Revenue-based financing platform Klub has raised an undisclosed amount from market-bound Northern Arc Capital in a debt financing round, the company said in a statement on Thursday.
It plans to give e-commerce merchants access to the funds to enable them to use flexible growth capital, the company said. Klub will also scale up its embedded platform by 20X to support digital small medium enterprises (SMEs) with growth capital ranging from Rs 2 lakh to Rs 30 crore, the company said.
Klub has partnered with India’s leading e-commerce platforms, which the company gauges will offer opportunities of around $100 billion by 2025. It claims to have provided access to flexible capital to over 200,000 SMEs across these platforms. Merchants on online marketplaces will now be able to access Klub’s financing options either directly on the platforms they sell on or via their preferred payment gateways, and logistics partners, the statement said.
“Klub’s embedded financing solution helps merchants on our partner marketplaces to get easy access to capital without leaving the marketplace ecosystem,” said Sudharsan Venkatakrishnan, Vice President, Klub.
The company had appointed Venkatakrishnan, a former Capgemini executive, in November to head Blaze, Klub’s newest business offering, which provides marketing and inventory capital for digital SMEs in partnership with non-banking financial companies (NBFCs).
Venkatakrishnan, an IIM Ahmedabad alumnus, previously worked as the Chief Operating Officer of MyShubhLife (formerly Shubh Loans), a full-stack digital lending and savings platform, where he was part of the founding team, instrumental in building its fintech platform as well as launching financial products. He worked at Capgemini as a Senior Consultant till 2015.
Founded in 2019 by Anurakt Jain and Ishita Verma, Klub, operated by Ken Capital Technologies Pvt Ltd, provides flexible growth capital against future receivables, ranging from Rs 2 lakh to Rs 30 crore, with zero equity dilution or personal guarantees.
They also facilitate funding for recurring marketing, inventory, and capital expenditures spending to a wide variety of digital-first companies and SMEs across e-commerce, direct-to-consumer (D2C), ed-tech, software as a service (SaaS), and the broader digital commerce spectrum.
Earlier, Klub raised Rs 20 crore (around $2.7 million) in debt financing from Trifecta Capital. In August, they raised $20 million (around Rs 148.6 crore) in a Seed funding round led by 9Unicorns and Sequoia Capital India’s Surge and joined by Alter Global and GMO Venture Partners.
For market-bound Northern Arc Capital, Klub’s investment adds to its portfolio of financing companies. In November, Credit Fair, a consumer lending fintech startup had secured an undisclosed sum as debt from Northern Arc Capital. In October, VCCircle had reported that Berar Finance Ltd, which runs a two-wheeler-focused financing unit, had raised debt financing from the alternative investment arm of non-banking financial company (NBFC) Northern Arc Capital. Northern Arc Capital had also led debt investment rounds in BharatPe, earlier this year.
“Northern Arc has always believed in partnering with pioneering companies like Klub that disrupt the existing ecosystem, at an early stage. Our ability to understand the potential and risks of underlying sectors and markets helps us underwrite these institutions and provide them with suitable products through their lifecycle,” said Bama Balakrishnan, Chief Operating Officer, Northern Arc Capital.
The Chennai-based lender, which has filed for an IPO to raise up to Rs 300 crore and an offer for sale (OFS), may also consider issuing shares for private placement up to Rs 150 crore, prior to the filing of the DRHP as Pre-IPO placement.
The proceeds from the issue will be used for augmenting its base capital to meet future capital requirements.
As on March 2021, its capital-to-risks-weighted asset ratio was 28.89% of which Tier-I capital was 27.62%.
For FY21, net profit stood at Rs 76.59 crore on a total revenue from operations at Rs 681.17 crore, as compared with Rs 102.93 crore a year ago on a revenue of Rs 632.82 crore. Its gross NPA stood at 2.3%, while net NPA was at 0.9%. The non-deposit taking NBFC’s total outstanding borrowings stood at Rs 3,920.81 crore.