Digital credit ledger Khatabook has raised $60 million (about Rs 454 crore) in a fresh equity financing round led by B Capital Group, the investment firm founded by Facebook co-founder Eduardo Saverin.
This takes the total funding raised by the two-year old firm to $87 million.
ET was the first to report on the negotiations between Bengaluru-headquartered Kyte Technologies, which owns and operates Khatabook, and B Capital Group on February 24.
The Series B round, which according to sources values Khatabook at between $275 million and $300 million, has also seen participation from a clutch of existing institutional investors, including Sequoia Capital, and Partners of DST Global, Tencent, GGV Capital and RTP Global, along with a number of prominent angel investors.
“Started with a vision of transforming India’s small shops, today we are the biggest player in the small business segment digitizitising a sector that forms the backbone of our economy. We are looking to work closely with the government and financial institutions to strengthen our market leadership and help MSMEs increase their income while making them more efficient and competitive,” Ravish Naresh, chief executive of Khatabook, said.
The company plans to deploy the fresh capital in building financial services products.
Khatabook competes with the likes of OkCredit and Paytm’s Business Khata, allowing small and medium enterprises to record their financial transactions, while also sending reminders to their creditors via text and instant messaging platforms, reducing the need to maintain account books in physical form.
Khatabook claims to have reached over 8 million active merchants across 11 languages in less than a year.
“We are impressed by its (Khatabook’s) product suite as it is addressing the critical pain points of merchants across credit tracking, revenue leakage and collections. We expect the number of digitally sophisticated MSMEs to double over the next three to five years,” Kabir Narang, general partner of Asia at B Capital Group, said. Angel investors Kevin Weil, Alexander Will, Cred founder Kunal Shah and Snapdeal co-founders Kunal Bahl and Rohit Bansal also participated in the round.
Two new investors, Unilever Ventures and Rocketship.VC, have also joined the cap table of the startup, which was part of Y Combinator in its earlier avatar, as well as being in the maiden cohort of Sequoia Capital’s rapid accelerator programme Surge, in 2019.
In India, Los Altos, California-based Rocketship.VC, an early investor in Lyft and Facebook, has previously invested in Snapdeal, Moglix and NoBroker, among others. Separately, Unilever Ventures, the investment arm of the world’s largest FMCG company, counts the likes of Milkbasket, and Peel-Works among its portfolio.
Khatabook was founded in 2018 by four IIT Bombay alums, Ravish Naresh, who was also a co-founder and former chief operating officer at realty portal Housing.com, Jaideep Poonia, Dhanesh Kumar and Ashish Sonone.
It last raised $25 million in a Series A funding round from GGV Capital, Tencent, Sequoia Capital, along with a clutch of top angel investors, in October 2019.
The investment in Khatabook is the latest by the US and Singapore-based investment firm launched by Saverin, a co-founder of technology behemoth Facebook, and Raj Ganguly, who was formerly with Bain Capital.
In January, the firm co-led a $105 million investment round in mobility startup Bounce, while also participating in B2B packaging materials marketplace Bizongo’s $30 million Series C funding round.