Groww Business Model: How Does Groww Earn Profit?

Groww, an online investment platform founded in 2016, has rapidly become one of India’s leading fintech companies. It offers a user-friendly platform for investors, particularly targeting millennials and first-time investors, making it easier for them to invest in a range of financial products such as mutual funds, stocks, ETFs (exchange-traded funds), and digital gold.

How Groww Makes Money?

1. Commission from Mutual Funds:

The most significant revenue source for Groww is the commission fee it earns from mutual fund houses. When users invest in mutual funds through Groww, the mutual fund companies pay Groww a commission. This accounts for more than 50% of Groww’s revenue. Unlike traditional brokers, Groww doesn’t charge users directly for these transactions, making mutual fund investments on its platform free for the users. However, the mutual fund companies benefit by gaining access to a vast user base​.

2. Stock Market Trading Fees:

Groww also generates revenue through brokerage fees when users trade stocks. Although the platform is known for its commission-free investments in mutual funds, stock market trading comes with a small fee. These fees contribute significantly to Groww’s overall income, especially as the platform has expanded into equity trading​.

3. Value-Added Services (VAS):

Groww offers several premium value-added services to enhance the user experience. These include investment advisory services, tax planning assistance, and personalized investment recommendations. Users opting for these services pay a fee, contributing to Groww’s revenue. These services add more value to the platform and help cater to more advanced or personalized financial needs.

4. Partnerships and Collaborations:

Groww collaborates with other financial service providers, including insurance companies and lending platforms. Through partnerships, Groww may earn revenue-sharing fees or referral commissions by promoting or integrating additional financial products on its platform. These partnerships further diversify its income streams​.

5. Premium Subscription Services:

Groww has introduced premium subscriptions that offer exclusive features like advanced research reports, priority customer support, and ad-free experiences. This premium offering targets users looking for more in-depth analysis and personalized investment recommendations. The revenue generated from these subscriptions adds another layer to Groww’s profitability.

Growth and Future Prospects

Since its inception, Groww has seen exponential growth. In FY22, the company reported a revenue of ₹351 crore, reflecting its successful business model and growing customer base. Groww’s expansion into stock trading and digital gold, along with its customer-first approach, has made it a go-to platform for millions of Indian investors. The company’s future plans include offering more financial products like U.S. stocks, futures and options, and sovereign gold bonds, ensuring continued growth and profitability.

In conclusion, Groww earns profit primarily through commissions from mutual fund companies, brokerage fees from stock trading, value-added services, partnerships, and premium subscriptions. Its user-friendly approach, combined with a focus on customer education and innovation, has positioned Groww as a dominant player in India’s growing fintech space.