How revenue-based financing startup Klub plans to accelerate growth for digital first economy
With 150+ investments, Singapore-headquartered Klub launched Klub360 to finance and build a growth ecosystem for 360 digital businesses in a year
As digitisation continues to grow rapidly across the globe, there has been a robust ecosystem of SaaS platforms, digital marketplaces, and brand-building players springing up to democratise reach. While this has allowed businesses to easily transition from retail to omni-channel and online, traditional financing platforms are still finding it difficult to adapt to newer business models.
Digital first businesses are currently experiencing a golden age, and hold a $10 trillion market opportunity. And the supporting ecosystem partnership will propel this growth.
Launched in 2020 by Ishita Verma and Anurakt Jain,- a revenue-based financing player, is pioneering financial innovation and building deep partnerships to drive growth.
“We have seen a growth of 40x, and made over 150 investments in the past year owing to our unique product offering. Our objective is to provide digital first businesses access to quick, flexible, and scalable capital. With Klub 360, we aim to work with 360 digital first businesses through flexible financing and a deep partnership ecosystem,” informs Anurakt.
“While there has been tremendous growth in the number of ecosystem players supporting digital first businesses, we strongly believe that the power of the combined ecosystem will be larger than the sum of its parts. Klub 360 is an initiative driven by this belief. Through the course of the year, we aim to work with needle movers in the space - from businesses that require funding to businesses that are pillars in the digital first economy,” he adds
Through its revenue-based financing model, Klub takes a revenue share as returns instead of equity dilution or fixed EMIs, making it ideal for startups looking for quick funds without the arduous pitching process.
With over 25 years of collective experience in the investment sector, Ishita and Anurakt realised that the one-size-fits-all approach of traditional modes of equity and debt capital does not always meet the financing requirements of every business. Many entrepreneurs find it difficult to access capital, despite having solid products, increasing revenues, and a loyal customer base. This is even more apparent in the case of local digital-first businesses.
How does it work?
Klub is an ideal investment platform for businesses that need flexible, non-dilutive capital, but at the same time, want to retain complete control of their business. Depending on the business raising capital, Klub’s platform matches it to the right capital provider. Through its hybrid marketplace setup, Klub has completed 150+ investments.
Klub asks startup founders to plug their revenue channels via third party integrations into its platform, following which its proprietary credit engine provides initial offers within a matter of hours, and final term sheets within a couple of days. Companies can avail capital within just a few days, making Klub a very efficient, speedy, and scalable financing partner.
Beyond capital, Klub connects the startup with different kinds of partners in the ecosystem that can help them scale. These include solutions in digital marketing, influencer marketing, loyalty, buy now pay later, logistics, distribution etc.
Klub’s USP remains in its hybrid marketplace approach. The flexible revenue-based finance approach helps founders and investors to come together as an ecosystem. In this day and age, besides just providing financing to businesses, it is imperative to also match them to the right capital partner, based on the risk and return profile, allowing founders to focus on driving business growth.
Before co-founding Klub, CEO Anurakt was an intrapreneur at InMobi, and part of the team which created two global businesses, Glance and TruFactor, as core growth areas. He also brings years of professional experience as a venture capitalist with DFJ and Vertex, and as an angel investor. Anurakt graduated from IIT Delhi, holds an MBA from The Wharton School, and is a CFA charter holder.
Ishita, who is COO of Klub, has over 9 years of experience across early stage investment banking, investing, and public/private equity markets. She graduated from Lady Shri Ram, Delhi and holds an MBA from IIM Bangalore.
With a team size of 30 members, Klub is looking to add more team members for its next phase of growth. The current team of Klub comes with diverse backgrounds across credit, venture capital, investment banking, legal, lending operations and risk analytics.
As per a recent report by Allied Market Research, the global revenue-based financing market was valued at $901 million in 2019. This number is projected to hit $42 billion by 2027, growing at a meteoric CAGR of 61.8 percent from 2020 to 2027.
As with most revenue-based financing services, Klub takes a percentage of the revenue generated by companies it provides funding to. Funding ticket sizes vary between Rs. 2 lakh to Rs 30 crore. Klub also does repeat rounds of financing, and has completed up to five rounds of financing with a few companies as their revenue scales.
Anurakt claims that Klub is currently pioneering the revenue-based financing space in India through its two products, Klub Blaze & Klub Gro, curated to meet the needs of brands across sectors and stages.
While Klub Blaze, with its shorter tenures, caters to brands with monthly revenues up to Rs. 50 lakh, Klub Gro is recommended for brands making upwards of Rs. 50 lakh in revenues.
Klub has been instrumental in raising funds for leading businesses like The Man Company, SMOOR, Wallmantra, Third Wave Coffee, TagZ Foods, Wellbeing Nutrition, Tjori, and Pipa Bella etc.
Funding and future plans
By launching Klub 360 - an initiative to scale digital-first businesses through flexible financing and a deep partnership ecosystem, Klub aims to drive growth for the digital ecosystem.
“Klub 360 will provide a level playing field for all digital-first businesses, and increase financial reach by working with businesses in Tier II/Tier III cities and those created by women co-founders. With increasing need for quick, flexible capital, we are now on a mission to work with 360 businesses over the year and provide capital to every deserving business, to truly unlock growth,” says Anurakt.
In August, the revenue-based finance startup had raised one of the largest seed rounds of $20 million from existing investors 9Unicorns and Surge, Sequoia’s early-stage investment programme, along-with Alter Global (US) and GMO Venture Partners (Japan) as new investors. The current round also saw participation from marquee global angels as well.
Klub’s competitors include GetVantage, Velocity, and N+1 Capital, among others. Internationally, some of the biggest players in the RBF space are Clearco, Pipe, along with Uncapped, Wayflyer, Jenfi to name a few.
Speaking on the same, Anurakt says, “We believe in the complementary nature of Revenue Based Financing, with all traditional financing options. As companies scale up, they will always need a mix of financing options, each with its own pros and cons. Our mission is to drive more growth to our partners, and we see flexible and scalable non-dilutive capital as the first critical input.”
Edited by Anju Narayanan