Khatabook to pivot to super app model, scale up finserv | The Financial Express

Khatabook to pivot to super app model, scale up finserv

After the launch, Khatabook’s super app is likely to remain free for basic features but will charge depending on what software-as-a-service (SaaS)-based features features businesses use.

Khatabook to pivot to super app model, scale up finserv
The plan is to become an end-to-end MSME-focused platform. (IE)

Sequoia-backed Khatabook, a business bookkeeping software provider, is preparing to pivot to a super app model with a launch likely in October or November. Along with that, the company is also attempting to scale up its financial services (finserv) category as it strives to monetise its offerings at a time when several players in the space are struggling to generate revenue or looking to exit the industry, two people aware of the developments told FE.

Over the past years, in search for a model that generates sustainable revenue, Khatabook has been evolving from a startup that just helped businesses maintain daily accounts to automating their goods and service tax (GST) filing and even helping manage their cash flow. The company is finally toying with the idea of providing deeper features via a super app. It plans to scale up its money lending and borrowing arm at a time when peers — like OkCredit — are reportedly up for sale but yet to find buyers. Essentially, Khatabook helps businesses keep a digital record of their day-to-day transactions, with primary focus on the country’s 63-65 million micro small and medium enterprises (MSME).

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After the launch, Khatabook’s super app is likely to remain free for basic features but will charge depending on what software-as-a-service (SaaS)-based features features businesses use. The plan is to become an end-to-end MSME-focused platform. For instance, inventory, workforce management, salary payouts and the likes. The company is yet to classify the features it will charge for and the options that it will keep free. The company is also due to finalise its pricing strategy for the super app, one of the persons cited above said.

Along with the super app, Khatabook’s talks with the Reserve Bank of India (RBI) is making “significant progress” as it plans to expand its finserv division, another driver that will help it reach its monetisation goals. Finserv is active in a select few cities under its pilot stage. The Bengaluru-based company has apps like the Digital Ledger App and Tally on Mobile, among others, most of which are free, the primary reason why the company has been unable to generate enough revenue.

“The space in general is not in a very healthy shape at the moment, it’s been very difficult to earn money via the existing business models for players in the space. Some companies are even planning to exit. Taking cue from that, Khatabook has decided to pivot to a super app model that will launch next month or in November and likely generate additional revenue depending on what the company offers as paid features,” one of the persons cited above said.

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“The incremental business – if any – is very difficult to assess at the moment. It remains to be seen how many customers are willing to pay for the super app. Increased efforts on the finserv end should provide some support to the business too,” the person added.

Currently, Khatabook’s Biz Analyst app — its premium platform — has about 0.15 million monthly paying customers. Overall, Khatabook has around 9-10 million monthly active users (MAUs), up from 8.1 million MAUs that it had in March 2021 and is the largest in its space. OkCredit, PhonePe For Business, Paytm and BharatPe are a few competitors. Khatabook had said, in terms of users, it was 1.7X of OKCredit, 1.8X of PhonePe For Business, 2X of Paytm and 3.8X of BharatPe, in its pitch deck shared with potential investors before its latest fundraise.

Khatabook declined to comment on the development.

The company raised $100 million from Tribe Capital, Moore Strategic Ventures and others in August 2021 at a valuation of $600 million. In total, Khatabook has raised about $187 million so far. Its other notable backers include Tencent, DST Global Partners, Y Combinator, B Capital, Alpha Wave Global (formerly called Falcon Edge Capital), and others.

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