India’s Khatabook raises $60m in round led by B Capital

Kirana stores, or small family-owned shops, are the backbone of India’s domestic grocery retail landscape, with a 90% market share. Under the ongoing nationwide lockdown, around 12 million kiranas need digital tools as more people rely on them for daily essentials.

Homegrown startup Khatabook, which provides a digital ledger for small businesses, has raised US$60 million in series B funding to support the digitization of kiranas in the Covid-19 economy.

Its latest round was led by Facebook co-founder Eduardo Saverin’s B Capital Group.

Khatabook co-founders / Photo credit: Surge

Existing and new investors such as Sequoia India, partners at DST Global, Tencent, GGV Capital, RTP Global, Hummingbird Ventures, Falcon Edge Capital, Rocketship, and Unilever Ventures also participated in the round, according to a statement. Facebook’s Kevin Weil, Calm’s Alexander Will, and Cred’s Kunal Shah, as well as Snapdeal’s Kunal Bahl and Rohit Bansal also invested.

The new funding will support the company in developing tech-enabled financial services and a merchant-focused distribution platform.

Founded in 2018, Khatabook helps MSMEs efficiently track their businesses and manage credit to create transparency in cash flows and increase trust with consumers.

It also features online payment collection through a unified payments interface and QR code as well as sending periodic reminders to creditors via messages and reports.

The company claims it has reached over 8 million active merchants across 11 languages in less than a year. It saw more than 1 million merchants uploading data and engaging with the app daily while adding US$200 million worth of transactions every day.

India’s MSME market is worth around US$50 million to US60 million. But only less than 50% of the sector is currently taking advantage of technology, which is critical for businesses today to survive and thrive, said Sequoia’s Amit Jain.

Last year, Khatabook, which was part of the first batch of startups in Sequoia India’s accelerator Surge, raised US$1.5 million in a seed round. Then it secured US$25 million in series A money from a slew of financiers, including Tencent, Y Combinator, and more than 20 angel investors.