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Karat Financial has raised $ 26 million to create business cards that extend credit to the economy of creators.
The San Francisco-based company wants to extend credit and financial services to influencers – livestreamers, YouTubers and other creators who have carved out new careers in the gaming industry. These people make huge sums of money, but often , they cannot get bank loans or credit cards because they have non-traditional jobs.
These influencers could make a lot of money through Twitch or YouTube, but they often pay their staff with Venmo. They don’t establish a financial history through regular paychecks and are often denied credit, said Will Kim, co-founder of Karat Financial, in an interview with GamesBeat. So Karat created a “black card”, which you can use to pay for services and get money, but which you pay every month like an American Express card.
“We’re building the best corporate card for creators,” Kim said.
And Kim said the company is seeing 50% month-over-month transaction growth, in part thanks to top influencers who used the card and spread the word.
Karat’s funding included $ 15 million in debt financing and $ 11 million in venture capital funding. Union Square Ventures led the round of participation of GGV Capital, SignalFire and famous creators including Graham Stephan (who has three million subscribers on YouTube), Carter Sharer (eight million subscribers on YouTube) and Alexandra Botez (800 000 followers on Twitch).
Since launching last June, the company has grown viral and has become the industry leader in providing banking solutions that meet the needs of the world’s top creators, Kim said.
Kim co-founded the company with former Instagram Live product manager Eric Wei to design financial products exclusively for the designer economy.
“Eric and I thought about this idea a few years ago when it came to board games,” Kim said. “Eric worked on Instagram, creating business tools for creators. And I was working on the corporate side. I had raised a $ 5 million fund and had invested in a bunch of different companies, including companies related to influencers. We started talking about all this influence economy. And what we’ve seen is the emergence of this new idea of small businesses, where creators don’t sell things or services. They sell media attention.
Today, the industry is one of the fastest growing industries with an estimated value of $ 100 billion, and there are over 3.2 million creators earning more than six figures per year.
However, without a fixed monthly income and a variety of income sources, high-income creators are too often denied access to capital because they don’t have good FICO scores, Kim said. It handicaps them when trying to grow their business, he said. Some streamers were even denied credit while broadcasting to large audiences.
Using an exclusive subscription, Karat Financial analyzes the multiplatform success of creators and audience engagement, which no other bank does, and offers the easiest access to capital without high fees or interest rates. ‘high interest. Applying for credit is easy.
“I have experienced a lot of firsthand prejudices and banks have refused me credit on several occasions simply because the nature of my business is not what they are used to seeing. There are literally thousands like me who are not valued or understood by traditional financial institutions, ”Botez, founder of Botez Online, said in a statement. “Karat Financial is a real partner who gets my business and has tailor-made solutions to support it. I believe in the business so much as a cardholder that I also jumped at the opportunity to invest.
In addition to better limits, Karat Financial offers creators an easy way to manage their finances and save money with personalized rewards and benefits. Notable creators like Josh Richards, TheRussianBadger, Nas Daily, 3LAU, and Botez trust Karat to optimize their business beyond the hype cycle.
Understand new careers
Banks don’t really have an influencer life, Kim said. But creators need banks to do things like hire new staff, pay video editors, and do their jobs differently.
“We saw that they weren’t getting any of the services a small and medium-sized business (SME) might expect from your typical financial services,” he said. “You see the top 10 Twitch streamers in the world, who were making half a million dollars a month, were getting a personal credit limit of $ 20,000 from a big bank.”
Over time, the company has more ambitions to help the influencer nouveau riche with their financial needs.
“What we are seeing is that these creators are running companies and ultimately the companies will have to become full creators,” Kim said. “We can help these people start their careers with credit, grow and grow, and we can help them start and build their businesses. We can help them with their accounting and taxes, and we help them with all of their payroll management needs.
By performing reviews, Karat will look at creators and their social media growth stats, cost per mile (CPM or ad rate), and engagement with their fans.
The future of the designer economy
“We’re going to come up with new models that match their business,” Kim said. About 30% of American children today want to become professional YouTubers. If you move forward five or ten years quickly, this space will have to become more professional. We can help the people who have made it a profession and hopefully help the next generation of creators as well. “
Kim is well acquainted with the idea of the designer economy, which I call the leisure economy, where one day we will all be paid to play games.
“Today we kind of serve the high net worth designers because we had to start somewhere with a niche,” Kim said. “And often the bigger ones have the greatest working capital needs. And we want to solve this first. In the long run, we see so many of these creators coming to us to get started. “
He believes we are moving from a more industrial economy to an economy driven by creators and distributors of media.
“The future of commerce is going to be led by creators,” he said. “Mr Beast has millions of followers and he now sells burgers and treats. And it outperforms other retailers. This is because he started to develop the distribution first. We think about how we allow creators to take over the world because they have this gravitational pull where all commerce will be creation centric.
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