Brand Story #1 - CRED
- 3 ins.ide
- Oct 12, 2020
- 2 min read
- by Tanya
Cred is the second venture of FreeCharge co-founder Kunal Shah. It lets credit card holders pay bills through an app, and gives them benefits via Cred coins and gems. These virtual coins can be redeemed across coffee shops, movie theatres, eCommerce sites, etc.
If your credit score is 750 or higher, you are granted access to the app, else you join a waitlist. The app scans any credit cards linked to your phone number and adds them to the app. To manage the cards, Cred requires access to your email account (this is not mandatory).
Kunal Shah of CRED has successfully leveraged his credibility to raise $120 million in funding given the state of his business. The company now faces a conundrum on how and where to deploy this capital.
It has over 25 ex-founders in its team – perhaps that’s what gave it the execution speed to ship new products targeted at solving liquidity issues within weeks of the pandemic hitting India. The company is focussing on affluent consumers, a strategy that gives it the confidence to prioritize scale over revenues for now.
BBCI recently announced CRED as the official partner of IPL. The company will give the highest payer of the match award with a Rs 100,000 check. Since it arrived in 2018, CRED has gathered a vast user base of around 3 million users. It has raised a total of $245 million in Series A and Series B funding round. And has an estimated value of $450 million as of 2019.
The Story
At a recent startup event, Kunal Shah, the founder of the credit card payment platform CRED CLUB (CRED for short), was asked about how he raised so much money. “I am able to raise money now because of past success,” Shah responded.
Shah previously founded Freecharge, an online recharge business, which was sold for a then-record sum of $400 million to e-commerce company Snapdeal. This was in the halcyon days of e-commerce, circa 2015.
It, therefore, came as no surprise that Shah was able to raise a large sum as seed funding for CRED, “a platform to aggregate and reward people who have good credit scores”. Even before the launch of its product, CRED raised $30 million from marquee investors such as Sequoia Capital India and Ribbit Capital.
In a land where startup exits are few and far in between, founders who deliver large exits to investors are a precious commodity, and in this market, capital chases credibility. The rather vague value proposition of CRED was easily trumped by the credibility of Shah’s previous success.
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