Punch Raises $7 Million in Seed Funding to Revolutionize Stock Trading Platform

Stock-broking platform Punch has successfully raised $7 million in seed funding. The investment round was led by Stellaris Venture Partners, Susquehanna Asia VC, Prime Venture Partners, and Innoven Capital. Notable angel investors, including Cred founder Kunal Shah, Ultrahuman cofounder Vatsal Singhal, and Nazara Technologies founder Nitish Mittersain, also participated.

Strategic Allocation of Funds

The newly acquired funds will primarily be directed towards research and development (R&D) to enhance user experience and cover marketing expenses. Amit Dhakad, cofounder and CEO of Punch, stated, “Over the next year, a chunk of the funds we have raised will be spent on innovating our products, understanding the regulatory and customer requirements. We will see how we can inculcate responsible trading without really giving education to customers.”

Punch's Unique Value Proposition

Founded in 2022 by Amit Dhakad, Hiral Jain, Arshad Fahoum, and Ajit Dandekar, Punch is a trading platform developed by Market Pulse Securities, a Securities and Exchange Board of India (SEBI)-registered broker. The platform supports index and stock options trading, as well as direct stock trading. Punch has been in a beta testing phase for the past 18 months, with around 18,000 trading accounts already opened.

Focus on Young, Part-Time Traders

Dhakad highlighted that nearly 60-70% of Punch’s users are young, part-time traders with less than one year of trading experience. While the company currently focuses on options trading, it plans to introduce cash trading next month. This shift aims to broaden the platform's appeal and offer more trading opportunities for its growing user base.

Navigating Regulatory Challenges

The recent regulatory scrutiny by SEBI on derivative trading, including futures and options (F&O), poses significant challenges for wealth tech startups. On July 30, SEBI released a consultation paper proposing measures to curb high-risk derivative trading by individual traders, particularly younger ones. These measures include raising the minimum contract size for F&O to Rs 20 lakh and imposing limits on weekly options contracts.

Despite these challenges, Punch remains optimistic. Dhakad noted that young traders continue to engage with derivative trading, often underestimating the associated risks. Punch aims to address these issues by enhancing its platform to promote responsible trading practices.

Looking Ahead

With the fresh capital infusion, Punch is well-positioned to innovate its products, meet regulatory requirements, and expand its market presence. The platform's focus on young traders and its commitment to responsible trading practices will be key drivers in its growth journey.