DataLabs by Inc42 in its Annual Tech Indian Startup Funding report 2019 had noted that Sequoia Capital was the most active venture capitalist in 2019. The firm enabled 43 deals, mostly powered through its early-stage accelerator Surge, which was launched last year.
Continuing the trend, yet another Sequoia Surge startup has raised funds. Talking to Inc42, Anurakt Jain, cofounder, Klub said that the company has raised $2 Mn in pre-seed round led by Sequoia Surge.
Founded in August 2019 by Jain and Ishita Verma, Klub is a fintech startup enabling financing to high-affinity brands. Jain told us that the investment has also come in from EMVC Fintech Fund, Better Capital, Tracxn Labs, and 9Unicorns among other investors.
Further, via AngelList, 40 angel investors including Naveen Tewari and Piyush Shah of InMobi, Kunal Shah of Cred, Rajesh Yabaji of Blackbuck, Ramakant Sharma of Livspace, Amit Gupta of Yulu, participated in the round.
Jain told us that the funds will be used for building Klub’s investment and data platform along-with building the team and acquiring partners on the platform.
Klub: Financing New-Age Brands
At present, the company is in stealth mode and hence, not much details are available about the business. However, Jain explained in brief that Klub provides growth capital to high-affinity brands across sectors like F&B, direct-to-consumer brands in fashion, lifestyle, and FMCG, and consumer internet brands. The company is also running limited pilots with select brands, including some international ones entering India.
Klub utilizes data-driven analytics and community engagement to provide skin-in-the-game financing to loved brands with high customer engagement. The startup is currently headquartered in Singapore, Klub is building its platform for the India market initially while aiming for a pan-Asia presence.
The startup’s early team comprises IIT, IIM, and NIT alumni, with deep fintech domain experience across organizations like Flexiloans, InCred, Credit Suisse, SRI Capital, Fullerton, Northern Arc, and Brand Capital.
Jain told us, “There is a growth of consumer brands in Asia driven by rising consumerism, information symmetry through social channels, and ease of launching new brands. These consumer brands face a lot of challenges in raising capital from traditional equity and debt sources. Klub aims to be a partner in the growth journey of these brands providing them with skin-in-the-game financing and enabling them with new revenue opportunities.”
India’s Fintech Opportunity
DataLabs by Inc42 noted that with $2.6 Bn in total funding, fintech startups recorded 125 deals in 2019. The funding amount is 71% higher than 2018 whereas the deal count plunged by 9% compared to the previous year with Delhi NCR taking the lead.
Compared to the other sub-sectors in fintech, the investor confidence towards lending tech startups remained high in 2019 as the share of lending tech startups in the total fintech deal count was 46% or 58 deals, and for unique startups funded it was 45% or 48 deals.
High investor confidence towards lending tech startup can be ascertained by large financial gaps between the MSME sector and the formal financial institutions, opening up opportunities for newer players to enter the market which has the potential to become a $1 Tn opportunity by 2023.
Niti Aayog CEO Amitabh Kant had recently highlighted in a recent media statement that the fintech market in India is likely to expand to $31 Bn in 2020. The continuously increasing collaboration between banks and fintech startups in the form of supplementary offerings, partnerships, acquisitions, incubators and investment is one of the key drivers of India’s fintech growth as well.