Challenge

Eric Wei and Will Kim started Karat to give creators access to working capital frequently denied to them by traditional banks, which rely on personal credit scores and histories, consistent business revenue, and longevity as a basis for lending approvals. These creators, even those pulling in six-figure annual revenues, typically lack these prerequisites and often find themselves frustrated trying to secure funds. Karat saw an opportunity to provide the capital that this new wave of entrepreneurs needs to scale their growing businesses. Karat’s underwriting model evaluates creators based on revenue and social media metrics rather than traditional markers and scores evaluated by banks.

“We wanted to help folks go from just streaming their content to building media empires by giving them access to working capital,” said Will Kim, cofounder and co-CEO of Karat.

Karat knew credit cards were an easy way to fill creators’ working capital needs. Creators could then easily deploy funds to produce more content, smooth out monetization inconsistencies, and purchase goods and services to power their businesses. But building out a financial services product internally would require many months of work, and partnering with traditional banks could add even more delays. Karat needed a faster way to build this unique financial solution and get it quickly to market.

Solution

Karat turned to Stripe Issuing in order to get its business up and running quickly. With Stripe’s API, Karat used Stripe Issuing to create, manage, and distribute virtual and physical cards and provide creators with effortless access to the credit they need. Stripe’s responsiveness and “stellar support” also gave Karat the confidence to quickly scale its novel product offering.

“Stripe is friendly for any startup that wants to explore card issuing,” said Wei, cofounder and co-CEO of Karat. “Speed is everything, and Stripe gets that the most.”

Stripe Issuing lets developers instantly create virtual and physical credit cards with custom branding and without setup or monthly fees. Platforms and their users can then use advanced spending controls to set spending limits, authorize transactions in real time, and block merchants or categories. Additionally, Stripe Issuing enables platforms like Karat to create a new revenue stream by keeping a portion of interchange revenue that accompanies every transaction.

Results

With a fast launch and a tailored product, Karat now relies on Stripe Issuing to help it fund the $50-billion creator economy by treating creators as the entrepreneurs they are. Creators also get access to working capital and can easily track spending as they grow and scale. Karat is pioneering financial services to help this next generation of entrepreneurs while generating impressive results for itself:

Integrated Stripe Issuing in three weeks, 75% less time than building from scratch

The speed of integrating Stripe Issuing was critical, especially as the founders were building Karat within the three-month Y Combinator startup accelerator program. Karat was able to integrate Stripe Issuing in a few weeks, and launch its complete product in just three months.

“In just three weeks, we were able to get up and running. You would spend at least three months with any other vendor or bank,” said Kim.

Processed eight figures through Stripe Issuing in under three years

Creators’ eagerness for capital to grow their businesses has propelled Karat from a nascent startup into a fintech force. This is evident in the rapid speed at which Karat has grown its customer base, processing tens of millions of dollars in transactions in less than one year.

“Stripe has enabled most of our business because our core business is built on Stripe,” said Kim.

4x increase in creator spending power

Even though Karat is still limiting growth to referrals from existing customers, its business continues to rocket forward. Through Karat’s offering—powered by Stripe Issuing—creators have quadrupled their spend, on average, which is partly due to Karat enabling creators to grow through the working capital Karat provides. The combination of a market need and a great product, built on Stripe Issuing, has created a loyal and loving following from creators, earning Karat a Net Promoter Score of 88/100.

“This is the first time many of these creators have been treated as a real business. Stripe Issuing provided everything we needed to do it,” said Wei.