough聽聽
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from my side i really hope that you enjoyed聽
the video and i will see you in the next one
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