Khatabook raises USD 100 million in Series C funding round, announces ESOP buyback worth USD 10 million

Kolkata : Khatabook, India’s leading fintech start-up, today announced it has closed a USD 100 million Series C funding round, with a valuation now close to USD 600 million.

The round was led by US-based VC firms Tribe Capital and Moore Strategic Ventures (MSV). Other investors in this oversubscribed series C round were n Alkeon Capital, with continued investment participation from internal investors B Capital Group, Sequoia Capital, Tencent, RTP Ventures, Unilever Ventures, and Better Capital. In addition, Balaji Srinivasan Sriram Krishnan participated as independent investors, among others, in Khatabook’s series C funding round.

The startup is buying back USD 10 million worth of ESOPs 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. Khatabook has also expanded its ESOP pool to USD 50 million.

Amidst the growing demand for technology solutions by India’s MSMEs, Khatabook experienced 150% YOY growth FY 20-21. Currently, Khatabook, across all its software products, has over 10 million monthly active users. Besides the flagship ledger application, Khatabook, the company is also focused on the growth of its software ecosystem for MSMEs through its other apps — Pagarkhata for staff management, Cashbook for expense management, and recently acquired Biz Analyst for insight-driven decision making and business management for Tally ERP9 user base.

Khatabook has a user base in almost every district in India. In the next phase, the focus for the start-up will be financial service disbursement through its tech platforms. The financial services on the Khatabook platform will digitally foster lending, payment, and deposits related efficiencies in the ecosystem. As Khatabook builds financial services, it will be looking for the right partnership opportunities that enable the seamless rollout of solutions benefiting the economic aspirations of millions of small businesses.

Besides building financial services, the funding will also help the start-up with strengthening its talent base. Khatabook, currently at the headcount of 200+ employees, will accelerate hiring, especially in engineering, product, design, analytics, and data science functions.

Ravish Naresh, CEO, and Co-founder, Khatabook, said, “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. On this milestone for the company, we would like to acknowledge the contribution of employees and early investors through the ESOP buyback plan.”

Arjun Sethi, Co-Founder and Partner at Tribe Capital, said: “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.”

James McIntyre, Senior Managing Director & COO of MSV, said, “We are excited to partner with Khatabook as they continue to provide millions of small & 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.”

Over the last year, small local businesses have adopted technology to become more operationally resilient in the face of the Pandemic. Khatabook represents the most extensive digital MSME network in India. The company intends to leverage this platform reach in building equal access to financial services.