Khatabook: Bengaluru based startup helping small businesses in India record financial transactions digitally and accept online payments2 weeks ago Pronit Das
Even as tens of millions of Indians have come online for the first time in recent years, most businesses in the nation remain offline. They continue to rely on long notebooks to keep a log of their financial transactions. A Bengaluru based startup that is helping them digitize their bookkeeping and accept online payments just raised a significant amount of capital to expand its operations. KhataBook has a mobile app that helps small shopkeepers and Kirana store owners in India manage their books by helping them track the money owed to them through the means of a digital ledger. The service sends reminders on Whatsapp and through SMS when it’s time for the merchant to collect and helps keeps track of due payments which traditionally have been done through writing in notebooks.
The merchant partners interact with the Khatabook service through the app, which has Indian regional language support, also includes an option of “Hinglish”. Khatabook has crossed over $1 Bn in transactions, 1 Mn downloads and on-boarded over 400K businesses organically in the past year. The growth is especially notable considering that a year and a half ago it only had 40K merchants on the platform.
The scorching traction Khatabook has received is because the team comprises sons of tier 2 cities and its shops. Naresh, an IIT-Bombay alumnus, himself hails from Meerut in UP, while Khatabook cofounder Jaideep Poonia is from Hanumangarh in Rajasthan and comes from a family that runs a pesticides shop. Another co-founder Ashish Sonone is from Bilaspur in Chhattisgarh, while Dhanesh Kumar is from Jehanabad, Bihar and his family runs a mobile accessories & recharge shop. Finally, Vaibhav Kalpe who originally built Khatabook had the experience of working at his father’s electrical shop in Nanded, a town in Maharashtra. The CEO said that this is one of the primary reasons for everyone at Khatabook to have a deep understanding of the problems faced by merchants which helped them build the right product combined with the fact that utility apps designed for India, esp for the small-town users has not been done before.
Back in 2016, Ravish Naresh, along with his team of college friends, started Kyte.ai, a digital spend manager app. They wanted to help their users understand their expense pattern using their SMS alerts. As digital transactions happen along with SMS alerts, they felt it was a good entry point to make sense of users’ financial state. Digging deeper, they found that first-time online users did not deal in digital transactions. They were still relying on traditional khata or ledger book. That is when the idea for KhataBook materialised for the Kyte team. In 2018, it started work on a simple cash management app and named it KhataBook to stress on the idea that traditional khata can be replaced by digital khata. It shifted their focus to small shopkeepers and decided to change their financial lifestyle by helping them manage their transactions and track repayments. Once it decided on KhataBook, the team included its earlier idea of checking the SMS inbox in KhataBook. It ensured the app sends out free SMS updates to the user’s customers on every transaction and even sets payment reminders. This feature has ensured a 3X faster return on credits for their users. It has raised $25 million in Series A funding from Partners of DST Global, GGV Capital, Sequoia India, Tencent, and others. Prominent investors like Kunal Shah, Founder, Cred; Kunal Bahl, Co-founder, Snapdeal; Jitendra Gupta, Head – LazyPay; and Anand Chandrasekharan, ex-Facebook; were among others who participated in this round of funding. With this funding, the total funding raised by KhataBook will be $29 million. KhataBook is one of the 17 startups from the first cohort of Surge, Sequoia India’s rapid scale-up programme for early-stage startups in India and Southeast Asia. Y Combinator and Info Edge are also investors in Khatabook.