How Revenue-Based Financing Marketplace Klub is Aiding the Growth of Loved Consumer Brands?
How Revenue-Based Financing Marketplace Klub is Aiding the Growth of Loved Consumer Brands?

Klub, India’s first community-based revenue-based financing marketplace providing growth financing to loved consumer brands, was started in 2019 by Ishita and Anurakt Jain.

Klub is known for providing brands dilution-free, sector and scale agnostic growth capital to loved brands across sectors including wellness, FMCG, direct-to-consumer, food services, fashion, beauty & personal care, subscription, and online-first retailers for recurring marketing, inventory, and CAPEX spends. 

It takes a revenue share as returns instead of equity dilution or fixed EMIs, making it ideal for a post-Covid financing ecosystem. 

“Through our professional careers, collectively spanning over 25 years, we realized that the one-size-fits-all approach of traditional modes of equity and debt capital does not always meet the financing requirements for consumer brands. The realization that there were multiple great brands with phenomenal products and loyal customers not getting financing through traditional routes led to the inception of Klub,” explains Anurakt Jain, CEO & Co-founder of Klub.

“Klub is India’s first community-focused revenue-based funding platform that enables founders’ to have access to not just funding, but also to a community that helps leverage the knowledge and network to build a truly scalable business,” he further adds.

It works as a hybrid marketplace sourcing capital both from institutional partners and from super-fans of the brand. In the last year alone, it has deployed capital to 80+ brands across the country through a community of over 2,500+ patrons raising funds for leading D2C brands like SMOOR, The Label Life, Petsutra, Wallmantra, TagZ Foods, Sanfe, Wellbeing Nutrition, Tjori, and Pipa Bella among others.
 
Marrying Technology with the Hybrid Technology Platform

Klub follows an innovative data-driven underwriting model to evaluate businesses and performances. The risk profile of a brand is analyzed by using APIs to tap into digital datasets of companies coming in from third-party integrations, for example, GST, banking and financial statements, alternate systems of record, and calculate risk-return potential dynamically. 

“Through this all-digital analysis, we understand key parameters of the brand’s business. Data modeling then helps us create the risk and return profile of the brand. This deep risk analysis makes us a reliable RBF platform both for investors and brands,” asserts Jain.

Helping Brands Grow

Having a focus on local consumer brands with an online-first approach and a unique complementary financing model, Klub has become a pivotal support system for the consumer-dependent startups grappling with the pandemic. It has provided capital to early-stage brands across wellness, FMCG, D2C, food services, fashion, beauty & personal care, subscription, and online-first retailers. However, it has also witnessed interest from brands from other sectors and late-stage VC-funded companies as well. 

“We have seen a growth of 40X in the past year and have deployed capital to 80+ brands across the country in 100+ rounds of financing, out of which 1/3rd are women-founded companies. We also have a strong reach in the growing tier II and tier III startup ecosystems since these startups don't have access to VCs the same way urban brands do. We have been instrumental in raising funds for leading D2C brands like The Label Life, Petsutra, Wallmantra, TagZ Foods, Sanfe, Wellbeing Nutrition, Tjori, and Pipa Bella, etc.,” shares Jain.
 
Why Revenue-Based Financing?
 
RBF is an ideal investment platform for any brand that is making revenue and needs repeat tranches of flexible, non-dilutive capital infusion for recurring high RoI spends like marketing, inventory, and CAPEX. 

Companies, including D2C brands, will always explore multiple financing options as they scale up. While D2C brands have met with some success raising capital from VCs, it is still tough to scale up the business on equity alone. 

And, traditional debt financiers do not understand asset-light businesses since there are significant dependencies on collaterals and personal guarantees. This is where RBF becomes an ideal partner for companies as their revenues increase.

“Klub enables brands to raise repeat tranches of investments, typically every 2-3 months, for meeting their recurring high RoI spends. The amount raised through RBF also scales with the brand. Brands can raise higher quantum (up to Rs 5 crore every quarter) as they grow,” explains Jain.

Investing in Right Brands

Klub monitors some key parameters of a brand including revenues, scalability, cash flows, growth potential, operating margins, and customer affinity.

“As per our policy, any online first brand which is operational for at least 12 months with demonstrated revenue history can raise revenue-based funding from Klub. Our goal is to provide growth capital to brands that have demonstrated their product-market fit and/ or the service-market fit and are now ready to scale. The brand is typically required to have repeatable sales and a track record that demonstrates a strong revenue stream, and therefore a clear ability to return the capital to the investors,” Jain states.

Future Plans

The major objective of Klub is to provide brands access to quick, flexible, and scalable capital and aim to grow and support local brands while helping them keep their ideology intact. It is aiming to fund 350+ brands and partner with 5,000+ patrons, by the end of 2021.

“We, as a brand, are always on the hunt for new avenues. As of now, we are exploring both vertical and horizontal growth avenues. Vertically, we are looking to infuse more capital into our present portfolio and also magnifying the amount of financing for the brands to be onboarded in the future. Horizontally, we are scouting brands from sectors we haven’t explored yet. We have also started pilots with SaaS brands,” he explains.
  
It is also looking to expand into SEA markets given the growing number of consumer brands, strong D2C, and commerce ecosystems.
 

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