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Karat Financial raises $70M and teams with Visa on credit cards for creators

Bynewsmagzines

Jul 19, 2023
Karat Financial raises $70M and teams with Visa on credit cards for creators


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Karat Financial, a financial services platform for creators, has raised $70 million in a combination of debt and equity financing aimed at building a new kind of personal credit card.

Karat, based in Los Angeles, also announced a partnership with Visa, designed specifically to help content creators establish personal credit history and improve access to capital.

The card is one of several tools offered by Karat to support the $250 billion creator economy, which has faced significant challenges in accessing credit from conventional banks that typically require a consistent monthly income and focus on traditional revenue streams.

The new Karat business card provides creators with several benefits, including personal credit building, exclusive events and collaborations, purchase protection, and simplified taxes.

Karat Financial founders Will Kim (left) and Eric Wei.

Karat cofounders Eric Wei and Will Kim believe that the financial tools they provide will help creators bring their creative ideas to fruition. The company’s underwriting model measures the unique creditworthiness of creators, enabling them to access higher limits and exclusive rewards.

They started the company after finding that many creators, riding on revenue from millions of fans, couldn’t get simple lines of credit because traditional banks didn’t understand their businesses. Conventional banks, which typically require a consistent monthly income and focus on traditional revenue streams, often deny high-earning creators access to the capital and credit needed to expand their businesses.

Funding details

Karat helps creators do their finances.

Karat Financial raised a combined $70 million in series B financing, including $30 million in debt financing from TriplePoint Capital and a $40 million equity round led by SignalFire, with participation from existing investors Union Square Ventures, CRV and GGV.

New investors included Commerce Ventures, Will Smith via Dreamers VC, Nick DiGiovanni, MoistCr1TiKaL via MANA Talent Group, Ludwig Ahgren, Wendover Productions, and Pat Flynn – joining existing angels like Biz Stone cofounder of Twitter, Michael Ovitz cofounder of CAA and Steve Chen cofounder of YouTube. The new capital brings the total amount the company has raised to more than $100 million to date.

Karat Financial has grown its creator cardholder base five times since its series A raise in 2021, and notable creators like Graham Stephan, Marina Mogilko, Nas Daily, 3LAU, Alexandra Botez, Sam Kolder, and Toddy Smith trust Karat to optimize their businesses beyond the hype cycle.

“The Karat card has been a game-changer for both my business and personal finances,” said top chess creator Alexandra Botez, in a statement. “It’s not just another credit card; it’s a powerful tool that has transformed the way I manage my finances and access credit. With Karat, I have the financial freedom to invest in my creative projects, while continuing to expand and grow my business.”

Karat’s solutions have positioned the company at the forefront of the creator economy. Karat Financial’s dedication to serving the needs of creators has resonated deeply with investors.

“Karat’s unwavering dedication to serving the needs of creators resonated deeply with us, and they’ve proven out a new financial model, which no one else is doing,” said Wayne Hu, partner at SignalFire, in a statement. “We believe the creator economy is a force to be reckoned with, and Karat’s solutions – without the steep fees or high-interest rates of other cards – positions them at the forefront of this powerful movement.”

The new Karat business card

The new Karat Business Card.

Personal credit building: The Karat business credit card helps creators build their personal credit history as they make on-time payments. Even better – creators don’t undergo a hard credit pull when they open up the card. Building personal credit history helps the entire financial ecosystem better understand creators and offer them better terms.

Exclusive events and collaborations: Karat creators receive special access to exclusive events to network and collaborate with each other. Karat has hosted unique member experiences at VidCon, the Streamys, VidSummit and more.

Purchase protection: Karat creators enjoy a shield of security for their purchases. They can receive reimbursement if eligible items are stolen or accidentally damaged within 90 days of purchase, providing peace of mind and safeguarding valuable investments.

Simplify taxes: Creators are often eligible for thousands of dollars in tax write-offs that they miss. Karat creators can effortlessly track business write-offs with their card and upgrade to personalized bookkeeping and tax services, ensuring a hassle-free tax season.

Karat has raised $30 million in equity funding and $40 million in debt.

As for the founders, Wei’s prior experience includes Instagram, Blackstone, and McKinsey, while Kim brings expertise from his time as a VC, and at Palantir and Goldman Sachs.

“We understand the challenges creators face in accessing capital and credit, and we’re here to bridge that gap,” said Kim. “By helping creators access the capital they require, we are enabling them to bring their creative ideas to fruition.”

Wei added, “Our mission is to become a one-stop financial center for creators by providing them with all the tools they need to thrive and scale, so they can focus on what they do best – creating remarkable content that inspires and captivates audiences worldwide.”

Underpinning Karat’s success so far is its underwriting model, which measures the unique creditworthiness of creators. Creators have already made millions of dollars in transactions using Karat business cards, benefiting from higher limits and exclusive rewards. As the creative economy continues to evolve rapidly, the company wants to remain at the forefront of innovation with recently launched tools that include bookkeeping and tax services, among others.

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