Khatabook- How it is Reducing the Burden of Accounting?

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In our haphazard daily life, we tend to get busy with several things and forget about payments and maintaining a log of all the financial transactions. This, sometimes, becomes extremely hectic and might even affect businesses adversely in a whole host of ways. However, with the emergence of numerous business management software, businesses and individuals can manage their businesses effortlessly. Khatabook is one of such reliable software solutions that makes managing business and personal ledgers a breeze!

Founded in 2018 in Bangalore, Khatabook is hailed as India's fastest-growing SaaS company. Khatabook reminds you through WhatsApp or SMS when the money is due to be paid or collected. forgetting the due dates of payments to be made. Besides, handling multiple businesses will no more be a deal with Khatabook!  

The micro, small and medium businesses of the country simply has a new name, Khatabook, which brings safe and secure business and financial solutions to increase efficiency and reduce costs.

Here's diving into Khatabook's journey in this StartupTalky article, where we will find out more about Khatabook Founders and Team, Funding and Investors, Startup Story, Tagline and Logo, Growth, Business and Revenue Model, Challenges, Competitors, Future Plans and more.  

Khatabook - Company Highlights

Khatabook - Latest News
Khatabook - About and How it Works?
Khatabook - Founders and Team
Khatabook - Startup Story
Khatabook - Mission and Vision
Khatabook - Tagline and Logo
Khatabook - Business Model
Khatabook - Revenue Model
Khatabook - Growth
Khatabook - Acquisitions
Khatabook - Awards and Achievements
Khatabook - Partnerships
Khatabook - Challenges Faced
Khatabook - Funding and Investors
Khatabook - Competitors
Khatabook - LayOff
Khatabook - Future Plans
Khatabook - FAQs

Khatabook - Latest News

9th November 2021 - Khatabook has decided to shut down MyStore, the eCommerce enablement of the company, which has been a core product of the company, effective from 15th November onwards.

24th August 2021 - Khatabook concluded its Series C round of funding with a fundraise of $100 million led by Tribe Capital, Moore Strategic Ventures, Alkeon Capital, B Capital Group, Sequoia Capital, and more.

3rd February 2021 - Khatabook released its 2020 statistics. In 2020, Khatabook activated merchants in >95% Indian districts, recording over $100Bn+ in transactions with over 150Mn+ customers.

13th January 2021 - Out of the 7 Indian startups in Y Combinator's latest top companies’ list, Khatabook is one among them. India has emerged as an important market for Y Combinator.

Khatabook - About and How it Works?

Founded in January 2019, Khatabook is the fastest growing Saas company in India and one of the fastest-growing SaaS company in the world. It has become India's leading business management app for MSMEs with 20M+ downloads in a remarkably short period of time. It operates the Android-based Khatabook app that enables companies to keep a digital log of their financial transactions and accept payments online.

Khatabook enables micro, small and medium merchants to track business transactions safely and securely. The app is available in over 12 vernacular languages, catering to a diverse audience in the country.

It helps businesses and individuals manage the business and personal ledgers on their phones and computer devices along with helping them recall the due dates with the help of effective SMS and WhatsApp reminders about the same. This Bangalore-based mobile app service shares WhatsApp and SMS reminders to users when the money is due to be paid or collected.

The Khatabook app has a free ‘Payment Reminders’ feature. With this feature, an automatic SMS is sent to your customers every time a transaction is recorded. Khatabook lets its users keep all details of credits and debits for any number of customers across multiple businesses ready and handy on their phones. Furthermore, Khatabook also helps its customers sync their transactions automatically, download, share and maintain reports of all the transactions, reap all the benefits of the effective QR code-based payments with 0% fees on transactions and more. In short, this app lets merchants do stress-free business.

Khatabook - Industry Details

Khatabook's founder Ravish Naresh revealed on Twitter that Khatabook activated merchants in >95% Indian districts with 150Mn+ Customers. Based on the Indian MSME Data, Khatabook conducted research and analysis on the credit behavior of people across the country and also the impact of Covid-19 on small businesses.

Here are some of the major findings:

• Business volumes on credit are 45% higher for South Indian states vs the national average.
• Credit given out by Khatabook merchants dropped by 40% in the initial Covid months. It has continued to recover to 80% of pre-pandemic levels by December.
• Average days to recover debts increased by 25% during COVID for Khatabook Merchants.
• Sectors like travel, construction, apparel were more impacted during 2020.

Khatabook - Founders and Team

Vaibhav Kalpe originally built Khatabook, which was later acquired by Kyte Technologies in 2018. Kalpe later joined the owning team of Kyte before he left the organization. The founding team of Khatabook currently has Ravish Naresh leading the company as the Co-founder and CEO along with other co-founders - Ashish Sonone, Dhanesh Kumar, and Jaideep Poonia.

Ashish Sonone

The Co-founder of Khatabook, Ashish Sonone is a IIT Bombay Btech graduate in Computer Science. JetSynthesys Pvt. Ltd and Qiosk - News for Professionals were the companies where Sonone worked as a Software Engineer and Consultant respectively before co-founding Frodo and Kyte, in both of which he also served as a Backend Engineer. Khatabook is the third company that Sonone has co-founded.

Dhanesh Kumar

Another Computer Science and Engineering from IIT Bombay, Dhanesh Kumar started with Amazon as a Software Developer, who then realized his entrepreneurial and decided to co-found Knit Messaging, Kyte and now Khatabook, where he is still serving as a Co-founder.

Jaideep Poonia

Jaideep is an IIT Bombay alumnus from where he completed his Btech in Civil Engineering before completing S18 from Y-Combinator. Poonia has also been the co-founder of Knit Messaging, Kyte, and Khatabook as Dhanesh Kumar.  

Ravish Naresh

Co-founder and CEO of Khatabook, Ravish Naresh completed his Btech from IIT Bombay, much like the other co-founders of the company, after which he co-founded Housing.com, where he also served as a COO. It was after leaving Housing.com, Ravish co-founded Khatabook, where he is still working as a CEO.

Khatabook currently works with around 300 employees.    

Khatabook - Startup Story

The story goes back to 2016, when Ravish Naresh along with his team of college friends, started a digital spend manager app, Kyte.ai. The app helped users understand their expense patterns using their SMS alerts. Kyte initially had good traction but did not reach the expected growth scale. Also, the team realized all their users were based out of metropolitan cities.

On researching, they found that first-time online users did not deal with digital transactions, and they still rely on traditional khata or ledger books. As per Ravish, they wanted to build something that people want and then try to build a business around it.

That is when the idea for Khatabook developed, and they started to work on a simple cash management app, which they named Khatabook. The parent company of Khatabook is Kyte Technologies.

Khatabook - Mission and Vision

The mission statement of Khatabook says, "Empowering Udhari Khata (Book-Keeping)".

"Started with a vision of transforming India's small shops, today we are the biggest player in the small business segment digitizing a sector that forms the backbone of our economy. We are looking to work closely with the government and financial institutions to strengthen our market leadership and help MSMEs increase their income while making them more efficient and competitive," said Ravish Naresh, CEO of Khatabook.

Khatabook - Tagline and Logo

The tagline of Khatabook is Business Hua Easy! The app lets every business go digital instead of following the same traditional method of book-keeping and making it easy to grow their business.

Khatabook's logo itself signifies what the company is all about. It maintains a digital record of all the transactions we make, something which our actual 'Khatabook' (the diary in which we maintain our financial record) does.

Khatabook - Business Model

Khatabook is a mobile app that helps small merchants to digitize their accounting and credit balance recording. It helps to reduce the burden of bookkeeping and accounting. It is just like having a khata in your pocket. The business model of Khatabook is making "Bharat" / India come online.

It is 100% free to use and secure for all types of businesses with which shop owners can record credit (Jama) and debit (Udhaar) of customers. But Khatabook has no revenue source at present.

Ravish Naresh, CEO of Khatabook, said they're now developing the app to provide a complete financial solution for small businesses. The startup has plans to bring a host of new features onto the platform and UPI payment is next on the line.

Khatabook has seen some growth in the past two and a half years, where it has emerged as an integral part of the MSME community in almost every district in India. A majority of the merchant users on the Khatabook platform have embraced the digital practices dumping their offline business practices.

Furthermore, Khatabook has also introduced 3 other solutions apart from the Flagship Khatabook for the benefit of the MSMEs:

• Biz Analyst - This is a leading SaaS business management solution from Khatabook designed to offer premium value-added on-demand services like sales and purchase reports, livestock updates, and other MIS reports. Biz Analyst can be integrated with Tally ERP9 and allows an overall view of the business operations.
• Pagarkhata - This is a staff management platform for businesses by Khatabook which aims to help merchants to turn the staff attendance, payroll/wages, attendance updates, leaves, payments, and other processes digital.
• Cashbook - Cashbook is another platform by Khatabook built as a cash handling and tracking solution. Furthermore, it also helps with cash sales and expense management.

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Khatabook - Revenue Model

In 2020, Khatabook has active merchants in 95% of Indian districts, recording over $100 Billion in transactions with over 150 million customers.

Khatabook has recorded total revenue of Rs 17 crore during FY21, thereby registering a 25.3% decline from Rs 24.4 crore. The startup's revenue from operations, currently recorded at Rs 16.9 crore, witnessed a dip of around 30.7% from Rs 24.4 crore that it posted in FY20. On the other hand, the other income of the startup rose from Rs 12.7 crore in FY20 to Rs 21 crore in FY21.

Diving into the profit-loss segment, it has been discovered that Khatabook has managed to reduce its loss by 63%, which has been brought down from Rs 89.5 crore to Rs 33 crore. This is primarily due to the selling of its intellectual property, some of which it sold to its holding company, Kyte Technologies Inc. for around Rs 57 crore.

In FY22, the company experienced significant growth in its operating revenue, surging from Rs 17 crore in 2021 to an impressive Rs 71 crore. However, this growth was accompanied by a corresponding increase in total expenses, which escalated from Rs 109 crore in FY21 to Rs 189 crore in FY22. Consequently, the company's losses also saw a substantial rise, soaring from Rs 33 crore in FY21 to Rs 111 crore in FY22 during this period.

Here's a look at the financials of Khatabook:

Operating revenue for the Khatabook increased by 14% in FY23 to Rs 81 crore. Conversely, there was a marginal rise in losses of 4% to Rs 125 crore.
Due to increased employee benefit costs (wages, salaries, PPF, etc.), which amounted to over Rs 142 crore, the company's total expenses stayed steady at Rs 223 crore, a slight increase from Rs 189 crore in the year FY22.

Khatabook - Growth

Khatabook has registered around 10 Million monthly active users and the numbers are growing.

Growth had an excellent trajectory, which did take a hit during the lockdown in line with other external factors. With the relaxation of the lockdown, the company started reviving the business at a steady pace. The revival has been faster with users in tier-2 and tier-3 cities of India.

As a very relevant offering for merchants in the pandemic, the company also launched the MyStore app to enable them to take their stores online in 15 seconds and continue doing business through their preferred communication channels.

Within a month after the launch, more than 2.5 million merchants across India have installed MyStore. Khatabook also initiated work from home active, 24/7 call center support for merchants. Currently, the revenue model of Khatabook depends on its funding.

Some key growth highlights would include:

• 5 crore+ registered businesses
• A spread over 4000+ cities of India
• Powered by popular investors like Sequoia Capital, DST Global Partners, Y Combinator, Tencent, B Capital Group and more

Khatabook - Acquisitions

Khatabook has acquired Biz Analyst on March 25, 2021, which remains the company's maiden acquisition.

Khatabook - Awards and Achievements

Some of the popular awards and achievements that Khatabook has seen so far are:

• It was declared as the Winner of Nasscom League of 10 in the Emerge50 Awards 2020
• The company's app won the Best Innovative Mobile App award at IAMAI 2020
• mCube announced Khatabook the winner of the Best Content in a Mobile Marketing Campaign in its awards ceremony in 2020

Khatabook - Partnerships

Khatabook currently partners with the former skipper of the India cricket team, M.S. Dhoni, who is an investor as well as the brand ambassador of the company. The strategic partnership was announced on March 17, 2020.

Khatabook - Challenges Faced

Khatabook also faced a shortage of money during its initial days just like other new startups. Ravish, the CEO of Khatabook realized that they need to look into serious funding options.

In the series A phase, they were struggling a bit with the funding. The growth hit them fast, so the seed round took place in 5 bridges. It was the highest in the history of funding for Sequoia.

"Well, the struggles were mainly money-related. We knew we were working on something important and kept going with it. Often it was difficult to imagine the future of our initiatives with no funding, but perseverance is what got us where we are today," said Ravish Naresh.

He also said that the adoption of their product was not only dependent on the app's visibility and convenience but also on educating users, not just for the app but also for using digital technology in general. The biggest hurdle was to persuade offline shopkeepers to come online and train them for digital transactions.

Switching away from the convention is understandably tricky and daunting for merchants who mainly have offline workflows. Persuading traditional enterprises to embrace the digital still remains a crucial challenge for them.

“It is important to build something that people want and then try to build a business around it, and that is exactly what the team did.” said Ravish.

Khatabook announced the shutdown of MyStore on November 10, 2021. The eCommerce enablement product was one of the core products of the company, which also contributed to the expansion of the company by raising funds along with helping the company with its bookkeeping requirements.

“Thank you for being a part of the MyStore journey. We are planning on discontinuing the MyStore App. Your MyStore App won’t work from 15 November 2021,” goes a blog post from the company.

The company has further asked its users to download their invoices by sharing order invoices before doing away with the app.

Khatabook had previously been dragged into a legal fight with its rival, Dukaan over the plagiarism of the name when MyStore was named ‘Dukaan by Khatabook’, in August 2020. Khatabook later decided to change it to ‘MyStore by Khatabook after a legal battle of around four months. The tagline of the app, however, remains the same, ”Create Your Online Dukaan in 15 Seconds” to date on Play Store.

Khatabook - Funding and Investors

Khatabook has raised a total of $186.5M in funding over 4 rounds. Their latest funding was raised on 24th August 2021, from a Series C round. Khatabook is funded by 34 investors in total. Tribe Capital and Moore Strategic Ventures are the most recent investors. The valuation of Khatabook was estimated to be around $600 Million in August 2021.

Khatabook - Competitors

The top competitors of Khatabook are:

• OkCredit
• BharatPe
• Instamojo
• Simply Vyapar Apps Pvt. Ltd.
• PayMate
• Razorpay
• Obopay
• Paytm
• Working Papers

Khatabook - LayOff

In a strategic move aimed at optimizing costs and prolonging the company's financial runway, the organization recently made the difficult decision to implement workforce reductions, resulting in the departure of over 40 employees from various departments. These actions were undertaken as part of a broader effort to navigate the challenges faced by growth-stage companies.

While undoubtedly a tough choice, the company's leadership recognized the importance of preserving its financial stability and ensuring a sustainable future. This move reflects a commitment to adaptability and resilience in an ever-evolving business landscape, with the hope that these measures will ultimately position the company for long-term success.

“Khatabook has laid off 42 employees across sales, marketing and analytics, and technology verticals,” said one of the sources requesting anonymity. “People who lost their jobs in the exercise have been given standard severance packages including 3 months salary among others.”

Khatabook - Future Plans

Khatabook plans to expand and achieve two to three times business growth by simplifying the traditional way of doing business. Remaining committed to India's MSME segment, Khatabook will be adding services to streamline and simplify business processes for the merchants.

"Committing to a goal is essential for business directions and decisions. One thing that pandemic has taught us is that we need to think through the most unlikely scenario and make sure we are relevant in all possible scenarios or are agile enough to change our direction as per the need of the hour," says Ravish.

Khatabook has already managed to build a widely accepted tech ecosystem for the MSMEs across the country and will now concentrate on the disbursement of financial services through its tech platforms. These financial services will further enable smooth lending, payment, and deposits in the MSME space.

Khatabook is eyeing the right partnership opportunities to seamlessly roll out the solutions that would benefit the economic aspirations of countless small businesses.

Khatabook has announced a buyback scheme of ESOPs worth USD 10 Million in order to acknowledge the contributions of its employees, the ex-employees and the early investors who stayed by the company and helped it grow. The employees who are eligible for the ESOP scheme would be able to sell up to 30% of their vested options. Meanwhile, Khatabook has also expanded its ESOP pool to $50 Mn.

Furthermore, Khatabook is also looking to strengthen its talent base by hiring employees for the engineering, product, design, analytics, and data science departments.

Khatabook - FAQs

What is Khatabook?

Khatabook is the world's fastest-growing SaaS company. It is India's leading business management app for MSMEs that enables companies to keep a digital log of their financial transactions and accept payments online. It's like having a khata in your pocket.

Is Khatabook an Indian app?

Yes, Khatabook is an Indian app founded in 2019 with an aim to reduce the burden of bookkeeping and accounting.

Which company owns Khatabook?

Kyte Technologies is the Parent Company of Khatabook.

Who is the CEO of Khatabook?

Ravish Naresh is the CEO and Co-founder of Khatabook.

Who are the founders of Khatabook?

Khatabook was founded by Ashish Sonone, Dhanesh Kumar, Vaibhav Kalpe (Ex-Khatabook), Jaideep Poonia and Ravish Naresh in 2019.

How does Khatabook make money?

The Khatabook revenue model is non-existent at the moment. Naresh says their focus is now on developing the app to provide a complete financial solution to small businesses.

What is the use of Khatabook?

Khatabook app enables MSMEs to keep a digital log of their financial transactions and accept payments online.

What is the valuation of Khatabook?

The valuation of Khatabook was estimated to be around $600 Million.