CRED Nears Unicorn Status with $2 Billion Valuation

The fintech landscape in Bangalore is poised for another significant milestone as CRED, a rapidly growing startup, approaches a valuation of $2 billion.

Funding Discussions

Sources indicate that CRED is in the final stages of negotiating a funding round of approximately $200 million. This potential investment would value the company at around $2 billion, according to three individuals with knowledge of the discussions.

Like its Series C funding secured earlier this year, this new round is anticipated to be primarily led by existing investors. The deal is projected to be finalized within the next month.

Rapid Growth and Investor Confidence

Founded by Kunal Shah, CRED has quickly become a prominent name within India’s startup ecosystem, largely due to its impressive valuation growth.

The company benefits from backing by leading investment firms, including DST Global, Sequoia Capital India, Tiger Global, Ribbit Capital, and General Catalyst. CRED’s valuation reached $806 million during its Series C round in January and $450 million in August 2019.

Fastest to $2 Billion

Should this latest deal be completed, CRED will achieve the distinction of being the fastest startup in the world’s second-largest internet market to reach a $2 billion valuation. Prior to this prospective Series D round, the startup had already secured around $228 million in funding.

CRED declined to provide comment when contacted by TechCrunch last week. Sequoia Capital India has not yet responded to requests for further information.

CRED’s Business Model

The company operates a mobile application that incentivizes timely credit card bill payments, offering exclusive deals from brands like Starbucks, Nykaa, and Vahdam Teas. As of January, the platform had over 5.9 million users, representing roughly 20% of India’s credit card holder base.

Unlike many Indian startups, CRED strategically targets a more affluent demographic, rather than focusing on mass-market user acquisition.

Market Opportunity

Analysts at Bank of America highlight the potential within the Indian credit card market. “India has 57 million credit cards, compared to 830 million debit cards, primarily serving the higher-income segment. The top four banks – HDFC, SBI, ICICI, and Axis – control approximately 70% of the market, and this sector is highly profitable,” they noted in a recent report.

They further added, “Few startups, such as CRED, are concentrating on this premium customer base and adopting a platform-based strategy. Credit cards remain an aspirational product in India, and limited penetration suggests continued growth potential.”

Promoting Financial Wellness

CRED emphasizes its commitment to improving users’ financial habits. Membership requires a credit score of at least 750. The company reports a median credit score of 830 among its members, with over 375,000 individuals currently on a waiting list, many having actively improved their scores to qualify for access.

User Benefits and Savings

CRED reports significant financial benefits for its users. 80% of CRED Protect members identified extra interest charges and avoided late fees through bill tracking. Members have detected over ₹145 Crores ($20.1 million) in additional charges and avoided over ₹43.5 Crores ($6 million) in late payment fees.

Furthermore, 160,000 members improved their credit scores last month, and earned ₹12 Crores ($1.65 million) in cashback rewards for on-time payments. The platform provides access to over 750 new rewards and products.

Revenue Streams

The startup generates revenue through cross-selling financial products, earning commissions from banks and financial institutions. It also receives a percentage from merchants featured on the platform, as stated by Kunal Shah in a January interview with TechCrunch.