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Cred valued at $2.2 billion with new round, Kunal Shah says 'conscious call' to not monetise in first 2 years

Updated : April 06, 2021 06:57 PM IST

"Valuation is not something we celebrate. More fundraise is more responsibility to deliver returns to investors," Kunal Shah told CNBC-TV18.

Further, the company has announced another ESOP buyback up to $5 million.

"We took a conscious call to not monetise in the first couple of years. Many companies monetise 5-8 years after building distribution," he added.

Credit card payment platform Cred has turned a unicorn, nearly trebling its valuation in just three months to $2.2 billion with a new round of funding of $215 million. The company is among the few startups to achieve a unicorn status at a very early stage, having begun operations only 2.5 years ago.

The Series D round was led by Falcon Edge Capital (new investor) and Coatue Management LLP (existing investor), while Insight Partners (new investor) is also joining the cap table.

Existing investors DST Global, RTP Global, Tiger Global, Greenoaks Capital, Dragoneer Investment Group, and Sofina are also investing in this round, the company said. In early January 2021, Cred had announced a $80 million round of funding, which had valued the company at $804 million.

Also read: InMobi, India’s first Unicorn, eyes US listing by end of this year

"Valuation is not something we celebrate. More fundraise is more responsibility to deliver returns to investors," Kunal Shah told CNBC-TV18. "The focus that we took on affluent customers, contrary to many startups building for the rest of India, has paid off," Shah said.

Cred currently has about 6 million members (it selects members only with credit scores above 750), and the company claims over 35 percent of premium credit card holders in India are on Cred.

While Shah said there were several secondary transactions in the round, he did not confirm on which investors made exits. A Moneycontrol report last week had said Chinese investors in the company such as Hillhouse Capital and Morningside Ventures were exiting in the round. "Chinese investors had no meaningful ownership. Secondary transactions are part of every round and all investors have the option to sell," Shah said.

Further, the company has announced another ESOP buyback up to $5 million. In January, Cred had announced an ESOP buyback.

Also read: Fintech startups raised $10 billion in 10 years, lead India's unicorn landscape: Credit Suisse

Cred was recently a talking point on social media for its operating revenue of Rs 52 lakh in FY20 while losses stood at Rs 363 crore. Entrackr on Tuesday cited regulatory filings stating that Cred has projected revenues of Rs 108 crore for FY21, while losses are projected at Rs 562 crore.

Shah did not comment on the Entrackr report, but said the company is seeing good revenue growth, "Revenue per user is looking very sound, and that is giving us confidence that as we get to monetising more percentage of users, the revenue will be better."

"We took a conscious call to not monetise in the first couple of years. Many companies monetise 5-8 years after building distribution," he added.

Also read: India clocked $10 billion VC investments; added 7,000 startups, 12 unicorns in 2020: Report

Cred runs multiple products, including rewards on credit card payments; Rentpay (monthly rent on credit card for a small transaction fee); CRED Cash (Instant credit line), STORE (an ecommerce marketplace to use CRED coins); and CRED PAY (merchant payments ).

"It is too early to talk of winners among these products. It is largely a platform play," Shah added.

Published : April 06, 2021 03:52 PM IST

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