Mumbai-Based Startup Upside AI Uses Machine Learning To Invest In The Indian Stock Market
People familiar with stock investing understand the impact of behavioural impulses of emotional buying and selling of stocks. Most investors make biased and emotional decisions related to investing, leading people to buy at market tops and sell at market bottoms.
But as technology is evolving, entrepreneurs are integrating tech and investing to make the best investment related decisions.
And as machines are unbiased, unemotional and can follow standardized rules in market euphoria and panic, entrepreneurs are coming up with tech backed investment platforms.
Today’s startup story is about Mumbai-based investment firm Upside AI that leverages the power of technology to build a stock portfolio for its clients.
Startup Story: Upside AI | Machine Learning Based Investing
Upside AI Founder
Started by Kanika Agarrwal, Atanuu Agarrwal, and Nikhil Hooda, Upside AI is a Mumbai-based investment firm that uses machine learning to invest in the Indian stock market.
The founders come from a strong educational background with expertise in the tech and finance sector. Kanika Agarrwal is a CA (All India Rank 18), CFA and B.Com graduate from Mumbai University.
Nikhil Hooda is a Ph.D holder and has done B.Tech in Computer Science from IIT Bombay.
Atanuu Agarrwal (B.Tech and M.Tech from IIT Bombay) has extensive experience in public and private investing. He has worked across PE, VC and SPACs (AUM $1bn) with Vedanta Capital in the US and India.
How Upside AI Started?
The founders started Upside AI on the belief that technology will make better investing decisions than humans over the long term.
As per the founders, the main idea behind starting Upside AI has been to eliminate human errors and biases in the fundamental decision-making process.
Despite being clear in its mission, the team faced a lot of challenges.
The first problem came in the form of building the tech right. And, it took the Upside AI team a year to build the platform and a year to test in live markets.
After testing and realising that the platform they have built is a robust, dynamic, and differentiated product, Kanika, Atanuu, and Nikhil launched Upside AI in 2017.
“We could see tech-based investing becoming the norm, not the exception, and it was time India also became a part of that change. While tech plays a small role in the ecosystem in India, for e.g., for high-frequency trading or technical trading, we knew that it could do so much more. So when we built this, we said is AI going to be the next Warren Buffett? And that was really what we set out to build to replace human investors.”
USP Of Upside AI
Upside AI is a Mumbai-based investment firm that leverages the power of technology to build a stock portfolio for its clients. Making investments simple, smart and systematic, Upside AI analyzes 50 million ideas to build a stock portfolio for its clients.
“We rebalance the portfolio every quarter as companies release financial results. We started building the algorithm in 2017, spent a year beta testing, and after two years in development, in July 2019, Upside AI started offering its investment products to external clients.”
As per the startup, their algorithms are more successful than the best human investors in the country. It is because of the sophisticated investing technology that Upside AI offers, the investment firm has generated 52% returns for our investors over the past year.
Present Situation Of Upside AI
With an investor and distributor base in pan India, the Mumbai-based startup claims it has an AUM of Rs 40 crore and has grown 7x in the last calendar year.
In terms of generating profits for the investors, the Mumbai-based investment firm has delivered 52% net fees to its investors, while the NIFTY 500 index delivered 33% over the last year (as of February 28, 2021).
Because of this performance, the investment firm has emerged as a top decile fund manager, i.e. Upside AI is in the top 10% of managers out of 200+ PMS schemes tracked.
Upside AI offers portfolio management services and retail advisory services (recently launched) to its clients.
The clients that use the portfolio management services (PMS) offered by the startup include large family offices, brokers, VC fund managers, and C-Suite managers of large MNCs in India and the US.
Speaking about retail advisory business, Kanika says,
“Through the retail advisory business, it is our ambition to make sophisticated technology more accessible to India (which so far has solely been available to high net worth investors globally). Through a partnership with smallcase, we have been able to introduce best-in-class investment technology to consumers who can invest as little as Rs 30,000 to Rs 40,000 or even do SIPs of lower amounts.”
In terms of clients, the majority of the clients of Upside AI are based in India and the US.
Future Plans Of Upside AI
The Mumbai based startup plans to introduce a large-cap/ mid-cap product this year.
Upside AI aims to be a multi-billion dollar asset management platform with a suite of products across equities, debt, and ETFs over the next five years.
Talking about upcoming products, Kanika says,
“We are currently beta testing a US mid and small-cap product. We are also building an asset allocator using machine learning to decide the split between equity, debt, commodities, etc., based on macro factors like interest rates, inflation, liquidity, etc.”