May, 25, 2017
Buy. Hold. Sell.
01 Dec
2015
Posted by MADHUMITA PRABHAKAR

Former Lehman employee, Kunal Nandwani, founded UTrade Solutions in 2011, with the goal of creating a tech-based platform to improve trading experience in global capital markets. Today the company offers a slew of products – multi-asset trading platforms, order & risk management systems, pre & post trade analytics, and data analytics products – to clients globally.

It took a Lehman Brothers’ collapse in 2008 for Kunal Nandwani (then, an associate at the firm) to realise that life is more than just a job in financial services, and that real joy lies in creating something original.

Nandwani calls this a starting point to turning entrepreneur. And, what followed was a two-year additional stint at various financial institutions in London (such as Leo Group and Nomura), before a chance encounter with a stock broker in India that led him to plant the first seeds for his business, uTrade Solutions.

“I was clear about one thing; I wanted to start a business in a field I already carried sufficient experience in because I could pass on the learnings from the corporate world into my venture, and bring credibility into the business,” he notes. uTrade was founded with the belief that just as technology impacted other sectors such as healthcare and banking, it could impact the trading platforms as well at a time when it was happening manually. “Our thinking was; why should we buy superior technology from abroad when we can build one in India itself?” he recalls.

uTrade came to life in 2010, co-founded by Nandwani, Mayank Mathur, Ashish Grover and Harwinder Sidhu. While Nandwani carried significant experience in trading, Mathur (who worked with companies such as Citi Group and Morgan Stanley) brought in valuation skills and Grover and Sidhu who earlier built enterprise software brought in the all-important technology skills. “When identifying co-founders for the business, I went with people I knew for a significant period of time and could trust. I also wanted people who could complement my skills. It’s certainly not an overnight decision to find the right co-founders,” shares Nandwani.

The Product Development Path

When developing the first set of solutions, the team adopted two parallel strategies; on one hand, they began building a prototype based on their understanding of what the industry currently needs. On the other, they took their prototype to potential clients to understand if it would be relevant and how the solution could be improvised. Here, Nandwani and his team learnt their first lessons on developing the ability to adapt.

For example, initially, the team was planning to build online and mobile trading software, but once they approached the clients for feedback, they learnt that the solution would be relevant only for retail investors who form a very small portion of the market. What transpired from this suggestion was a complete turnaround from the initial plan, to creating something new, from scratch. “It was then that we started building an algorithmic trading software, one with which trading can happen automatically with minimal manual support,” states Nandwani. A second lesson was learnt in June 2011 when the team started to work on retail trading software, which was set to launch in April 2012. By the time they could launch, NSE had made all retail trading software free, in essence killing uTrade out of the market. “This incident reminded me of a quote by Mike Tyson: everyone has a plan until you get punched in the face.”

Today, uTrade offers a technology-based trading platform, algo-trading, analytics and customisation. The company innovates on three fronts. Firstly, it automates the trading platform and eliminates the need for people to trade manually. Secondly, it made the trading software open source. “Earlier, everyone would keep their software to themselves. Now, they can have the source code and make any changes they want. Our belief is, even if we give the source code, we can manage it better than they do because we have a strong team focussed on this. If someone can do it better than us, we are in trouble,” says Nandwani. A third innovation the team has brought into the industry is improved user experience. In other words, an individual can access only information they want to see, instead of being presented with a cluttered stream. “The software adopts and adjusts to what you need and what you want to see,” he adds.

Scaling Up Strategy

Already listed among the top three companies in India in this sector, uTrade works with clients such as BSE, GMEX U.K. and Marex Spectron U.K. across developed markets and emerging markets such as Uganda, Turkey, Russia, China, Chile and more. Nandwani believes that India is the most complex market they have worked in. Hence, if they can crack this market, breaking into any other market would be an easy task.

The company has designed clear strategies to gain a market leadership position in India and create a global presence in the next two to three years. First among them is, to add more clients on the platform. “It takes time to understand each financial firm’s needs and implement our solutions into their workflow. Once it’s established, they stay with us for a long time,” notes Nandwani. A second strategy is to add more peripheral products to trading, such as risk management and the third is to improve its suite of services based on the needs and requirements of other markets. “For instance, if a client has an additional requirement in Russia or China, once we begin offering our solution there, we extend it to other markets as well,” explains Nandwani.

Being a B2B business, marketing for uTrade is largely about building sales and business development teams, identifying brokers who can benefit from its solutions and pitching to them. Of course, an added strategy is public relations. “We spend a significant amount in PR. Thought leadership articles, content creation and media reports give us the added leverage in this industry,” points out Nandwani.

With a current team size of 50 and offices in Chandigarh, Mumbai and Delhi, Nandwani notes that the company is growing at 100 per cent year-on-year, and the biggest challenge it faces is in identifying the right talent. “Since we are based out of Chandigarh, access to talent pool is limited. Having said that, when identifying the right candidate, we hold six to seven rounds of intense discussions. When it comes to hiring freshers, I personally visit campuses and convey our vision to potential candidates. Of course, there is the third option of referrals from existing employees,” shares Nandwani.

Apart from a seed round of US $400,000 from Hong Kong-based Axis Capital (in March 2012), the company has not raised further funding until now. “While the initial funds were used for hiring and product development, from year three, we started breaking even and bootstrapped our business. Now we are profitable, so we don’t see ourselves raising another round in the near future,” he admits.

As trading also joins the technology bandwagon, amidst his many plans to build uTrade into a global business, Nandwani still holds one goal close to his heart. “When I started my own business, I was clear that it had to be one that no one has heard of and one that is credible because of our name (not because I was from Lehman Brothers, or because we are from an established company). This was harder than we thought it would be, but we are well on our way to fulfil this goal,” concludes Nandwani.

 


LESSONS ON FUNDING AND FUND RAISING.

▶ Entrepreneurs should understand how the investors think and know what they expect from the investee

▶ They should not hesitate to reach out to people (potential investors), no matter how big or small they are. For example, at the early stage, Nandwani reached out to Infosys’ Narayana Murthy to invest in a business. While he did respond and schedule a meeting, it was not in his interest to invest at that point. But what matters is that he tried.

▶ Fund raising is a full-time job. Hire someone or have a co-founder take over your business.  You can’t run your business and raise funds parallely because you need to meet at least 50 investors before one invests in your business, you need to constantly communicate with them and update your valuations all the time.

▶ Once you’ve raised investments, send a monthly update to your investors and let them know what you have in mind going forward. Where needed, they will pitch in with valuable inputs.

▶ Keep in touch with your investors. Seek their guidance, get introductions when needed. Do the same in return.

 

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