The key enablers for digital SMEs

Klub was founded in 2019 on the concept of revenue-based financing (RBF) by entrepreneurs Anurakt

Klub was founded in 2019 on the concept of revenue-based financing (RBF) by entrepreneurs Anurakt Jain and Ishita Verma, assisted by their professional careers collectively spanning over 25 years. Klub’s unique proposition lies in its proprietary data-driven technology, which assists in quick risk assessment within 24 hours followed by frequency of repayments. Klub currently enjoys its market leadership position in India, and will soon set its footprints in the Middle East and South-East Asia regions.

The main stakeholders fuelling the traction were incubators, accelerators, mentors, venture capitalists, angel investors and private equity investors. With a unique model, Klub’s team draws on qualitative and quantitative experience from industries like fintech, venture capital, technology, and investment banking with a solid understanding of data mining and processing. These are new age thinkers, with a clear foresight, ready to spin the market opportunities into tangible gains and create disruption. They are fast, fair, flexible, frequent and founder-friendly funding for growing digital businesses.

In the age of digital commerce, most businesses are innovating, aided with technology, building upon products and connecting communities. These entrepreneurs visualised RBF investors across different stages of the business life cycle, and as a result of sustained efforts, 50 percent growth has been delivered after funding. Interestingly, over 25 percent of the portfolio brands are women-led.

The core team of over 60 members, comprises individuals with impeccable backgrounds. They possess a combined knowledge asset across technology, product design and data analytics. The co-founder, Anurakt Jain is a blue-sky thinker having worked with InMobi, Bertex, DFJ, and Indust View. His academic credentials from IIT-D, Wharton, being a CFA and Charter holder makes him a perfect person on the business front. Ishita Verma, another co-founder, brings in her rich experience from Snyder Group (UAE), Unitus Capital, Kotak Institutional Equities and holds a solid foundation in education from Lady Sriram College followed by a degree from IIM-Bangalore.

Other leadership members include Sudharsan Venkatakrishnan who brings his 11+ years of strategy and leadership experience from Shubh Loans, Capgemini and IIM-Ahmedabad. Subhashish Bhadra draws expertise from past engagements with Omidyar Network, McKinsey & Company, St Stephens College followed by the University of Oxford. Deepak Bansal, their next core team member, has exposure with Estee, Gulaq, InCred, InstaPaisa and Snaplion while Anant Jain draws his experience from InMobi, Karthik Sekar from Moodys, Credit Suisse & Futures.

During the pandemic times, the founding team realised a latent opportunity wherein the growth of digital SMEs and the flexible non-dilutive capital was unresolved. Online consumption was at its peak. The team saw a massive financing opportunity for consumer brands, SaaS, cloud-kitchen, etc. For this, they had to create a robust ecosystem of marketplaces, commerce, marketing and the platforms for distribution. They realised the critical need for marketing, inventory and Capex management while being cemented with the idea that traditional systems do not work efficiently as compared to a digital interface.

With a strong foundation, Klub provides a platform with the sole purpose of establishing a potential business relationship. As a brand or patron investor, these incumbents are referred to as members and with the help of tools, validate the business ideas. Klub offers financing from Rs 5 lakh lasting up to Rs 30 crore, as required in a typical business life cycle. Some of these areas of financing are Digital Marketing, Inventory & Marketing and Growth Capital for 3-18 months. Every month, there are flexible repayments as a percentage of revenues. As of now, they have completed 450+ investments in 250+ brands in the last two years, with zero defaults.

Their target markets include digital businesses in the fashion, beauty & personal care, lifestyle & accessories space. It also includes FMCG, health & wellness, food & beverage, and cloud kitchens with a keen interest in direct-to-consumer & subscription businesses and consumer apps. Their brands are based out of Hyderabad, Delhi, Bengaluru, Pune, and Mumbai. Currently, they have been able to draw in investments from Surge, Alter, GMO Venture Partners, Better, Trifecta Capital, Emphasis Ventures, Angel List and 9Unicorns.

Their journey has been around concept validations, market validations and product-market fit. At the initial stage of their entrepreneurial journey, they tried building a financing model and had to relook into the ‘Ikigai’ of their business. Ikigai in Japanese implies one’s ‘reason for being’. They caressed the local F&B businesses and thought of taking it forward into a community-led model. What they realised was that these businesses have had a hard time raising the capital and this became their ‘aha’ moment. After careful market research for SaaS businesses in the West, the founders realised that there was a contrast in funding opportunities in the US as compared to India. Balancing their aspirations and the current market reality, the entrepreneurs went back to the drawing board, extrapolating various models. This was followed by market validation and an early product-market fit.

Klub’s RBF model targets all consumer brands, with a medium-cost based on revenue-based payments. Interestingly, with a size of $43 million in India, its immediate competition is with Velocity, GetVantage and N+1 capital. In the US market, it competes with companies like Clearco and Pipe, while in Europe, companies like Wayflyer are in close competition. In Singapore, Jenfi is a tough contender. Therefore, there is tremendous scope and a large pie for Klub to bite upon.

Klub has raised one of the largest seed funding rounds in the fintech industry in a mix of equity and debt as a part of its seed funding from investors US-based Alter Global and Japan-based GMO VenturePartners. It was followed by participation from existing investors including 9Unicorns and Sequoia Capital India’s accelerator program, Surge. The company had raised $2 million as a part of its pre-seed round led by Surge along with other angel investors. Klub has grown 10 times from FY21 to FY22.

Experts estimate the revenue-based financing opportunity in India at around $5-8 billion, with a potential to reach $40-50 billion over the next few years. The D2C space, a key driver for RBF, is predicted to be a $100 billion opportunity in India by 2025, according to Avendus Capital and this is where Klub intends to scale. Apart from this, digital commerce financing is a massive $3.3 trillion opportunity. The D2C and marketplace seller’s industry has gone up by 22 percent, omnichannel FMCG has gone up by 5.4 percent, cloud kitchens have gone up by 6.5 percent, SaaS/EdTech, B2B and B2C subscriptions have grown by 10 percent, and cross-border commerce by over 15 percent.

Keeping the above factors in consideration, Klub has the potential to become a unicorn. There is no equity dilution and the owners retain complete control of their business. With an elevated team, they have complete control over their processes, working with a community of affluent investors, and helping people through its driven culture mission.

https://yourstory.com/2022/05/meet-team-klub-digital-smes-key-enablers/amp