Raise Financial Services, which operates the investing and trading app Dhan, is in the initial stage of discussions to secure approximately $100 million in a new funding round. This investment could elevate the company's valuation to between $1.2 billion and $1.5 billion, potentially earning it a spot in the prestigious unicorn club.

Although discussions are still in the early stages, investment banking firm Avendus has been selected to manage the fundraising, according to one source. Dhan, established by former Paytm Money CEO Pravin Jadhav in January 2021, competes with larger rivals like Zerodha, Groww, and Angel One, among others.

The fundraising is taking place as Indian stock markets reach new highs due to strong retail participation, despite warnings from the government and market regulator about increased F&O activity.

This year, India has seen the emergence of only three unicorns Porter, Krutrim, and Perfios. Investors are proceeding with caution following the excitement of 2021.

For Dhan, this upcoming funding round will be its largest since its founding in 2021, significantly boosting its valuation from approximately $150 million to between $1.2 billion and $1.5 billion. The new funding will be allocated towards business needs and expansion efforts to better compete with rivals. Although the company currently provides investing and wealth management services, it is also branching out into financing, payments, insurance, and additional areas, according to its website, to target a larger share of the market.

The funding round will witness new investors and existing backers of Raise but formal negotiations are yet to begin. Beenext, Mirae Asset Venture Investments, 3one4 Capital, Rocketship.vc are some of the company’s existing investors.

When questioned about the startup’s confidence in achieving such a high valuation, a second source noted that Raise was currently generating a revenue run rate of $100 million, or approximately Rs.830 crore, with a net profit margin of 40 percent. With these financial metrics, the targeted amount and valuation seem well within reach."

Dhan, a three-year-old startup in the competitive discount broking sector, faces tough competition from established names like Groww and Zerodha, which have built extensive user bases over the years. Despite the challenging landscape, Dhan has achieved impressive growth, with a 330% year-over-year increase.

This success stands in contrast to many competitors who are either stagnating or experiencing declines as competition heats up. To remain competitive and boost revenue, broking apps are diversifying their services to retain traders and minimize dropouts.