Karat is a new startup promising to build better banking products for the creators who make a living on YouTube, Instagram, Twitch and other online platforms. Today it’s unveiling its first product — the Karat Black Card.
The startup, which was part of the Winter 2020 batch of accelerator Y Combinator, is also announcing that it has raised $ 4.6 million in seed funding from Twitch co-founders Kevin Lin, Signalfire, YC, CRV and Kotyu.
Co-founder and co-CEO Eric Wei knows the producer world well, thanks to his time as product manager for Instagram Live. (His co-founder Will Kim was previously an investor with seed fund Lucky Capital.) Wei told me that although many creators have significant income, banks rarely understand their businesses or when they need capital If they do, they give them good positions.
“Traditional banks care a lot about FICO [credit score],” he said. “Many YouTubers, when they are flying, have no time to think: let me make sure that my FICO is terrible too.”
At the same time, he argued that the creators had been skeptical about potential Scamini financial offers, for the fact that if you were a participant in a pre-cod widdon and tried to give $ 3,000, “good creators would call it Won’t take it even if you tell them there are no wires behind it. ”
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With Karat Black Card, the startup is offering creators a credit card that they can use for their business-related expenses. When creators are approved, they receive a $ 250 bonus that can be applied to future electronics or appliance purchases.
The card comes with a custom design, 2% to 5% cash on purchases and it also offers an advance on sponsorship payments.
Wei said that Karat has developed an underwriting model that works for creators. Karat focuses on the size of a manufacturer’s following, their current revenue, and whether they are “business savvy” or not, rather than looking at credit scores.
“It’s not just your number of followers, but which platforms are there,” said Wei. I’d rather TikTok have over 100,000 subscribers on YouTube because on TikTok, it’s all algorithmically driven. ”
Karat has already provided the cards to an early group of creators, including Theresienbjer, Tierzu and Nas Daly. Wei said the model is working so far, with no defaults.
For now, the card is aimed at professional, full-time creators who have at least 100,000 followers. Wei estimated that there is a potential customer base of 1 million creators. Eventually, he wants to provide more than a black card to those creators.
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“We are building a vertical financial and biz ops experience,” he said. “People in the earlier stages, we eventually want to go to them, but only when we feel that we have evolved enough from a young age model.”
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