How Khatabook Eased Bookkeeping Woes of Small Shop Owners in India

How Indian Tech Startup Khatabook Found Opportunity in Ledgers and Accounts


Khatabook says it wants to solve the financial problems of India’s billions of users ready to come online. In just one year of launch, the Khatabook app gained 10 million downloads just through word of mouth within merchant networks. Operated by Kyte Technologies, the Khatabook app offers a digital ledger to all small business owners in India. It helps to manage books of accounts and it also offers reminders through WhatsApp and SMS for collecting money and making due payments. The app is available in over 13 vernacular languages catering to a diverse audience in the country. 

Small business owners who use Khatabook (iOS, Android) are now spread across 4,000 cities and towns, the company says. The platform has its presence in 700 of the country’s 729 districts – a huge feat for a startup that is just a few years old. The company’s overwhelming growth has attracted angel investors like Kevin Weil, the co-creator of Facebook’s cryptocurrency Libra, as well as celebrity investors like cricketer MS Dhoni. In its latest round of funding in May 2020, during the time when the COVID-19 crisis was at its peak, Khatabook secured its largest funding yet of $60 million (approximately Rs.  4,433,092,300).  

Here’s Khatabook by the numbers:

khatabook table 3 Khatabook

Experts opinion: PN Sudarshan, Partner, Deloitte India says, “SaaS as a business model has proved effective in the digitization of small and medium enterprises around the world. India is an important market both from a supply and demand perspective. SaaS revenues in India have reached $3.5 billion as of FY2020 with 75 percent coming from global sales. From a demand perspective, India is going through mass digitization, which brings industry value chains into the digital fold enabling shared information exchange across the supply chain. Small and medium enterprises are an integral part of our manufacturing and services industries in India, and to truly achieve the potential of mass digitization, it is necessary that small and medium enterprises access enterprise-level software provisioned at flexible pricing models. SaaS as a business model is definitely well-positioned to catalyse this change and cost-effective digital tools would help us move from a “data-poor” to “data-rich” economy. The current COVID-19 pandemic has catalysed the rate of technology adoption across industries. In this context, SaaS as a business model can witness increased adoption, as flexibility and affordability becomes a key for enterprises to manage the pandemic response and thrive in the changing market dynamics.”

We spoke to CEO and Co-Founder of Khatabook, Ravish Naresh to know a bit more about the company’s overwhelming success story and its future plans.  

khatabook ravish naresh Ravish Naresh

Khatabook CEO Ravish Naresh

1. How did you think of this business idea? When did you finally take the leap of faith and make it official? 

We observed that the quality and access of services that digitally savvy people with high-end smartphones can prevail are way better than those who are not so tech-savvy and use low-end devices. From the beginning, we were a group of techies passionate about digitally solving the financial problems for Bharat’s billions of users ready to come online. With that goal, we started kite.ai, where we were working on an AI-based SMS inbox to manage digital transactions. This provided us with great insights into the financial struggles of users. Simultaneously, in a small electrical shop in the tiny town of Degloor, Nanded district, Maharashtra, Vaibhav was trying to solve the same problem to ease his father’s struggle in keeping track of pending receivables of customers. Meeting Vaibhav was a nudge for us to pursue our vision. Khatabook already had 60,000 merchants when we acquired it.  

Our commitment, hard work, and the digital landscape changes in India favoured us tremendously. With Jio’s entry in service provider space, millions of users from hinterlands of tier-2 and tier-3 cities in India joined the digital wave. The people for whom we were solving the problems were coming online faster. We also became part of Y-Combinator in 2018, which helped us structure our somewhat overwhelming business journey.   

2. Did you have to put in any money to start the business? When did you decide that funding was required?

I borrowed Rs. 10 lakhs from my dad, and that’s how it all started. But honestly, in the initial days, we were always short of money. After we acquired Khatabook, we realized that now we need to look at some serious funding options. In the series A phase, we were struggling a bit with the funding. The growth hit us fast, so the seed round took place in 5 bridges. It was the highest in the history of funding for Sequoia.  

3. Every successful startup has to deal with challenges that the outside world knows little about. Would you please offer our readers some insight on one such recent incident?  

Our business model is for “Bharat” coming online. The adoption of our product was not only dependent on the app’s visibility and convenience. It was heavily reliant on user education, 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 us. 

4. Could you share some interesting stories about initial struggle days. How did you manage to overcome these struggles? What has it taught you? 

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.  

5. What are the other big milestones that KhataBook crossed since inception? Please offer details on them. 

The adoption of our digital ledger app in the country’s SME retail sector indicates the value we have created for our users. We understood the requirements of first-time users. We developed a ‘no-frills,’ AI-embedded, user-friendly interface, with vernacular language compatibility that works well for them. As a result, the Khatabook app achieved 10 million downloads through word of mouth within merchant networks within a year of its launch. Spread across 4,000 cities and towns and 700 of the country’s 729 districts, Khatabook has emerged as one of the fastest-growing B2B companies in the world.  

Recently, we raised $60 million (approximately Rs. 4,433,092,300) through a Series B funding round, despite the economic constraints imposed by the COVID-19 outbreak.  

6. What are the numbers like now?

Khatabook today has a monthly active user base of 8+ million with 20+ Million registered users. Before the lockdown, the growth had an excellent trajectory, which did take a hit during the lockdown in line with other external factors. With lockdown relaxation, we 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, we launched 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 over from the launch, more than 2.5 million merchants across India have installed MyStore. We also initiated work-from-home active, 24/7 call center support for merchants.  

7. Any advice for young Indian entrepreneurs out there? 

The scaleup will come only out of the real value to the users. 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. 

8. What is the employee strength? Is KhataBook currently hiring? 

We are a 100+ member team now. Yes, we are extensively hiring for growth.  

9. What do you think India needs to work on, to help the startup ecosystem flourish even more? 

I think India is already a very dynamic startup ecosystem mainly due to its tech talent landscape and diversity of user profiles, making it easy for startups to develop, pilot, and scale the ideas. However, strong policy support, investments, and better infrastructure are always something we could use more of.    

10. What are the big plans in the future? Where does Khatabook see itself in the next five years 

Moving forward, we plan to augment our service portfolio and drive two- to three-fold growth in business by providing more relevant solutions and value to our users. Remaining committed to India’s MSME segment, we will be adding services to streamline and simplify business processes for the merchants.  



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