Bengaluru-based Klub is a fintech platform that provides growth financing to new-age niche but popular consumer brands through a unique revenue-based financing (RBF) model. Launched last year, Klub has enabled over 20 direct-to-consumer (D2C) brands including TagZ Foods, Tjori and Pipa Bella to raise capital from their patrons. It has empowered brands across fashion, beauty, personal care, FMCG, D2C, food services, subscription, ed-tech and online-first retailers with growth capital by combining financial product innovation, community engagement and deep data-driven analytics.
Co-founders Anurakt Jain and Ishita Verma, who had earlier worked in venture capital, investment banking, and entrepreneurship, recognised it is difficult for young brands and founders to raise capital through traditional financing methods, leaving many without access to capital and the necessary bandwidth to focus on a growing business. “Through our unique marketplace setup, we aim to not only provide them access to alternative financing but also to an exclusive community where brands and investors can come together to explore and grow together more holistically,” says Jain. According to Jain, RBF takes a revenue share as returns instead of equity dilution or fixed EMIs.
“Klub is an ideal investment platform for brands that need flexible, non-dilutive capital. It provides brands with scalable capital and ~30% of the brands funded through Klub have availed additional capital as they scale,” he says. “Our investment platform combines financial product innovation, deep data-driven analytics, high-frequency collections, and community engagement.”
As a sector and stage agnostic player, Klub funds recurring marketing, inventory, and capex spends of its client brands. Klub is also the only player offering a hybrid model for investment by raising capital from both NBFCs and financial institutions alongwith individual patron investors across different products, says Jain. “Our mission is to improve access to a flexible, founder-friendly form of capital to the early stage ecosystem. Another aspect that makes our funding model unique is that Klub invests and provides risk participation in every brand on its platform, operating on the mantra of being a skin-in-the-game partner.”
With brands in the D2C space having seen robust growth in the last few years, Klub has facilitated funding for nearly 30 brands and have onboarded nearly 1,000 patrons. “Our revenues have tripled over the last quarter of 2020 owing to our unique product offering and mushrooming growth in the D2C space. We are now looking to grow this community to over 350 brands and over 5000 patrons in 2021 alone,” he informs.
Klub had raised $2 million in its pre-seed round led by Sequoia Capital India’s start-up scale-up programme Surge. Other participants in this round included EMVC Fintech Fund, Better Capital, Tracxn Labs, and 9Unicorns. “Our angel investors include Naveen Tewari, founder and CEO, InMobi Group; Kunal Shah, founder & CEO, Cred; Shradha Sharma, founder & CEO, YourStory. We have not raised any further rounds of funding post this but will do so soon,” he says.
According to Jain, fintech is well-positioned for growth in a post-Covid market with increased digital adoption and solutions incorporating the market volatility. “Underlying market fundamentals have accelerated in three to four quarters, what would have taken three to four years.”
Additionally, a revenue surge of over 200% was witnessed in 2019 in the consumer brands across sectors in India. The total market for consumer brands in SEA (where Klub looks to expand to in 2021) is expected to go over $400 billion by 2023 with new-age brands contributing to a growth of 25%. “The new market capitalisation in this sector is expected to hit $1 trillion over the next decade,” he says.
Having an early focus on consumer products with an online-first approach and a unique alternate financing model, Klub became a pivotal support system for the consumer-dependent D2C startups grappling with the pandemic. “Flexible financing solutions for SMEs and alternative investment products for investors will do well in 2021, along with underlying platforms powering the digital transformation of the fintech ecosystem,” says Jain.