Despite earning six-to-seven-figure-a-year incomes, many content creators are denied the capital they need to expand their businesses. The reasons vary, but most are relatively young and have limited business and credit histories, and deal with inconsistent income across platforms.
It’s a lucrative problem to crack. According to OneSource, hundreds of millions of people now create content full-time, and could well drive the market for digital content creation to over $180 billion by 2032.
The huge addressable market spurred Eric Wei and Will Kim, best friends who met in 2016, to found Karat Financial, which aims to help creators manage their money across payments, bank accounts, invoicing, and more.
Karat’s First Product: A Business Credit Card
Y Combinator-backed Karat’s first product was a business credit card that provides creators higher limits based on their social and financial stats instead of traditional credit scores. This innovative approach is designed to cater specifically to the needs of content creators, who often have non-traditional income sources.
A New Partnership with Visa
Karat has recently partnered with Visa to expand its product offerings. The partnership allows Karat to leverage Visa’s vast network and expertise in payment processing, further solidifying its position in the creator financing space.
Raising a Combined $70 Million in Funding
The Series B funding round brought in a total of $70 million for Karat, with a combination of debt ($30 million) led by TriplePoint Capital and equity ($40 million) led by SignalFire. The investors participating in the round include Union Square Ventures, CRV, GGV, Commerce Ventures as well as actor Will Smith via Dreamers VC, Twitter co-founder Biz Stone, and YouTube co-founder Steve Chen.
What’s Next for Karat?
With this influx of funding, Karat aims to scale its existing products and continue building tools to help creators manage their finances. The company plans to expand its offerings to cater to the growing demand from content creators.
The decision to raise a combination of equity and debt financing was based on careful strategic considerations. Debt financing allows Karat to access working capital and cover cardholder spend while maintaining control and flexibility, while the equity round led by SignalFire and the participation of esteemed investors brings not only financial resources but also valuable insights and networks to support the company’s trajectory.
The Growing Demand for Creator Financing
Karat Financial closed the round now to keep up with the growth of the creator economy, which Goldman Sachs predicts will reach nearly half a trillion by 2027. Having proved the model and expanded it under a new partnership with Visa, creators now have a smoother path to accessing the capital they need when they need it.
The Future of Creator Financing
With Karat leading the charge in creator financing, we can expect to see more innovative solutions emerge in the market. As the demand for content continues to grow, it’s essential that creators have access to the financial resources they need to succeed.
