Karat Raises $26M Series A To Build Financial Infrastructure For Creators  – Crunchbase News

Karat Raises $26M Series A To Build Financial Infrastructure For Creators  – Crunchbase News

Karat Financial, known for its credit card for creators, raised $26 million in funding, the company announced Thursday.

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The fundraise includes $11 million in equity and $15 million in debt. The round was led by Union Square Ventures, with participation from GGV Capital, SignalFire, and more than 20 creators including TikTok star-turned-VC Josh Richards and actor Jared Leto.

The idea behind Karat is that creators and influencers are businesses, but the traditional financial system simply doesn’t understand them or cater to them. The company underwrites creators based on non-traditional metrics like audience engagement.

 “People want to have content that’s catered to them from the community that’s built for them and by them, and we see creators leading the charge there,” co-founder Will Kim said in an interview. “And as a business they’re not getting the recognition they deserve from financial institutions.”

Crunchbase News covered Karat when the company first launched last year with its Black Card for influencers and creators. Since then, co-founders Eric Wei and Will Kim moved the company to Los Angeles to be closer to the creators it serves, and the company has grown more than 50 percent each month since the launch.

The COVID-19 pandemic has highlighted the importance of content, as people turned to their phones and laptops for entertainment while social distancing and staying home, according to Wei. Half of Karat’s growth was existing creators growing their businesses and spending more.

“From a company perspective, what we’ve seen is, over the past year this has gone from a discussion of ‘Are creators businesses?’ to ‘Oh my gosh, yes they are and how can we help and get involved?’” Wei said in an interview.

The company will use the funding to expand its team, which currently has 14 members, and invest in the product and customer success. The Series A is meant to scale up the Karat card and explore other financial products creators may need, according to Wei. The next natural step for Karat is to expand into building neobank-like accounts 

“Creators are catalyzing a new wave of distributed entrepreneurship, but even the most successful creators are locked out of traditional banking services,” Union Square Ventures managing partner Andy Weissman said in an email. “Eric and Will have designed an entirely new way for creators to get the financing and support they need, and they’ve validated this model with impressive traction since launch.”

Illustration: Li-Anne Dias


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