Khatabook is a startup helping Indian merchants digitize their books and accept online payments. It announced Tuesday that it had raised $100 million in a new round of financing as it prepares for the launch of financial services.
The startups new financing round a Series C was led by Tribe Capital and Moore Strategic Ventures and valued the two-and-a-half-year-old Bangalore-headquartered startup at close to $600 million, its co-founder and chief executive Ravish Naresh told TechCrunch in an interview.
Balaji Srinivasan, Alkeon Capital and many other investors participated in the new round, which was well-subscribed. Better Capital Khatabook also stated that it will also be buying back shares valued at $10 million to reward employees and investors. According to the startup, it will also increase its stock options pool for employees up to $50 million
Despite the fact that hundreds of millions of Indians have gone online over the past decade, the majority of South Asian merchants are still offline. These merchants are local business owners who rely on traditional bookkeeping methods to maintain ledgers on paper. This is both tedious and easy to make mistakes.
Khatabook aims to change this by offering merchants a suite to digitize and manage their books and expenses. Over 200 people work for the startup. It claims to have more than 10 million active monthly users, spread across almost every zip code.
Numerous firms, from startups like Khatabook or Dukaan to Amazon and India's largest retail chain Reliance Retail, are aggressively trying to tap into the South Asian market.
India has approximately 60 million small- and medium-sized business owners. A fraction of these are local stores, also known as kirana, in South Asia. They are found in tens to thousands of Indian towns, cities, and villages. These mom-and pop stores sell all types of products, pay low wages, and often do not rent. Their economics are often more than others.
Tribe believes in the power and potential benefits of the network effect. Khatabook is a successful network that enables MSME businesses to shift from paper to digital. Despite its early success and rapid adoption, the company is still early on its journey to become a leader in this segment. We are thrilled to have been a part its growth and to help it build on its network.
Khatabook counts Emphasis Ventures, (EMVC), among its backers. In recent years, the company has increased its product offering to attract more businesses. Naresh stated that the startup will offer merchant lending later in the year. He said that the product is currently being tested with distributors and retailers.
While online lending has seen a boom in India over the past few years, very few companies today are trying to serve small and medium-sized business owners. Indian SME credit demand is still unmet at $300-$350billion. More than 90% of the current demand is met by banks. An average digital SME lender is focused on 1-5 million Indian Rupees ($13.575 to $67.875) ticket size, with no collateral, average tenure of 12-18months, and with an ecosystem anchor, Bank of America analysts wrote in a report.
Khatabook was affected by the pandemic, as were many other companies. It lost a large portion of its business last year when Indian states imposed lockdowns to limit mobility. The startup has since rebounded. According to Naresh the month of July was its highest ever. He said that MSMEs have rebounded strongly this year and that businesses weren't as affected by the second wave as they were last year.
