Deal focus: Khatabook aspires to be shopkeeper’s best friend

Khatabook is Ravish Naresh’s third start-up. Fleeing the messy boardroom battles at online realty start-up Housing.com, he launched expense management app Kite seeking to help consumers track their digital purchases. However, it turned out shopkeepers were the real power users as they sought digital records of their transactions. 

Considering how to address this opportunity, in 2018 Naresh came across a self-taught young programmer in a village in the state of Maharashtra who had created Khatabook – Hindi for “book of accounts” – two years earlier for his father, an electrical goods retailer. Impressed, Naresh invited the young developer to join his start-up. 

Within a month, the app’s interface was redesigned and new functionalities added. It quickly grew in popularity and now counts more than eight million merchants as users. Given how they accept orders on credit anyway - physically recording receivables – the app was easy to understand.

However, Naresh notes there are still millions of potential users in the country. “India has one of the largest small business markets in the world. It's a huge addressable sector, and a huge opportunity, which is just starting to get digitized,” he says.

Once a payment is registered against a customer’s mobile phone number, they are automatically notified via SMS or WhatsApp. Customers usually settle in cash within a week for small-value transactions. However, the app recently introduced a digital payment option as well. Khatabook also plans to introduce its userbase to lenders with a view to leveraging its transactional data to issue loans to small businesses.

For all the additional functionality, simplicity is the start-up’s selling point. Many shopkeepers were consumers at other establishments using Khatabook, downloaded the app and spread the good word. 

Khatabook doesn’t currently charge users. Likening the app’s appeal to WhatsApp, Naresh believes the app aims to serve a basic universal need, although its user agreements do specify the right to charge a convenience fee.

“We want to get to 30 million active merchants in the next two years,” he says. Beginning last month, the app can be downloaded on the Indonesian app store for android smart phones. Singapore-headquartered B Capital recently led a $60 million Series B round to fuel future expansion plans.

The pace of downloads in India slowed after a two-month nationwide lockdown was imposed in response to COVID-19. Supply chains for non-essential goods came to a standstill and small businesses are still struggling to maintain healthy cashflows.

However, the silver lining might be an enhanced appreciation for digital tools. For example, a template for a poster advising customers on timings, inventory availability and in-store social distancing rules was widely used by Khatabook users. 

“We're trying to stay relevant in these times and so we are coming up with many small features,” Naresh says. “Over the next few years, I feel the shops that are able to survive and compete will be the ones that are going digital first.”

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Technology
• South Asia
• Early-stage
• Support services
• B Capital
• India
• TMT