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Bengaluru-based financing startup Klub laid off about 60-70 employees in September and paused its commerce operations, according to multiple people aware of the developments. The company has been trying to raise capital and has restructured workforce and operations because of funding challenges, according to a person in the know. Its employee strength has come down from over 100 to about 45 employees.
Klub offers flexible funding to businesses, letting them repay based on future revenue instead of fixed schedules or giving up equity. The company’s core offering is its capital business, and it started the cross-border commerce enablement business about a year ago. The commerce division helps brands expand their e-commerce presence internationally, managing logistics, payments, and onboarding to various marketplaces.
Two employees of the company told Mint that the company has laid off most of the team in the company’s Ahmedabad office that was working on the company’s commerce-enablement business. “There has been no new inventory procurement for the last three months and one of the directors when informing about the layoff said that the company is in the process of clearing the remaining inventory post which they will close the commerce vertical,” one of the two employees said. Read more: Kalyani family dispute: Gaurishankar files documents to show HUF exists It is also believed that the company is scaling down its commerce business.
While the company did not comment on the reduction in workforce, its cofounder and CEO Anurakt Jain said that the cross-border commerce business is live and revenue-generating. “We continue to build it and are partnering with selective, high-potential brands,” he added. “Like most startups, over the last 18 months, Klub has derived operational efficiencies through performance improvement, technology investments, AI-based advances, and outsourcing of non-core activities.
Our revenue remains strong, and our operating economics have improved substantially with the core business nearing operational profitability,” Jain said. Funding efforts The company has started the process of raising capital, on the back of these efficiencies, he said. Klub is in active conversations and carrying out due diligence with multiple investors after which there will be a formal announcement after the round is completed, he added.
Another person with knowledge of the company’s affairs also told Mint that the company hasn’t paid certain brands that were using Klub’s services, for the last three months. Two companies, on condition of anonymity, told Mint that there has been a delay in payment with no clarification from the company’s end. “The point of contact keeps on changing since last month as people are leaving and there is no communication with regards to that.
There is no clarity about the payment for our sold inventory or our current inventory that is with the company,” the brand of one company said, adding that Klub has stopped placing orders for new stocks for about a month and a half. Jain, however, said there was no delay in payments. “Our cross-border commerce enablement contracts are as per standard industry practice: brands generate revenue as and when sales happen.
No payments to any brand partners are overdue. We strictly adhere to contract terms, releasing payments on pre-agreed frequencies as sales happen,” he said. Venturing into commerce enablement seems to be a move to diversify from its core financing business but it has its challenges.
The revenue financing market in India is estimated to be about $82 million, according to Cognitive Market Research. Read more: India’s venture capital firms are finding that leaner might be better In the case of companies moving into commerce, the need for expertise in logistics, inventory management, and customer service becomes critical—all areas which fall completely outside of company's original business model, according to Appalla Saikiran, founder & CEO, SCOPE. "Without a unique advantage or significant investment in these domains, the move into such a competitive market could be more complex than anticipated," he said.
"Investors usually tend to judge such diversifications negatively, cognizant of the fact that they contribute towards diluting focus, stretching resources, and adversely influencing profitability. Therefore, scaling back such ventures and refocusing on core strengths often proves to be the more prudent approach. It reinforces the point that diversification needs to be in consonance with strategy and should not be risky,” he said.
Klub’s revenue increased to ₹ 31 crore in FY24 from ₹ 24 crore in FY23, even as its losses decreased to ₹ 4 crore from ₹ 8 crore, according to data sourced from Tofler. Founded in 2019 by Jain and Ishita Verma, the startup has raised a total capital of about $22 million from investors like Peak XV’s Surge, Trifecta Capital, Northern Arc Capital, US-based Alter Global and Japan-based GMO VenturePartners, among others. Klub competes with Mumbai-based revenue financing platform GetVantage and Bengaluru-based Velocity, among others.
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