US-based fintech startup Karat has introduced Karat Black Card, its first business credit card exclusively for social media influencers and creators on YouTube, Instagram, TikTok and other online platforms.
Co-founder and CEO Eric Wei used to be product manager at Instagram and helped built products like Instagram Live for creators. His co-founder Will Kim was previously an investor with seed fund Lucky Capital.
“We started Karat because we heard stories of banks rejecting top creators for credit cards, mortgages, and financing. We heard creators tell us that they didn’t have time to figure out taxes, expenses, or even know how much they were making every month,” Wei said in an online statement.
The new card assesses a creator’s financials using Plaid and evaluates a creator’s follower count, engagement, platforms, and type of content amongst other metrics along with financial information to determine credit limits.
Approved creators will receive a $250 bonus for future purchases such as camera equipment, and 2% and 5% cashback on purchases as well as advances on sponsorship payments. You can even create your own card with a custom design.
The company will make money from the processing fees from merchants at point-of-sale terminals. Cardholders have to pay their credit card balances in full at the end of each month instead of a minimum credit due amount. If they fail to do so, the company will waive off fees and interest.
Karat has beta tested the card with select influencers including TierZoo and TheRussianBadger. Eligible creators can start applying for the card by sending the company an Instagram DM. For now, they will prioritise full-time creators with verified followings of at least 100K or those referred by their partners.
“For typical consumers, using social ranking or grading generally is not a good idea and doesn’t work. However, what we’re focused on is a segment of businesses that are driven by creative metrics.
“You’re a creator. You make content. You have a lot of metrics available online about how your business operates, and we can underwrite that,” said Kim.
Karat has also secured $4.6 million in seed funding from Twitch co-founder Kevin Lin, SignalFire, YC, CRV and Coatue.