Y Combinator-backed fintech Karbon raises $12 mn in pre-Series A round

Karbon will use the funds to step up its product development, hiring plans and operations. It expects to double its headcount to 60 over next 6 months

Karbon Card, a fintech offering corporate cards, said it has raised $12 million in a Pre-Series A round from US-based fintech Unicorn Ramp, Rainfall Ventures, Roka Works, Y Combinator, and other global investors.

Ramp is a New York-based spend and budget management app or corporate charge card start-up that went on to become a unicorn with a valuation of $3.9 billion in less than two years. Karbon plans to use the funds to step up its product development, hiring plans and operations. It expects to double its headcount to 60 over the next 6 months.

Founded in 2019 by Pei-fu Hsieh, Amit Jangir, Kartik Jain and Sunil Sinha, Karbon was selected by Y Combinator in the Summer 2021 batch and had earlier raised $3.5 million from Orios Venture Partner and US-based 2AM VC.

Karbon’s co-founder and CEO, Pei-fu Hsieh said the firm aims to build the most customer-centric card platform for Indian startups and SMBs with a $20 billion market opportunity at present. He said the firm is solving a major challenge faced by Indian startups and small businesses while availing corporate cards from the banks that ask for 110 per cent deposit guarantee, personal guarantees and massive amount documentation.

“We are impressed with what Karbon has built so far,” said Karim Atiyeh, Co-founder and CTO at Ramp

The Bengaluru-headquartered company said it offers startups with four key benefits such as credit of up to Rs 5 crore with no personal guarantee or fixed deposits, provides seamless payments transactions through corporate cards to its customers, offers rewards specific to the startups' requirements such as AWS credits with $50,000 or SaaS products. It also helps offer expense management through WhatsApp in a very intuitive way.

The firm makes money mostly off interchange fees. Using personal credit cards for company usage affects personal credit score, reimbursement hassles and creates confusion to segregate personal and corporate expenses.

With over 1,500 clients in less than two years of its launch, Karbon has reported a 30 per cent month-on-month growth in revenues despite the pandemic that slowed down corporate spending to a large extent.

However, as the economy starts reviving, Karbon expects 35 per cent month-on-month growth in the next 8-12 months. Additionally, considering the recent RBI’s Mastercard ban, Karbon has been quick to integrate with Visa network to provide an uninterrupted experience to their customers in a 40 million untapped SMB segment in India.