Y Combinator backed Indian Fintech Karbon Secures $12M in Pre-Series A from Unicorn Ramp, Rainfall Ventures, Roka Works

Karbon Card, a Fintech firm providing corporate cards, has secured $12 million (appr. INR 88.8 crore) in a Pre-Series A funding round from US-based Fintech Unicorn Ramp, Rainfall Ventures, Roka Works, Y Combinator, and other international investors.

Ramp is a New York-headquartered spend/budget management app or corporate charge card start-up that became a Unicorn with a valuation of $3.9 billion in just a couple of years. Ramp’s investment in Karbon Card indicates that there’s been considerable growth in the corporate card segment in India.

The startup intends to use the proceeds to support its product development, hiring plans and overall business operations. It expects to “double its headcount to 60 over the next 6 months,” according to a release.

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

Karbon’s Co-founder and CEO, Pei-fu Hsieh stated:

“Excited to be partnering with Ramp, the global corporate card leader, to build the most customer centric card platform for Indian startups and SMBs with a $20 billion market opportunity at present. We are solving a major challenge faced by Indian startups and small businesses while availing corporate cards from the banks that ask for 110% deposit guarantee, personal guarantees and massive amount documentation. Karbon’s corporate cards eliminate all these hurdles and provide solutions in just five minutes.”

Karim Atiyeh, Co-founder and CTO at Ramp, remarked:

“We are impressed with what Karbon has built so far and are looking forward to seeing them deliver more value for Indian SMBs and startups.”

The Bengaluru-based firm provides startups with several benefits including credit of up to INR 5 crore with “no personal guarantee or fixed deposits.” It also offers seamless payments transactions through corporate cards to its clients, as well as special rewards “specific to the startups’ requirements such as AWS credits with $50,000 or SaaS products.” It also helps offer expense management via WhatsApp.

The Fintech firm, which generates earnings mainly from interchange fees, intends to address a major problem for SMEs and startups by “replacing the use of personal credit cards for company usage with corporate cards.”

Using personal credit cards for company usage impacts personal credit score, creates reimbursement issues, and may lead to confusion when trying to differentiate between personal and corporate expenses.

With more than 1500 customers in just 2 years of its launch, Karbon has reported  30% MoM growth in revenues, even though the COVID-19 crisis had significantly slowed down corporate spending.

But as the economy begins to recover, Karbon’s management noted that they’re expecting around 35% MoM growth in the next 8-12 months. Additionally, when considering the recent RBI’s Mastercard ban, Karbon has been “quick to integrate with Visa network to provide uninterrupted experience to their customers in a 40 million strong untapped SMB segment in India.”

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