Smartkarma raises US$13 million for overseas expansion

Singapore

SINGAPORE-based Smartkarma, a subscription-based marketplace for investment research, has raised US$13 million (S$17.7 million) to expand its sales and distribution overseas.

The Series B round of financing brings Smartkarma's total funding to US$21 million, it said on Monday.

Existing investors such as Wavemaker Partners, Jungle Ventures and Spring Seeds also joined the Series B round led by Sequoia India.

Founded in 2014, Smartkarma launched its service last year, and now has more than 150 subscribers; these include institutional asset managers such as sovereign wealth funds, hedge funds and family offices.

Sequoia Capital India managing director of Shailendra Singh said: "The traditional equity research model has been broken for a while. Smartkarma is empowering independent researchers and creating a new paradigm of transparent pricing in this industry. The early success of the company is a strong testament to its innovative business model."

Smartkarma said it will use the fresh funds to consolidate its leadership position in the Asia-Pacific by strengthening its network of 400 independent analysts, augmenting the tools and features on its platform, as well as adding new services.

It will also open a new office in the United States and grow its London office, which opened in September.

Mr Raghav Kapoor, chief executive of Smartkarma, said: "For us, what's very significant is that there's profound regulatory change in the market for research. It's called MiFID II (The Markets in Financial Instruments Directive) and we're very well positioned for this change."

MiFID II is a piece of banking legislation to be rolled out in the European Union from next year. It will require fund managers to tell investors exactly how much they pay banks and brokers for external research.

These fees have long been bundled with trading commissions and other services fees.

The idea is to create greater fee transparency, which is what Smartkarma offers, said Mr Kapoor.

He and co-founder Jon Foster were also co-founders of Aviate Research, which was acquired in 2010 by Religare Capital Markets.

Mr Kapoor said the latest funding round was over-subscribed: "We were initially looking to raise a much smaller sum."