It's been 10 years at Capitalmind!It's been 10 years at Capitalmind!

It’s been 10 years since Capitalmind became a registered startup. Thank you for all the support and encouragement over the years, to help us grow from what was a blog, to what is now a portfolio manager with Rs. 2,200 crores in assets!

We’ve had a decent run on the portfolios this far, in the long term.

We’ve had an unconventional past. Most of us at Capitalmind are outsiders to capital markets - almost none of the management here have worked meaningfully in the financial sector, including me. I started in this field because I thought we could build a solid technology based investing platform for retail investors; and then I was this tech guy interested in investing. We started off as a blog a long time ago, called the “Indian Investor’s blog” and that morphed into the name Capitalmind in 2009 or so. And a business in 2014 that offered research as a service, as Capitalmind Premium.

How come we’re so off-field? Mostly because our DNA is into learning, building and growing, from first principles where it matters. That’s probably why many of you like what we write, or listen to our podcast. Because we don’t know enough to use the jargon that the industry does, but we know enough to speak about it in more simplistic language. And for that, a lot of us have educated ourselves from the ground up, and built things slightly differently, in the PMS.

The PMS itself has grown slowly, with over 1300 customers. We built our PMS back end, our fund accounting software, our customer dashboards, our internal analytics, our whole concept of quantitative investing into a proprietary framework, and even automated trading. Much as we build, we also buy and integrate tools, a factor essential for longer term growth. Performance of the portfolios is one thing, but in the financial services business, you have to do good for the customer eventually, in terms of service, peace of mind and simplicity.

We’re one of the first PMS entities to charge only a management fee, but no performance. And at the same time, have most of the company’s money (and my personal portfolio) in the PMS as a customer, giving us skin in the game in terms of also taking a share of losses. We’ve reached about the 25th rank in terms of portfolio managers in India, growing entirely on the back of word-of-mouth, referrals, and customers relating to us because of what we write.

Capitalmind has a brilliant team, like I’ve said, and I’m biased, of course. Let me tell you who.

Shray, our co-founder: My podcast co-host, Shray is also co-founder at Capitalmind. He joined us in 2017, and helped set up the PMS, and since then, has organized the company in so many ways I can’t even begin to describe. Shray’s influence on me has changed my thinking about how to live a better life. Money, as he says, is a concept. And that we’re here to make the best use of the concept - first investing/growing it, and then spending it.

Vashistha, our Chief Operating Officer: I met Vashistha on twitter. We were both trading and talking about options, while he was in Delhi working with legislative research. And he has a background in Design. Yet, he ended up learning javascript from scratch, built a brilliant tool called Stratoptions, first in Google Sheets and then as a standalone app, and is among the best developers I know. His ability to learn, build and deploy quickly gave us Capitalmind Plan, the Progress Dashboard and a whole bunch of other tools we now use internally.

Anoop, Head of Research and Fund Manager: Anoop is a calm investor. That’s also his twitter handle. He runs our Adaptive Momentum and Resilient strategies, which have done well (Adaptive Momentum has nearly 2x the return of Nifty in five years). He’s also the fittest guy in the office, and in that, a role model. His post on Momentum, which is the size of a book, but reads way faster, is an excellent note on what we’ve learnt from running an actual portfolio based on the factor, for five years. (Read it!)

Venki: Venki’s helped build our tech for the back-end ops, including devops, since 2014, and has been responsible for getting the PMS back-end, and automated trading operational. We met in 2010 when I’d told him we might eventually get to a point where we might manage a few crores (I think I used 20 as a number). In some sense, we became the  100x.

Dev, VP of Engineering: Dev manages the entire back-end tech stack for our fund accounting, ledger, back-end and trading operations for the PMS. He’s handled requests from everyone, from dealers, to ops to sales to even me, wonderfully. Dev’s T-shirts have these witty sayings that make it impossible to start a conversation other than, “Where did you get that?”

Akanksha, Head of Sales: Akanksha has built a solid sales and support team, and manages relationships with our customers. Her focus, she told me once, was that I shouldn’t be the first call for every customer, which it was in the early days. Now, that function’s been taken over incredibly well, and is now much more scalable and process driven.

Nandan, Compliance and Finance Head: Nandan manages our compliance process and reporting, and handles our finances as well. He’s managed to bring together a good team to ensure all our reporting, to customers, regulators and the government, happens in the right way.

Varun, Head of Operations: Varun’s been instrumental in building out operations to a solid semi-automated process driven system, in the PMS. He deals with our custodians, our brokers, and our multiple partners in various areas of our business, and is laser focused on execution. And while he’s not at the helm of ops, he’s running marathons and doing an MBA.

Of course, I miss out on mentioning the others individually. But all of them have been responsible for some part of our interesting journey this far, and my personal note of thanks to everyone!

On a different note, I’ve always gone back to this quote by Anton Ego, the food critic in the animation movie, Ratatouille. I won’t give any spoilers, but let’s just say he absolutely loves a certain dish (the name of the movie). And the chef, it turns out, wasn’t exactly what you’d picture as a chef, an unconventional, out-of-left-field unimaginable source.

In the past, I have made no secret of my disdain for Chef Gusteau's famous motto, "Anyone can cook." But I realize, only now do I truly understand what he meant. Not everyone can become a great artist; but a great artist *can* come from *anywhere*.

In our company, great people can and do come from anywhere; they learn and grow.

The Next 10 (?) years

Where do we go from here? We’ve always wanted to provide investors with enough information, education and enrichment to help them meet this long term financial goals. What we now do, mostly, is help them build wealth through our PMS.

We’re happy to note that Capitalmind has received an in-principle approval from SEBI to set up a mutual fund. This will still need a final approval once we have set up the business. Firstly, we must thank SEBI for the opportunity.

The mutual fund business will allow us to serve customers from anywhere, and with any size (the PMS has a minimum of Rs. 50 lakh to start). In the PMS, we charge no performance fee, so we effectively charge like mutual funds do; but mutual funds are a little more tax efficient. This new structure, if we get the final license, will allow us to serve a lot more customers, build a lot of new interesting products (debt, hybrid) and also give our existing customers the ability to participate in a more tax efficient product as well. It will still take between 6 months and a year to get it going, with a final approval awaited, but it’s a start!

What we want to do is build products to help you live better. An asset manager’s job is thought about as someone who wants to get the highest returns all the time. But in the real sense, it’s not; it’s to provide the peace of mind that investors need in order to continue to give meaning to their lives. Our goal in the next decade, is to help you get that peace of mind, with due recognition to performance, compliance and strong investor engagement.

India’s growth story will continue onwards, and it’s only now that retail investors have started to invest. The fear has been that they’ve bloated up Indian stock valuations, but this is a temporary fear. It was that fear in 2007. In 2017. In 2021. And yet, the market has raged higher. More businesses are being built in India than ever before. Many are listing in the exchanges. The landscape has changed; even the authorities want a stronger private sector that builds for India and in India. The momentum is a tailwind for the next decade; everyone will benefit, including you, including us.

This “sher” (an urdu couplet) by Majrooh Sultanpuri, that I recently got on a message, was super on point:

Main akela hi chala tha jaanib-e-manzil magar
Log saath aate gaye aur kaarvaan banta gaya

(I started off alone towards the goal but
More joined along, and the caravan builds on)

Our little caravan has now got a boost. It’s time for us to build bigger, better and greater. To the next 10 years!

Ten-aciously,

Deepak