Despite earning six to seven figures a year, many content creators are deprived of the funds they need to scale their businesses. Reasons vary, but most are relatively young, have limited business and credit histories, and face income inconsistencies across platforms.
This is a profitable question.According to one sourcethere are now hundreds of millions of people creating content full-time, and likely drive By 2032, the digital content creation market will exceed $180 billion.
The huge potential market prompted Eric Wei and Will Kim, friends who met in 2016, to start Carey Financedesigned to help creators manage money through payments, bank accounts, invoices, and more.
The first product from Y Combinator-backed Karat is a business credit card that offers creators higher limits based on their social and financial stats rather than FICO scores. But the company is now looking to expand its offerings with credit cards that build a person’s credit history.
“Most importantly, Karat sees creators as the brands and businesses of the future, but premium creators, like any other business, need access to capital to grow,” Kim told TechCrunch in an email interview. “Karat is on a mission to drive this growth and democratize access to capital, something that remains off the radar of the big banks. Creators are eating the world, and Karat is well-positioned to be the financial system that powers them.”
Wei, a McKinsey and Blackstone veteran and former Instagram Live product manager at Meta, believes traditional banks don’t understand the ins and outs of the creator business. Banks often need a steady monthly income from “traditional” sources of income like product and service businesses to make lending decisions, leading banks to reject even high-earning creators.
more than 2 million creators According to venture capital firm SignalFire, the company makes more than $100,000 a year.and More than 46.7 million people Have enough of an online following to monetize with freelance content.
No business can ever hope to predict viral trends, especially in the creative content space. But Karat has worked hard to minimize risk using an underwriting model it developed in-house, the details of which remain under wraps.
“Karat analyzes creators’ cross-platform success, focusing on factors such as social influence, audience engagement, platform mix, and monetization to get a more accurate picture of their business model,” Wei said, adding that Karat plans to add some form of machine learning to the model in the future. “This allows Karat to serve creator businesses that would otherwise not have access to capital.”
Wei did not disclose exactly how many creators have been approved for the Karat credit card so far.but he done More than a billion users follow its clients, including realtor Graham Stephan, Lingatrip co-founder Marina Mogilko, and Arab-Israeli vlogger Nas Daily.
“No one is doing what Karat is doing at a level or scale that is tailored for the creator economy,” Kim said. “Creators have used Karat business cards to transact millions of dollars, benefiting from higher limits and exclusive rewards.”
After building out the basic card business, Karat is turning its attention to the aforementioned new card in partnership with Visa — a card focused on personal credit history. When new cardholders make payments on time, the card won’t require a hard credit pull, and it will report payments to the major credit bureaus, just like a typical credit card company, Karat said.
The new Karat card will come with standard benefits such as reimbursement for stolen or damaged items within 90 days of purchase. But it will also offer rewards for creators, such as a “membership experience” at industry events like VidCon and VidSummit.
Cardholders will also have the opportunity to Upgrade to personalized bookkeeping and tax services with Karat. Or, if they’re not willing to pay, the platform will offer a free tool to track chargebacks on the card.
“Our partnership with Visa is a first for this fast-growing space, allowing creators to use the Karat card to build a credit history, which they can use to secure better rates and terms for other key financial products to grow their business,” said Wei.
Karat faces competition from startups like Creative Juice, which underwrite creator businesses in exchange for a cut of revenue over a period of time. But it managed to gain a foothold in the nascent industry, closing a $70 million Series B round today, comprising debt ($30 million, led by TriplePoint Capital) and equity ($40 million, led by SignalFire).
The Series B round, with participation from Union Square Ventures, CRV, GGV, Commerce Ventures, as well as Dreamers VC’s actor Will Smith, Twitter co-founder Biz Stone, and YouTube co-founder Steve Chen, brings Karat’s total funding to more than $100 million.
“The decision to raise capital through a combination of equity and debt financing was based on prudent strategic considerations,” King said. “The debt financing enabled Karat to access working capital and pay cardholder expenses while maintaining control and flexibility, while the equity financing led by SignalFire and the participation of esteemed investors brought not only financial resources, but also valuable insights and networks to support the company’s growth trajectory.”
The fresh cash will help Karat expand its existing products and continue to develop tools to help creators manage their money, Wei added.
“Karat Financial is now closing its funding round to keep pace with the growth of the creator economy, which Goldman Sachs expects to reach nearly $5 trillion by 2027,” Wei said. “After proving and scaling this model under our new partnership with Visa, creators now have a smoother path to getting the money they need, when they need it.”