The company has been trying to raise capital and has restructured its workforce and operations due to financing problems, according to a person familiar with the matter. Its workforce has fallen from more than 100 to around 45 employees.
Klub offers flexible financing to businesses, allowing them to repay based on future revenue instead of fixed schedules or forgoing equity. The company’s core offering is its capital business, and it started its cross-border trade facilitation business about a year ago. The Commerce division helps brands expand their online presence internationally, managing logistics, payments and integration across various marketplaces.
Two company employees said Mint that the company laid off most of the team in the Ahmedabad office who worked on the company’s trade facilitation activities. “There has been no new supply of stock in the last three months and one of the directors, when informing of the redundancy, said that the company was in the process of vacating the remaining stock position and that it would close the trade sector,” said one of the two. » said the employees.
The company is also believed to be scaling back its business operations. Although the company did not comment on the downsizing, its co-founder and CEO Anurakt Jain said the cross-border business activity was active and revenue-generating. “We continue to build it and work in partnership with selective brands with high potential,” he adds.
“Like most startups, over the past 18 months, Klub has achieved operational efficiencies through performance improvements, technology investments, AI-driven advancements and business outsourcing non-essential. Our top line remains strong and our operating economics have improved significantly with our core business close to operational profitability,” Jain said.
Fundraising Efforts
The company has begun the process of raising capital, thanks to these efficiencies, he said. Klub is in active conversations and conducting due diligence with several investors, after which there will be a formal announcement once the round is completed, he added.
Another person with knowledge of the company’s affairs also told Mint that the company had not paid some brands that used Klub’s services over the past three months. Two companies, on condition of anonymity, said Mint that there was a late payment without any explanation from the company.
“The point of contact has kept changing for the last month as people leave and there is no communication about it. There is no clarity on payment for our sold inventory or our current inventory that is with the company,” a company brand said, adding that Klub has stopped placing orders for new inventory since about a month and a half.
Jain, however, said there was no delay in payments. “Our cross-border trade facilitation contracts are consistent with industry standard practices: brands generate revenue as sales occur. No payments to partner brands are late. We strictly adhere to the terms of the contract, making payments on pre-agreed frequencies as sales occur,” he said.
Getting into business development seems like a move to diversify from your core financing business, but it has its challenges. The revenue financing market in India is estimated to be around $82 million, according to Cognitive Market Research.
For companies moving into commerce, the need for expertise in logistics, inventory management and customer service becomes critical, all areas that are completely outside the company’s original business model, according to Appalla Saikiran, founder and CEO of SCOPE. “Without a unique advantage or significant investment in these areas, entering such a competitive market could prove more complex than expected,” he said.
“Investors generally tend to judge such diversifications negatively, aware that they contribute to diluting focus, stretching resources and negatively influencing profitability. Therefore, scaling back such ventures and refocusing on strengths often proves to be the most prudent approach. This reinforces the idea that diversification should be consistent with strategy and should not be risky,” he said.
Klub revenues increased to ₹31 crores in FY24 from ₹24 crore in FY23, even as its losses narrowed to ₹4 million dollars of ₹8 crore, according to data sourced from Tofler.
Founded in 2019 by Jain and Ishita Verma, the startup has raised a total capital of around $22 million from investors like Peak XV’s Surge, Trifecta Capital, Northern Arc Capital, US-based Alter Global, and Japan-based GMO VenturePartners, among others. Klub competes with, among others, Mumbai-based income financing platform GetVantage and Bangalore-based Velocity.