Revenue-based financing platform Klub on Monday said it has extended credit up to Rs 50 crore (around $6 million) to six companies.
These companies include vegan skincare brand Neemli Naturals, electric ride-sharing firm BluSmart Mobility, plastic-free toy store Ariro Wooden Toys, home decor brand Ecofynd, solar energy firm Freyr Energy and electric scooter company Hero Electric.
Revenue-based financing (RBF) is a model that involves getting returns based on the recurring revenue of the firm invested in. Startups that secure capital through this way pledge a percentage of their current gross revenue over periodic intervals as repayment.
The eco-friendly product market has grown geometrically over the last 7 years or so globally, and India is no exception, the company said in a statement elaborating on their investment. a research study by marketing company TerraChoice revealed a 73% growth in the eco-friendly product market over the last 5-7 years and more new companies and products are making entries.
“India is very different from the one that we knew ten years ago. Sustainable industry a decade ago was hardly spoken about, whereas today, at least 60% of Indians are ready to pay a premium price for a sustainable product,” said Anurakt Jain, Co-founder and chief executive at Klub.
“We want to support this new pendulum of change by helping sustainable brands grow in the Indian startup ecosystem, even more in 2023 and future years to come. We are aiming to have at least 40% of our portfolio with such brands,” he added.
Founded by Jain and Ishita Verma, Klub provides flexible growth capital ranging from Rs 2 lakh to Rs 30 crore with zero equity dilution or personal guarantees. The company has funded more than 380 brands across sectors in India.
Last year, online furniture rental startup Furlenco, which is run by Bengaluru-based House of Kieraya (HoK), raised debt from Klub, against future recurring revenue.
Klub has secured funds for direct-to-consumer brands like SMOOR, The Label Life, Petsutra and Tjori, TagZ Foods, among others.
Since its launch in December 2021, Klub’s Aceler8 fund has disbursed capital to late-stage online companies for expansion and inventory purposes. The fund has an average ticket size of Rs 50 lakh to Rs 30 crore.
The firm provides funding for recurring marketing, inventory, and CAPEX spending to a wide variety of digital-first companies and SMEs. Klub uses its data-driven underwriting process to make faster funding decisions, with emphasis on the cost of capital appropriately reflecting the inherent risks in business across sectors.
It evaluates the risk profile of a brand by using APIs (application programming interface) to get data from third parties, like Banking and financial statements and GST among others.