SUMMARY
The startup will use the funding to ramp up hiring across key verticals and to fuel expansion in India and other geographies
Recur Club has been growing 200% month-on-month since January, both in terms of financing and the number of companies it has onboarded
The startup currently caters to more than 550 clients and has a tradable revenue upwards of 150 Mn
After putting in his papers at Gartner, Abhinav Sherwal, was enjoying his sabbatical in the Himalayas. Twenty days into the retreat, he received a call from his fellow IIM-Calcutta alumni and close friend Eklavya Gupta about a ‘billion-dollar’ idea. Cutting short his trip, Sherwal came and met Gupta and, in a span of a week, brainstormed an idea that would later transform into Recur Club.
On Monday, the fintech startup raised $30 Mn in its seed funding round in a combination of debt and equity allocation. The funding round was led by InfoEdge Ventures and Bill Gates and Jeff Bezos-backed Village Global.
The round also saw participation from other marquee institutions such as Aditya Birla Finance, Ugro Capital, Titan Capital and Incred Financial Services.
Speaking to Inc42, Sherwal said that the startup will use the funding to ramp up hiring across key verticals and to fuel expansion in India and other geographies. It will also use the capital to invest in technology and in scaling up the venture. The startup will also use the investment to strengthen its artificial intelligence (AI) and machine learning-powered underwriting software to better gauge prospective clients.
Recur Club co-CEO and cofounder, Eklavya Gupta, also stated, “Recurring Revenue Companies (multi-trillion dollar market) have highly predictable cash flows with the only problem being lagging revenues versus their customer acquisition costs. This gap was being funded by diluting equity or by offering huge discounts on revenue. We introduced an efficient way which works like your customers paid you today that has resulted in us to achieve 5X growth in the last 2 quarters with more than 500 companies and more than $150 Mn worth of listed ARR. $28M debt allocation which we have been able to raise to finance companies reiterates investor trust in our platform, team and underwriting.”
Founded in April 2021, the startup went live in August last year. In simple terms, Recur Club calls itself a ‘trading platform’ that offers upfront capital in lieu of recurring revenue via subscription-based financing. The fintech startup leverages its AI platform to deduce subscriptions availed on the platform and combines it with public data available online to formulate the ‘Recur Grade’ of the startup. Based on that, institutional investors can bet on the platform and offer funding accordingly to these startups.
When asked about how Recur Club standardised the results, co-CEO Gupta said that the startup started off by leveraging its team and modelled the AI after ‘experiential data. He further added that with more than 550 companies on board currently, the data from these players helped fine-tune the AI to provide better results for evaluation.
The duo further asserted that the startup leveraged the financial acumen of its team members, coupled with technology, to create an AI-driven financial model that purportedly is one of the first in the country.
Elaborating about the revenue model, Sherwal said that the startup charges a ‘dynamic’ fee for its services. The fee differs from client to client and depends upon the size and sector among other parameters.
Growing At A Break-Neck Speed
The startup has been growing at an exponential pace. The founders told Inc42 that Recur Club has been growing 200% month-on-month since January, both in terms of financing and the number of companies it has onboarded. The startup currently caters to more than 550 clients and has a tradable revenue upwards of $ 150 Mn.
Recur Club also plans to use the latest funding to ramp up its presence across a slew of geographies. Headquartered in Singapore, the startup plans to further expand its reach across India and across the Asia Pacific (APAC) region. It also aims to unveil its products across the US and Singapore in the coming days.
Gupta said that the startup primarily focuses on B2B subscriptions, adding that it is open to startups specifically in the domains of SaaS, edtech, tech services and Direct-to-Customer (D2C). He further added that it is running pilots to test the viability of the platform for other domains such as media.
The co-founders also spoke about their plans for the startup. Sherwal said that Recur Club aims to eventually transform into a ‘Do-It-Yourself’ instant financing platform where founders could avail services such as raising funds in as little as ‘10 minutes.’
He further said that Recur Club is looking to emerge as a full-stack financing suite platform in the near future, providing a one-stop solution for startups from embedded financing to other avenues of founder support.
Highlighting his ‘CAPS’ philosophy, Sherwal said that it is looking to offer support from ‘Capital to Advisory’ and from ‘Right Partnership to Safety’ for its clients. He also said that the platform is not looking to immediately monetise different aspects of the startup and that it is slowly building the platform from the ground up.
Recur Club has backed many startups since its inception. In December last year, HRTech startup Keka raised $1.6 Mn in funding through Recur Club. In January this year, another startup Heal Software also raised an undisclosed amount of non-dilutive capital on Recur Club.
What Makes Recur Club Tick?
The startup has raised a massive amount of funds at a time when founders across the globe are looking at alternate sources of funds. Market volatility and scarce funding avenues for early-stage startups have pummelled the ecosystem.
Besides, the continued global uncertainty amidst the Russia-Ukraine war has made matters worse, especially for new-age tech startups. As a result, founders have been looking for alternate modes of funding, and this is where Recur Club fits right in.
Armed with subscription-based funding, the startup claims to bridge the gap between demand and supply, offering better modes of raising funds for these budding players.
The funding round comes at a time when Indian startups are looking toward alternate forms of funding. The year 2021 was a watershed moment for Indian startups, as they cumulatively raised $42 Bn in funding across 1,583 deals.
Indian startups had raised a mere $1.08 Bn in venture debt between 2015 and 2020, which improved slightly in 2021 as they raised close to $600 Mn in venture debt.
Speaking to Inc42, Gupta said Recur Club wants to fill this gap between startups and alternate funding avenues.
The overall mood for fintech startups appears positive in India. The country’s fintech startups raised $7.97 Bn across 280 funding deals last year, a record high. An Inc42 report estimates India’s addressable fintech market opportunity to grow to $1.3 Tn by 2025 at a CAGR of 31%.
Meanwhile, Recur Club seems bullish about its future. The startup aims to reach more than 2,000 customers and add $1 Bn in tradable revenue in the coming future. While the funding amount is a testament to its product, it remains to be seen whether it can translate these gains on the ground.
