US-based Karat Financial, which issues business credit cards exclusively to content creators, has raised $26m in the Series A funding round.
The round was led by Union Square Ventures. It was also joined by GGV Capital, SgnalFire and many digital content creators.
The fintech company’s financing round includes $15m in debt financing and $11m in venture financing.
Karat Financial plans to use the proceeds for new product development and staff expansion.
The company targets freelance content creators, who are not served by traditional banks.
Karat Financial is trying to solve this problem by underwriting creators based on metrics like their social media popularity.
Dubbed Karat Black Card, the card relies on social-media engagement statistics – like follower count – of online content creators to determine their eligibility.
The launch of the new product offering was followed by a $4.6m funding round.
Karat Financial co-founder Eric Wei was quoted by TechCrunch as saying: “Banks need to understand you in order to trust you, and it’s only when they trust you that they’re willing to give you credit, process your payments and hold your money.
“If Alexandra Botez has 800,000 followers, and let’s say a tenth of them are paying a monthly subscription fee on Twitch, you can actually back into what these creators’ income streams are and develop a better underwriting model than what the banks have today.”