Karat Financial: Revolutionizing Banking Services for the Creator Economy
The creator economy, with its estimated value of $100B, is experiencing rapid growth, as 50 million individuals worldwide have joined since its inception just ten years ago.
As the fastest-growing type of small business, more American children now aspire to become YouTube stars (29%) than astronauts (11%). However, traditional banks have yet to catch up with the unique financial needs of creators, leaving a significant gap in the market.
With this rapid growth creator economy is changing the way people earn money but traditional banks haven’t caught up yet
Creators are running businesses and businesses require help from banks with credit, build-up, scale, taxes, and all their money management payroll services. but banks don’t quite get the influencer life.
Creators were not even getting services that you might expect a small-medium business (SMB) to be able to get from typical financial services.
Eric Wei with Will Kim saw a gap here and launched Karat Financial a better banking service for digital creators.
Karat Financial
Karat provides customized financing, rewards, and support for creators so you can access more money as you grow.
"I have over $3M in revenue per year and 20 employees, but traditional financial institutions still don’t trust me with financing. Karat gets it.”
-Nas Daily | Facebook Influencer/Founder | 21M Followers
so how Karat is making financial services accessible for creators:
The best corporate card for a Creator
Karat has created a “black card,” which you can use to pay for services and get money, but you pay it off each month like an American Express Card.
Karat analyzes creators by looking at cross-platform success and audience engagement, Cost per mile, and engagement with their fans which no other bank is doing and offers capital access.
The average member has an annual income of $500K, and millions of followers with over $50K in savings.
Karat recognizes high-net-worth creators as the successful businesses and brands of tomorrow with the goal of being the financial system that empowers them.
“I experienced a lot of the bias first-hand, and was denied a business credit card several times by banks just because the nature of my business isn’t what they are used to seeing. There are literally thousands just like me who aren’t valued or understood by legacy financial institutions,”
-Alexandra Botez, founder of BotezLive.
Right now Karat card doesn’t charge interest or fees, the company makes money on interchange fees from merchants.
Manage your growth
Quickbooks integration
Employee accounts
Karat Concierge
Spend Management
Casino Nights
Karat Rewards include closed-door Casino Nights, a chance to not only meet other creators—but win some of their cash.
The Impact of Karat Financial on the creator economy
Started in 2019 with $4.6 million in seed funding from investors like Twitch co-founder Kevin Lin and with the latest $26 million series A including $15 million in debt financing and $11 million in a venture financing round. Union Square Ventures led the round participation from GGV Capital, SignalFire, and famous creators, including Graham Stephan (who has three million followers on YouTube), Carter Sharer (eight million followers on YouTube), and Alexandra Botez (800,000 followers on Twitch).
The company is seeing 50% month-over-month growth in transactions, thanks in part to high-profile influencers who have used the card and are spreading the word.
“Despite running one of the largest engineering channels on YouTube today, I couldn't get help through traditional finance channels. Karat provided me with top-level business financing."
-Real Engineering | Youtuber | 3.5M Subscribers
Future plans
Karat's ultimate objective goes beyond providing credit cards for creators. While they started with the credit card to validate their concept, their long-term goal is to establish a financial infrastructure that caters to creators' needs. This includes launching merchandise lines, incorporating businesses, acquiring mortgages, securing business loans, and handling tax filing.
To achieve this objective, Karat's strategy is to begin with a straightforward and established fintech product. The credit card serves as an underwriting model, allowing Karat to earn the trust of creators, with the goal of eventually expanding their suite of services.
“The future of commerce is going to be run by creators, we’re transitioning from a more industrial economy to one driven by creators and distributors of media. says Kim
MrBeast, who has a vast subscriber base, is now offering burgers and candy bars and outperforming other retailers. This success can be attributed to MrBeast's initial focus on building distribution
Creators have a unique ability to influence commerce and the future will be creative-centric. Karat’s goal is to empower creators by providing the tools and resources necessary to help them achieve their full potential.