India’s first revenue-based investment platform, utilizes an alternative financial model by providing growth finances to locally loved and trusted brands
- Founded: August 2019
- Investment Model: Revenue-based financing or royalty-based financing
- Minimum Investment: INR 2.5 Lakhs
- Expected Returns: 18% to 25% (based on business revenues)
- Tenor: 12 to 18 months (varies as per opportunity)
- Payment: On a monthly basis
- High cash-generating D2C brands.
- Strong team with relevant experience.
- Robust financial assessment and legal frameworks.
- Easy-to-access interface.
- Well Funded
- Involves a higher degree of risk
- No readily available secondary market.
- Changes in economic conditions and regulations might adversely impact the revenue.
Overview
Klubworks is fueling skin-in-the-game growth capital to entrepreneurs of D2C (direct to consumer) brands across fashion and lifestyle sectors.
In exchange of capital, the platform enables investors to earn a fixed percentage of ongoing gross revenues of a business. The cash flow of the investors is driven by the revenue the business generates. Based on the performance of the investment, the yield is expected to be anywhere between 18% to 25% IRR
Klubworks- Understanding the Business Model
Klubworks utilizes an alternative investment model different from conventional equity-based investments, such as venture capital, angel investing, and traditional debt financing. It runs on a revenue-based financing model (RBF) which requires brands to share a fixed percentage of its revenue to the investors every month for a predetermined tenure.
For instance, when a brand is in need of INR. 5 lakhs for a year’s period, the platform chooses a multiplier specific to the cost of its capital. Here, the amount repaid by the brands is 1.1x, which may or may not be the same as the revenue share. Hence, the revenue share will be a percentage that will give 1.1x returns during the tenor, but that revenue share could be either 1% or 2% or any other number.
Both parties enjoy the benefits of growing revenues in the times of certainty. Conversely, both parties suffer when the revenue declines. This model is advantageous for D2C brands whose revenue profile is seasonal or uncertain as it allows them to manage their cash flows better.
Klubwork – Know the Team
Founded by Anurakt Jain and Ishita Verma, Klubworks is a team of over 60 individuals possessing a combined expertise in fintech, venture capital, technology, data analytics and investment banking.
The co-founder, Anurakt Jain is a blue-sky thinker having worked with InMobi, Bertex, DFJ, and Indust View. His academic credentials from IIT-Delhi, Wharton, being a CFA and Charter holder makes him
an ideal person on the business front.
Ishita Verma, another co-founder, brings in her rich experience from Snyder Group (UAE), Unitus Capital, Kotak Institutional Equities and holds a solid foundation in education from Lady Sriram College
followed by a degree from IIM-Bangalore.
Klubworks Funding Information
Klubworks funding was boosted when it had first raised $2 million (approximately INR 13 crores according to current exchange rates) in its pre-seed round led by Surge and Sequoia Capital, India’s rapid scale-up program.
In its seed funding round led by 9Unicorns, Sequoia Capitals, Surge and joined by Alter Global and GMO Venture Partners, Klub raised $20 million (around INR 148.6 crore)
In December 2021, Klubworks funding gained further momentum when it raised an undisclosed amount from market-bound Northern Arc Capital in a debt financing round
Before that, the fintech startup had raised $2.7 million (around INR 20 crore) in debt financing from Trifecta Capital.
The fintech platform is also backed by several angel investors including Deutsche Bank managing director and head of technology Dilipkumar Khandelwal, Livspace co-founder Ramakant Sharma, CRED founder Kunal Shah, Yulu co-founder Amit Gupta, among others.
Frequently Asked Questions
- How are Klub’s investments and returns structured?
Klub’s investments are in the form of fixed yield investment. Investors are informed prior about the returns they will receive by the end of the tenure. The returns are subject to macroeconomic risks and brand specific risks. When the monthly returns are higher than projected, the investor will recover the amount and the investment will expire sooner than maturity. When the monthly returns are lower than projected, investors will receive a bullet payment at the end of the tenure to cover dues. The tenure will not be extended under any circumstances.
- What is Klub’s platform fee?
Klub has a very transparent structure in terms of collecting platform fees from its investors. It does not charge anything upfront when the investment is made as it believes it adds value only when the monthly repayments are credited to investors. Hence, klub charges 2.5% platform fees and 18% GST on monthly payouts from brands. No other charges or extra fee is involved.
- How will I be taxed?
The tax system of Klub’s RBF model is simple and well-established. All income earned over and above the initial investment is classified as interest earned and is taxed on the individual’s marginal tax bracket. The brand also deducts 10% TDS on every monthly payout and provides you with required TDS claim certificates.
Personal Experience
As with most of the investment platforms listed to Yieldkart, we make it a point to invest in these platforms as an investor. We have been investing with Klub since its inception primarily in more than 10 deals. Till date, for 100% of investments, payments have been on time with 0 defaults and an average IRR of 25%. Some deals invested in the past are
- Tijori
- The Man Company
- Smoor Chocolates
- Moonshine Meads
Yieldkart sources information from other investors also and compile a list of top performing assets know about the deals we have invested please visit – Portfolio Analysis
Final Klubworks Review
Klubworks is an interesting opportunity for investors who are willing to lead an investment for a brand they are confident about and become its small-ticket patron. However, investors must look at some risk parameters before considering these investments.
Along with the returns that yield 3 times higher than standard fixed deposits and mutual funds, there comes a risk of losing capital too. The key is to invest in brands that have already figured out the product-market fit and knows where they need help from the ecosystem.
At last, what makes the funding journey worth it for both brands and the patrons, is the seamlessness of the process and functionality of the product. Investors who aren’t conservative and looking for a high returns must consider this platform
