Tiger-Backed Jar Aims To Grab 5% Of India's $100-Billion Retail Gold Market In Five Years

Digital gold app Jar aims to capture $5 billion worth of gold being transacted in the country in the next five years, as the upstart bets on India's penchant for the yellow metal.

The startup, founded in the throes of the pandemic in 2021, allows users to invest in gold via its platform. Apart from direct daily, weekly and monthly investments, it ties up with UPI payment apps such as PhonePe, GPay and Paytm to round up amounts and invest the change from UPI transactions in gold.

"Existing investment products cater to only the top 1% of the population. They require financial literacy, expect users to be well-versed in English and digitally native," Nishchay AG, co-founder and CEO of Jar, said in a conversation with NDTV Profit.

"In India, gold is one such product which everyone understands. It's the best as it acts as a hedge against the markets, inflation and the dollar," he said.

Jar now claims to have amassed over 2 crore users on its platform in three years of operations and does a million UPI transactions a day.

Jar's current retail gold market share stands at less than 1%, according to Nishchay. To take it to the 5% target, he says, the startup's marketing and content efforts are the primary tool.

"We target content at those aged below 40, a population that is young and aspirational. We produce about 300 content pieces in nine languages at users that now primarily consume all their content on social media," he said. "It will be a combination of organic reach, content, performance marketing that will lead us to that kind of a market share."

Jar is backed by marquee investors like Tiger Global, Arkam Ventures, and Tribe Capital among others and has raised $58 million in funding so far.

To provide a tangible outcome for these users investing in gold, Jar has also forayed to jewellery via another brand called Nek. The company has also forayed into lending, via tie-ups with several NBFCs.

The primary revenue stream for the company is through the arbitrage on digital gold. "We operate on massive volumes because of which we enjoy wholesale retail arbitrage. We're able to collect small requests from many users and source it at a much cheaper price," Nishchay said.

The conversion from gold to jewellery also comes with a "good margin with a decent profit baked in". It also earns from the origination fee on the loans it offers as a lending service provider.

Jar is currently profitable at the contribution margin 2 level, which means the startup is in the green post deductions of marketing costs, but doesn't take into account other variable costs such as ESOPs.

Nishchay added that the startup has crossed Rs 100 crore revenue run rate in April and stands well-capitalised. "We take very calculated bets and are frugal, so we don't have to raise any capital near term."