Creator economy startup Karat Financial raises $40 million

Karat Financial, a Los Angeles-based provider of corporate credit cards for digital creators, raised $70 million in Series B funding.

Why it matters: Despite the funding downturn, the creator economy is still a $250 billion business that could swell to $450 billion by 2027.

Details: The funding is split between a $40 million equity round led by SignalFire and $30 million in debt financing from TriplePoint Capital.

• Existing investors Union Square Ventures, CRV and GGV also participated in the round alongside new investors like Commerce Ventures and Will Smith's Dreamers VC.
• This brings Karat's total funding to over $100 million; it closed a $26 million Series A in 2021.

The big picture: Funding for creator economy-focused startups has dried up over the past year.

• "VCs always amplify and magnify based off hype," co-CEO Eric Wei tells Tim. "They find that a lot of startups don't really understand how creators think and what creators need. ... A lot of these companies that had no business doing whatever they're doing are dying off."

What's next: Karat wants to be more than just a credit card for creators, looking to become a full-service financial services provider for that industry.

• The company, which has also recently expanded into providing tax services for creators, is launching a new business card in partnership with Visa that is aimed at helping creators build their personal credit.
• "This isn't just an industry — this is going to become the entire economy," Wei says. "We want to become Square for that. We want to not just do credit cards and taxes, but do bank accounts and payments and mortgages."