If you are a young startup in India with not the best of the balance sheets, banks would generally avoid handing over a credit card to you. And no, it isn’t the banks fault per say, but more of an issue within how the financial system functions. And fintech startup Karbon Card is looking to bank on that particular loophole within the financial system.
The company, founded by noted entrepreneurs and venture capitalists, is announcing a $2 Million raise from a group of investors based out of India and China. These include the likes of Kunal Shah (Cred), Amrish Rau (Ex PayU) and Jitendra Gupta (Jupiter).
The company plans to use the funds raised for product development, operations and market expansion. Aimed at providing a financial platform for Indian entrepreneurs, the start-up offers corporate cards packed with tools and rewards for new age startups. The interest-free corporate credit card includes rewards specific to startups such as AWS credit, MaketMyTrip/Uber/Hubspot/Freshworks discounts, etc. and expense management software among others.
Commenting on the fund-raise and his company’s overall vision, Pei-fu Hsieh, Co-Founder and CEO at Karbon Card said, “Unfortunately, the banks’ position to protect their customers’ savings at all cost make their requirements and policies rigid and unfriendly to startups. Karbon Card is a startup founded for all Indian startups. Our vision is to empower all startups to achieve more through a Karbon Card.”
As strange as it may sound, India, which is among one of the most thriving startup ecosystems globally, still does not have a system in place to issue corporate credit cards to startups. Traditional banks, despite all their ‘startup friendly’ bank accounts, continue to fail in understanding startups, and the need for a credit card. And even if they do, it is overwhelming with numerous challenges wherein the banks ask for a personal guarantee from startup founders and a 110% fixed deposit as collateral, making it impossible for the founders to avail a basic financial instrument.
Hseih believes, that his company has a solution for this. Karbon Card requires no fixed deposit, no personal guarantee, and can be issued in less than 24 hours. It does not have any hidden interest expenses or fees whatsoever. The Karbon Card features include reward programme, expense management software, auxiliary features and travel concierge.
While Karbon Card’s initial numbers are encouraging, it is still a good long road. India, according to Government’s criteria of categorising a company as a startup (strange!), is home to over 25K startups. But of course, as is the case, not all of them go on to become successes. In fact, 1 out of every 10 is reaching some point of success, wherien either they have raised significant VC money or have become sustainable. It will be these 9 out of 10 cases which may act as defaulters for Karbon Card. Nevertheless, the solution is encouraging and one which will see greater adoption in near future.
