Klub plans to deploy the capital to accelerate disbursements across growth-stage businesses during the upcoming festive season
The revenue-based financing platform grew 10X in terms of monthly disbursements in the last one year: Klub CEO to Inc42
The fund has already made 37 investments so far in brands such as BluSmart, Ben Franklin, Bewakoof, and Furlenco
Revenue-based financing platform Klub on Monday (September 5) announced the final close of its Aceler8 fund that will invest INR 200 Cr in consumer and SaaS businesses.
In a statement, Klub said that Credence Family Office played a ‘pivotal role’ in closing the fund, which was announced in December last year.
The category II alternative investment fund (AIF) will primarily be deployed to expand Klub’s investments in small businesses and unicorns over the next six months. Klub plans to deploy the capital to accelerate disbursements across growth-stage businesses during the upcoming festive season.
The fund has already disbursed 30% of its total value and is on the lookout for more investments in the next few months.
Speaking to Inc42, Klub CEO and cofounder Anurakt Jain said, “Revenue-based financing (RBF) fits perfectly for the festive season capital needs of businesses. This festive season we will expand our investments in small businesses as well as unicorns by 2X through our RBF fund over the next six months.”
Jain refused to disclose the average amount provided by the fund to startups, but said that Klub invests anywhere between INR 50 Lakh to INR 30 Cr for a tenure of 1-24 months.
“So, we’re in a very active deployment phase at this point in time. We are absolutely not holding back in any form, shape or manner. What we do is agnostic of the business cycle. So regardless of the phase on the equity side, we will continue to deploy capital,” he said.
The fund claims to have so far made 37 investments including in brands such as BluSmart, Ben Franklin, Bewakoof, Furlenco, SMOOR Chocolates, among others.
Jain also claimed that the fund is targeting about 50-55 investments over the next six months.
Founded by Jain and Ishita Verma, Klub offers financing options to digital brands and small and medium enterprises (SMEs) with recurring revenue.
It partners with non-banking financial companies (NBFCs), high-net-worth individuals (HNIs) and financial institutions to provide capital. It is backed by marquee names such as Sequoia India, US-based Alter Global, 9Unicorns, among otters.
Klub also works with startups across other sectors including D2C brands, cloud kitchens, edtech, and B2B companies with recurring revenue.
The fund’s advisory council includes names such as inMobi Group CEO Naveen Tewari, Vidit Aatrey of Meesho and 9Unicorns founder Apoorva Ranjan Sharma.
Jain told Inc42 that the idea of Klub germinated as a consumer brand but eventually took shape as a revenue-based financing platform. Its initial team consisted of finance professionals who had also worked in tech businesses.
Realising the ‘dearth’ of capital in the market and building on the concept of RBF the founders first heard in the US, the duo began work on the platform.
“We quickly saw that just morphing the US model to Asian markets does not work and one has to customise very deeply for the Indian market itself. And that is what we did. We looked at the concept, but we completely rebuilt the platform,” said Jain.
Klub looks at the past patterns of revenue generated by borrowers to build a prediction model about multiple risk factors associated with startups. Subsequently, it assesses the associated risks and the commensurate returns to decide the investment amount, Jain said.
Explaining the investment strategy of Aceler8 fund, Jain said, “The fund itself is designed as a low-risk pool of capital on the platform. Within the low-risk pool of capital, there is also a diversification that we do across different risk cohorts. So, we can go down actually far deeper and be a lot more nuanced with regards to risk segmentation in itself. But fundamentally, the fund is a pool of capital that takes on the lower risk on the platform,” said Jain.
The startup charges anywhere between 1-10% as revenue share from the borrowers, depending on the risk of the investment opportunity.
Klub On Growth Trajectory
Klub claims to have provided financing to more than 300 brands across 600+ investment rounds so far. The CEO said that the platform grew 10X in terms of monthly disbursements in the last one year.
Jain told Inc42 that Klub is looking to ramp up on the technological side and scale platform in the mid-term. The platform also plans to expand its services to more business verticals and intends to pilot them soon.
Klub primarily competes with other players in the segment such as GetVantage, Velocity N+1 Capital, among others.
According to a report, the global revenue-based financing market was estimated to be worth around $901 Mn in 2019, and was projected to soar to $42.3 Bn by 2027, growing at a CAGR of 61.8%.