Peak XV Partners, a major India-focused venture capital firm, is injecting $35 million into Neo, a fintech startup founded by industry veterans. Neo is making significant inroads into India’s wealth and asset management sector, challenging established players such as IIFL, Edelweiss, and Waterfield Advisors. Peak XV Partners’ investment underscores its growing commitment to the wealth and asset management segment.
Neo offers a comprehensive suite of wealth and asset management services catering to a wide spectrum of clients, including businesses, sovereign and pension funds, large family offices, and individuals with ultra-high net worth. Since its inception in 2021, Neo has rapidly expanded its customer base, boasting over 1,000 customers, according to Neo’s founder, Nitin Jain.
The investment between Peak XV Partners and Neo includes provisions for possible future extensions, allowing flexibility for additional funding. This follows reports in August that Peak XV was in discussions with Neo regarding an investment. Neo had previously raised approximately $40 million from undisclosed investors.
India, second only to China in terms of high-net-worth individuals among BRICS countries and home to more than 14,000 ultra-high-net-worth households, has an underdeveloped wealth management sector. This sector has faced challenges related to trust and misaligned incentives. Often, the industry has been more focused on product sales than on providing tailored financial advice.
Neo aims to address this by acting as an extended Chief Investment Officer (CIO) for multi-family offices. It actively participates in their investment committees and offers insights on asset allocation, corporate holding structures, and taxation strategies. This approach goes beyond traditional wealth management practices, combining advisory services with product offerings.
On the advisory side, Neo collaborates with multiple relationship managers, providing them with additional resources and incentives to enhance their existing practices. Jain estimates that 350 to 400 relationship managers in India manage 70 to 75% of assets. Neo plans to attract around 100 more of them in the next two to three years.
Regarding asset management, Neo focuses on long-term yield-based solutions in real estate and private credit. These solutions are designed to help clients generate income from their investments. The startup has already accumulated about $3 billion in assets under management.
Neo emphasizes that it doesn’t require additional capital and anticipates only one more funding round in the future.
Peak XV Partners’ investment in Neo aligns with its portfolio expansion in the asset and wealth management category. The venture firm has previously supported companies like CRED and Groww, serving different segments of the market.
With the backing of Peak XV Partners, Neo aims to attract high-quality talent and further enhance its growth prospects.
As the Indian wealth management sector evolves and attracts more players, including Jio Financial Services’ partnership with BlackRock to form Jio BlackRock, competition and innovation are expected to drive positive change in the industry. The injection of capital and expertise by Peak XV Partners positions Neo for further success in this dynamic market.
