Fintech platform Khatabook, operated by Bengaluru-based ADJ Utility Apps, has secured $100 million (about Rs 741 crore) as a part of its Series C funding round, led by US-based venture capital firms Tribe Capital and Moore Strategic Ventures (MSV).
Other investors who participated as a part of the round include Alkeon Capital and existing investors B Capital Group, Sequoia Capital, Tencent, RTP Ventures, Unilever Ventures, and Better Capital.
The round also saw participation from former and current partners of Andreessen Horowitz including Balaji Srinivasan and Sriram Krishnan, who invested in their personal capacity.
With this fundraise, the valuation of the startup stands at $600 million.
Separately, Khatabook also said that it is buying back $10 million worth of employee stock ownership plan (ESOP) shares to acknowledge and reward employees, ex-employees, and early investors who contributed to the company's growth. Eligible employees will be able to sell as much as 30% of their vested options, the company said.
Khatabook has also expanded its ESOP pool to $50 million.
The current funding will also help the startup with strengthening its talent base, as it looks to accelerate hiring across engineering, product, design, analytics, and data science functions. Currently, Khatabook has a headcount of more than 200 employees.
Khatabook will also use the proceeds from the current funding to launch financial services offerings for its merchant partners.
The startup posted losses of Rs 126 crore in 2019-20, with zero operating revenue since starting operation. However, the company looks to begin its focus on monetisation through distribution of financial services.
"The first phase of our journey was enabling digital transformation by building a tech ecosystem for Indian MSMEs. Now that we have created a widely accepted digital platform, the next step will be digitally-enabled financial services for small businesses. We are humbled by our investors' confidence in our mission to help local businesses succeed by providing them with the right digital empowerment,” said Ravish Naresh, chief executive officer, and co-founder, Khatabook.
The two-year-old company provides digital tools to kiranas and enables micro, small and medium enterprises (MSMEs) to increase efficiency and recover dues. The company has also launched Pagarkhata, a staff and salary management platform.
Earlier this year, it also acquired software-as-a-service (SaaS) accounting software Biz Analyst, for $10 million to offer premium value-added services like on-demand access to sales, purchase, inventory management, and more.
“At Tribe, we believe strongly in the power of the network effect and how it can create moats for businesses. Khatabook has successfully built such a network by empowering this seismic shift among MSME businesses to move from paper to digital, literally. Despite its large early success and fast adoption to date, the company is early in its path to power the segment. We’re thrilled to be a part of its growth as it leverages its network to build additional scale,” said Arjun Sethi, co-founder and partner at Tribe Capital.
Without disclosing absolute figures, Khatabook said that it has witnessed 150% year-on-year revenue growth in the financial year 2020-2021 (FY’21).
“We are excited to partner with Khatabook as they continue to provide millions of small and medium sized retailers in India with outstanding software products. This round will accelerate the growth of technology products with which Khatabook’s customers can better serve Indian consumers. Additionally, this round enables the launch of a next-generation financial services platform to escalate the growth of those same customers,” said James McIntyre, senior managing director and chief operating officer, MSV.
At present, Khatabook is available in 13 languages and claims to have more than 10 million monthly active users on its platform.