Khatabook can’t lend enough to justify its valuation

Why read this story?

Editor's note: There’s a sense of urgency towards monetization at Khatabook.  The startup, which launched its bookkeeping software for small businesses and stores about five years ago, was in the heady years of 2020 and 2021 the darling of investors pumped up about “kiranatech”. Companies like Khatabook and rival OkCredit promised to digitize the kirana, or small neighbourhood store, through mostly free software that would displace paper ledgers, or “khata”. The hope was always that some small percentage of the user base would pay for more advanced features, while the rest would become potential customers for other services, especially business loans. On the back of this pitch, Khatabook, the market leader, raised $60 million in 2020 and then $100 million in another round the following year, which valued it at about $600 million.  With the high of the COVID-19 pandemic ending and a global slowdown in venture capital funding last year, reality struck. Since barely any kiranas or small businesses pay for software—and an attempt at getting them to set up e-commerce storefronts failed—the only avenue for revenue is financial services, i.e. …