India’s KhataBook raises $100 million for its bookkeeping platform for merchants

Khatabook, a startup that is helping merchants in India digitize their bookkeeping and accept online payments, said on Tuesday it has raised $100 million in a new financing round as it prepares to launch financial services.

The startup’s new financing round — a Series C — was led by Tribe Capital and Moore Strategic Ventures and valued the two-and-a-half-year-old Bangalore-headquartered startup at “close to $600 million,” its co-founder and chief executive Ravish Naresh told TechCrunch in an interview.

As part of the new round — which was oversubscribed and also saw participation of Balaji Srinivasan and Alkeon Capital as well as many other existing investors including Sriram Krishnan, B Capital Group, Sequoia Capital, Tencent, RTP Ventures, Unilever Ventures, and Better Capital — KhataBook said it is also buying back shares worth $10 million to reward its current and former employees and early investors. The startup said it is also expanding its stock options pool for employees to $50 million

Even as hundreds of millions of Indians came online in the past decade, most merchants in the South Asian nation are still offline. These merchants, who run neighborhood stores, rely on traditional ways for bookkeeping — maintaining ledgers on paper — that are both time-consuming and prone to errors.

KhataBook is attempting to change that by providing these merchants with a suite of products to digitize their bookkeeping and manage their expenses and staff. The startup said it has a user in nearly every zip code in India.

“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, in a statement.

KhataBook has expanded its product offerings in recent years to try to solve a lot of other challenges merchants face. Later this year, Naresh said, the startup will provide lending to merchants. “We are currently testing the product with both retailers and distributors,” he said.

Online lending has boomed in India in recent years, but very few companies are today attempting to cater to small- and medium-sized businesses. “The unaddressed SME credit demand in India is ~US$300-$350 billion, with more than 90% of current demand being met by banks. A typical digital SME lender focusses on Rs1-5 million ($13,575 to $67,875) ticket size with no collateral, average tenure ~12-18 months, and with some ecosystem anchor,” analysts at Bank of America wrote in a report last year.

As with scores of other firms, the pandemic was not good news for KhataBook, which lost a significant portion of the business last year after Indian states enforced lockdown to restrict mobility. But the startup has since bounced back. The month of July, said Naresh, was its all-time high. “MSMEs have come back very strongly and businesses were not as impacted by the second wave this year as they were by last year’s,” he said.

This is a developing story. More to follow…

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Hyper is a new fund that offers $300k checks and promise of a media slingshot for founders 

Hyper is a $60M early-stage fund co-founded by Josh Buckley, Product Hunt’s CEO along with writer, founder and designer Dustin Curtis. Two ex-Sequoia operators are part of the team at launch as well. Malika Cantor as Partner and GM and Ashton Brown as Head of Program. The fund launches today and is self-described as ‘inspired by the Product Hunt community’. 

The team will be writing $300k checks for 5% of very early companies in any arena that seems promising to the partnership in a fixed deal structure that mirrors Y-Combinator. 

The fund will exist as a ‘sister company’ to Product Hunt (though it’s going to technically own it). Product Hunt, however, is the first of what the team says will be many companies it will own, create and operate in order to provide ‘direct value’ to its portfolio companies. 

I had a chat with Buckley, Curtis and Cantor about the new fund and company and the way that they hoped to differentiate Hyper in a world of aggressively service-oriented venture firms. 

The short version is: distribution. It’s hard to argue with the overall assumption that the Hyper team is working under — capital is majorly commoditized. Frankly, sometimes that’s all you want from an investor whose value add is more of a thorn in your side than anything. But, especially at the early stage there are a few funds and firms that offer a strong value outside of writing checks in the form of, say, hiring, sales introductions or board members that have relevant operational experience. 

Where Hyper differs, says Buckley, is that they see distribution as the biggest value add for a nascent startup at the stages where the firm hopes to invest. Product Hunt is one opportunity that he points to as an example. It’s an established launch pad to an audience of extreme early adopters that can provide a seed of a real user base — Hyper itself is launching via a post on the platform. 

I’ll let the Hyper team’s words spell out what they say is its thesis:

Hyper believes that every company (B2B or B2C) needs access to distribution channels to find customers, users, and talented employees to join their teams. Hyper works with early-stage companies at three key junctures in a startup’s journey:

  • Initial customer acquisition and validation (often at the pre-Seed stage)
  • First product/company launch and hiring (often at the Seed stage)
  • Scaling customer acquisition and fundraising (before the Series A)

Founders who go through the program will remain a part of the tight-knit Hyper founder community long past their Series A.

Over the past few months, Buckley says that Product Hunt has grown headcount by around 50% in part to boost its ability to act as an enhanced distribution channel. 

A short list of some of the people involved as advisors, mentors or investors themselves includes Alexis & Serena Williams, Alfred Lin of Sequoia, Garry Tan of Initialized, Harry Stebbings, Jeffrey Katzenberg, Naval Ravikant, Owen van Natta, Ryan Hoover, Ryan Tedder of OneRepublic and Sriram Krishnan of a16z. 

It’s a pretty eclectic group, but if you squint you can see the shape of the ambitions that Hyper has reflected in the parties involved. A mix of media, venture and product figures is probably the right way to go if you want to back yourself into a media empire funded by venture capital returns. 

They’ll be building additional media products as well, especially ones that focus on areas of hyper growth and high interest in order to both generate deal flow and to feature companies in the portfolio. Interestingly, unlike many marketing-operations-disguised-as-journalistic-enterprises, Curtis says that they want these to be real, functioning media companies and that startups funded by Hyper will be presented on those sites and platforms in clearly defined sections that make it clear that they are part of the program. 

As an example, the team is careful to state that Product Hunt will remain a ‘neutral platform’ for launching products and that Hyper companies will get clearly marked slots on the site. 

Surrounding those placements will be content that is produced by editorial media arms independent of the fund (though, in the end, funded by the profits of the fund). They’re not quite up to giving specifics about how they’re going to power these media properties initially but the funds management fees as well as most of its profits from carry will go towards cultivating the distro side. The other part of the ‘most’ will, one assumes, go to the individual investors. Curtis says that there could be other ways to obtain capital to speed up this process that is allowed by the unique structure of Hyper like debt or equity financing. 

Hyper itself is trying to establish two lines of business. A portfolio of wholly owned companies like Product Hunt (which still counts AngelList as a majority investor and Ravikant on its board) and other new media brands. And the other component which includes the portfolio of Hyper funds (plural theirs) and a founder program that includes mentorship, twice-a-year-events, and other future efforts — eventually. 

The mentorship component that Hyper hopes to add for founders in the fund is an 8-week founder program that includes individuals from “partners” like Andreeessen Horowitz, AngelList, Sequoia Capital, the Twenty Minute VC Podcast and Product Hunt helping founders to solve ‘key challenges’. Some of the participants are investors in Hyper, though none of the funds participated themselves The group includes some close to home figures as well, in Product Hunt GM Ashley Higgins and founder Ryan Hoover.

The program will also offer office hours with experts, an exclusive Product Hunt launch event and a Public Hyper Demo Day and Investor Demo Day to participate in within a year of being in the program.

The Hyper concept sounds fresh in combination, if not in components. An enormous amount of ink has been spilled, for instance, on the spinning up of the VC media apparatus as a bullhorn for a tech-optimism POV. But most of that content is understood to be talking the firm’s book and not intended to be seen as journalism. Though the media publications that Hyper is planning on forming have yet to be realized, there is enough of a differentiating spark here that could make it a unique play that attempts to straddle the worlds of editorial and venture. 

I have thoughts about the way that venture and media interact, as you might imagine given what I do and waves hands at the masthead where we are having this little chat. Combining a media and investing apparatus is not a new concept — as TechCrunch readers will know. But it’s not without its complexities. Enthusiast media that works does so for a couple of major reasons, in my opinion:

  • Genuine obsession with the subject matter. The writers, editors and even business people involved must have a crazy thirst to understand and contextualize the subjects that they write about. There can be no in-between here, as they are speaking every day to an audience that is just as obsessed with it as they are and can detect any level of commitment to it that is less than 100%. 
  • A patina of either trust or candor built over time. You can go into it with some bona-fides that you buy with a big name hire or series of them, and the reputations that they’ve built elsewhere. But if you’re full of shit, you’re going to lose — no matter how well positioned and funded you are. You may ‘win’ long term by turning what you’re doing into something else, a broad interest publication in niche clothing, for instance. But you won’t win at the enthusiast level.
  • An intense, punishing commitment to momentum. The further you delve into any niche, the more knowledgeable your audience will be. This means that you must produce uniquely insightful, crisp, well-researched content every day and you must do it with a level of granularity that surpasses anyone else in your niche. Your audience lives and breathes this stuff so if you’re telling them things they’ve already read on 3 message boards, in private texts or in their work slack then you’ve lost. You’ve got to get subcutaneous and not just superficially so. 

And when you add in a layer of complexity that is proudly announcing your vested interests in the success of particular companies, it just ups the level of difficulty massively. I don’t think that it’s at all impossible to run a fund that feeds a media arm, but it’s definitely a ‘doing a really hard thing while also on fire’ kind of operation.

Which doesn’t mean that Hyper can’t pull it off. Product Hunt is the model for what they’re trying to do, creating close-to-the-ground media that attracts as many operators and investors as it does early adopters. Duplicating that in a variety of publications and events, however, is not easy at all. 

I will say that a bet on distribution as value add is still one of the better stabs that I’ve seen lately. The capital is, as Buckley told me, readily and generically available. And having your calling card be “we can help the first 10, 20 or 30 thousand people know that you even exist” isn’t a bad situation at all. It works.

This is, after all, what we do at TechCrunch, we just don’t take a cut. 

The announcement today is the Hyper the fund, and the fact that they’re opening applications to a small cohort of 25 companies. The applications are planned to open for roughly 4 weeks every quarter and the deadline for this tranche is August 10th, 2021 at midnight PT. The second cohort will open in November 2021. 

The fund is taking applicants worldwide though notes that some countries present legal complexities for investment. 

#advisors, #alfred-lin, #angellist, #ceo, #corporate-finance, #dustin-curtis, #entrepreneurship, #finance, #garry-tan, #harry-stebbings, #head, #horowitz, #hyper, #jeffrey-katzenberg, #josh-buckley, #media, #money, #naval-ravikant, #owen-van-natta, #product-hunt, #ryan-hoover, #sequoia-capital, #sriram-krishnan, #tc, #venture-capital

Social platform veteran Sriram Krishnan is Andreessen Horowitz’s latest general partner

Today, Andreessen Horowitz founder Marc Andreessen announced that social media product veteran Sriram Krishnan will be joining the firm as their latest general partner.

Krishnan, whose previous roles include stints at Snap, Facebook and Twitter, has gained a higher profile in recent weeks from his recurring audio show “The Good Time Show” on Clubhouse. His recent talk with Tesla CEO Elon Musk was something of a watershed moment for the audio chat platform driving plenty of new attention to the budding app.

This announcement follows a report in The Information regarding the hire earlier this week.

Krishnan’s hire comes at an interesting point for Andreessen Horowitz, the firm is at the center of plenty of chatter among media circles regarding their “go direct” content strategy. At the same time, a16z and its leadership have played an increasingly hard-nosed role in driving a broader backlash against tech media in recent years among founders and tech enthusiasts in their orbit. Krishnan has spent much of the past couple years building out his flirtations with “tech optimism” content with his interview newsletter “The Observer Effect,” his Clubhouse show and his prolific Twitter usage.

Broader “tech pessimism” among media outlets has, I think, partially been owed to a swift and outspoken shift in thinking regarding the societal responsibilities of social media platforms to more aggressively moderate the content they are surfacing on a global scale. Some of the partners at a16z, a Facebook backer, have been among the more vocal in pushing back on these critiques even as the executives at their portfolio companies have seemed more amenable to shift their thinking.

In his blog post, Andreessen notes that Krishnan will be joining the firm’s consumer team to invest in areas that include social.

Krishnan, well-regarded in tech circles, may play an important role at the firm as they approach more social investments in a world where the effects of rapidly scaled consumer platforms have become more understood. The firm and its partners have been throwing their full support behind Clubhouse in an aggressive push to promote the platform, flexing the firm’s celebrity connections and influence along the way as the platform quickly picks up millions of new users. Krishnan’s direct operator roles engaging with the product struggles of building platforms that responsibly scale will likely be an asset as the firm faces increased competition across an increasingly frothy venture market.

#andreessen, #andreessen-horowitz, #ceo, #clubhouse, #effect, #elon-musk, #facebook, #marc-andreessen, #operating-systems, #snap, #social-media, #social-media-platforms, #software, #sriram-krishnan, #tc, #tesla, #venture-capital, #world-wide-web