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Klub Raises 20 Mn To Turbocharge Revenue Based Financing

Fintech Startup Klub Raises $20 Mn In Seed Round

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Revenue-based financing is now in vogue - The Hindu BusinessLine

April 09, 2021 Bhavik Vasa, Founder and CEO, GetVantage× GetVantage financed 40 businesses, while Klub has enabled over 75 rounds of investments over the last year   With more and more start-ups turning to revenue-based financing (RBF), this fund-raising mode is now in vogue. The market size for RBF in India is estimated to be about $5-8 billion from over 10,000 new small businesses entering the market every year. At the same time, entrepreneurship efforts are also being recorded from remote cities and towns. Revenue-based financing, also known as royalty-based financing, is a mode of raising capital from investors in exchange for a percentage of its gross revenue. While investors conduct proper diligence on a company s revenue-earning potential, this also means that if a firm does not earn any income, then investors don t get any return.

revenue based financing: Indian startups test a popular US model of fundraising

Synopsis Revenue-based financing, in which the investor gets a regular share of the business’ income, was more or less absent in India before the pandemic. Now, dozens of local startups are choosing this route. ETtech (Illustration: Rahul Awasthi/ETtech) Mumbai: Since the start of 2020, startups in India have been experimenting with a new way of raising funds called revenue-based financing (RBF). Here, the investor gets a regular share of the business’ income until a certain amount, decided in advance, has been paid. This amount is typically several times the investment. Popular in the US, the revenue-based financing model took off in India during the pandemic as young companies struggled to raise funds. Though it costs startups more to raise funds this way, revenue-based financing continues to gain traction among early-stage, direct-to-consumer brands, e-commerce startups, and small and medium enterprises that have recently gone online. One of the reasons is that it’s eas