Khatabook, An Indian Company Raises $100 Million For Its Merchant Bookkeeping Platform
Khatabook, an Indian startup that helps retailers digitize their bookkeeping and accept online payments, announced on Tuesday (24th August) that it has raised $100 million in a fresh round of funding as it prepares to expand financial services.
Tribe Capital and Moore Strategic Ventures led the Series C financing round, which valued the two-and-a-half-year-old Bangalore-based business at “close to $600 million,” according to co-founder and CEO Ravish Naresh in an interview.
Khatabook also announced that as part of the new round — which was estimated to increase and included Balaji Srinivasan and Alkeon Capital, as well as many other existing investors such as Sriram Krishnan, B Capital Group, Sequoia Capital, Tencent, RTP Ventures, Unilever Ventures, and Better Capital — it will buy back $10 million in shares to reward current and former employees. Employee stock options will be increased to $50 million, according to the company.
Despite the fact that hundreds of millions of Indians have gone online in the last decade, the majority of merchants in the South Asian country remain offline. These small-business owners rely on old-fashioned bookkeeping methods, such as keeping paper ledgers, which are both time-consuming and prone to errors.
Khatabook is seeking to change this by offering a suite of solutions to help shops automate their bookkeeping and manage their expenses and personnel. The company, which employs over 200 employees, claims to have over 10 million monthly active users in practically every zip code in the United States.
Several companies, ranging from new startups like Khatabook and Dukaan to Facebook, Amazon, and India’s largest retail chain Reliance Retail, are aggressively striving to enter into the South Asian neighborhood shop sector.
In India, there are around 60 million small and medium-sized companies, with tens of thousands of neighborhood stores (also known as Kirana in South Asia) covering tens of thousands of Indian cities, towns, and villages. These mom-and-pop shops sell a wide range of goods, pay cheap labor, and have low or no rent. Furthermore, their economies are frequently superior to the majority.
“At Tribe, we believe in the network effects’ potential and how it can help businesses build moats.” Arjun Sethi, co-founder and partner at Tribe Capital, said in a statement, “Khatabook has successfully developed such a network by facilitating this seismic change among MSME enterprises to migrate from paper to digital, literally.” “Despite its early success and rapid adoption, the company is still on its way to becoming the segment’s powerhouse. We’re delighted to be a part of its expansion as it expands its reach through its network.”
Khatabook, which also has EMVC as a supporter, has increased its product offerings in recent years in order to attract additional enterprises. The business will provide merchant lending later this year, according to Naresh. “We’re currently analyzing the product with both retailers and distributors,” he explained.
In recent years, online lending has exploded in India, but relatively few organizations are now aiming to serve small and medium-sized businesses. “India’s anticipated SME loan demand is estimated to be between $300 and 350 billion dollars, with banks meeting more than 90% of present demand. A typical digital SME lender focuses on ticket sizes ranging from 1 to 5 million Indian rupees ($13,575 to $67,875), with no collateral, an average tenor of 12 to 18 months, and some ecosystem anchor,” according to Bank of America analysts.
The pandemic was bad news for Khatabook, which lost a substantial amount of its revenue last year after Indian states imposed lockdowns to restrict mobility, as it was for a number of other businesses. However, the company has subsequently recovered. According to Naresh, the month of July was the all-time high. “This year, MSMEs have made a strong recovery, and firms have not been as hit by the second wave as they were last year,” he said.
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