Will Smith And Other Celebrities Back New Kind Of Financial Company With Latest Banking For Social Media Stars Startup Karat Financial

It's hard not to pay attention when big-name celebrities back an up-and-coming company. That's what's happening now with Karat Financial, a company that offers credit cards and banking to folks who sell via social media.

Karat announced a new funding round totaling $70 million. The funding comprises a $40 million Series B equity round spearheaded by SignalFire and $30 million in debt financing supplied by TriplePoint Capital. 

Celebrities such as Will Smith and his Dreamers VC, YouTube chef Nick DiGiovanni and video game streamer Ludwig Ahgren also invested. With this recent round, Karat's cumulative funding now surpasses $100 million. Previous backers of Karat have been personalities like social media influencer Josh Richards, YouTube Co-Founder Steve Chen and Twitch Co-Founder Kevin Lin.

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Karat Has A Simple Goal

Karat and its co-founders, Eric Wei and Will Kim, have a simple goal: to help social media stars better manage their finances. 

Established in 2019 and headquartered in Los Angeles, Karat has an unconventional approach: It capitalizes on popularity. Rather than relying on traditional credit scores, the company offers credit lines pegged to a creator's social influence, gauged by their follower count on platforms such as Instagram, YouTube and Twitch. 

Wei notes that major banks and credit card companies haven't yet ventured into the creator space because they perceive it as too niche and insignificant to warrant developing a new risk-assessment model.

The company will use the latest funding round to expand Karat's size and diversify its products. The goal is to transform Karat into a comprehensive financial hub for creators.

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What's Next For Karat?

Although Wei and Kim have not disclosed the size of their user base, they indicate a five times increase in customers since their 2021 Series A round, which raised $4.6 million. They also highlight that their cardholder creators collectively have over 1 billion followers across various social media platforms. As Wei puts it, "We're at a point where every single person we meet knows one of our clients."

The duo's long-term ambition is to scale Karat beyond the creator economy, aiming to become the financial ally for artists, creatives and freelancers — regardless of whether they're active on social media.

Reflecting on the evolution of the industry as a whole, Wei said, "We’ve seen over the past 10 years, this whole creator piece develop from a niche to an industry that's the creator economy. It's just going to be the economy, period."

A bold prediction, but based on recent trends, there's a good chance Wei's line of thinking is correct. 

For investors looking to invest in the latest startups themselves, platforms like StartEngine and Wefunder let anyone get involved investing in startups.

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