CRED, a Bangalore-based company, is beginning the year with significant momentum.

The startup, founded by prominent entrepreneur Kunal Shah, announced on Monday that it has secured $81 million in a new funding round and repurchased $1.2 million (approximately 90 million Indian rupees) worth of shares from its employees.

This Series C funding round, initially reported by TechCrunch in late November, was spearheaded by partners at DST Global. Current investors, including Sequoia Capital India, Ribbit Capital, Tiger Global, and General Catalyst, also contributed, alongside new investors such as Satyan Gajwani from Times Internet, Sofina, and Coatue.

This investment has established CRED – which operates a popular application that rewards users for timely credit card bill payments and provides exclusive offers from select online retailers – with a post-money valuation of $806 million.

In a discussion with TechCrunch, Shah explained that roughly 10% of CRED’s equity is currently held by employees, and those with fully vested shares were given the opportunity to sell up to half of their holdings back to the company through its inaugural ESOP liquidity program. “We are committed to ensuring wealth creation for all stakeholders, including our employees,” he stated.

CRED has almost doubled its user base over the past year, reaching approximately 5.9 million customers, representing around 20% of all credit card holders in India. The company noted that the average credit score of its users is approximately 830, and about 30% of its customer base currently possesses a premium credit card. (Notably, over 50% of CRED users utilize UPI for bill payments.)

CRED is a widely discussed startup in India, largely due to the rapid growth of its valuation and its ability to attract substantial investment in a relatively short timeframe.

A key question surrounding CRED is its revenue model, as many fintech companies in the country face challenges in establishing sustainable profitability.

Shah explained that CRED generates revenue through the cross-selling of financial products – facilitated by revenue-sharing agreements with banks and financial institutions – and by collecting fees from merchants featured on the platform. Currently, over 1,300 brands, including well-known names like Starbucks, TAGG, Eat.Fit, Nykaa, and emerging direct-to-consumer brands such as The Man Company, Sleepy Cat, and Crossbeats, are active on the platform.

The direct-to-consumer market in India is still developing, but projections suggest it could reach a value of $100 billion by 2025.

“Our focus wasn’t specifically on building the D2C market, but it naturally evolved. When we began offering rewards for D2C brands, they experienced significant growth,” he said, adding that CRED drives over 30% of sales for some brands.

“We effectively address the discovery challenge for customers. By organizing offerings around themes – such as work-from-home or coffee – we’ve seen positive results. We are essentially connecting customers with brands that would otherwise need to invest heavily in marketing.”

A significant strength of CRED lies in its ability to attract high-value customers in India. Unlike many other startups and large corporations like Google and Facebook, CRED is not targeting the mass market.

“Approximately 20 million customers account for 90% of all online spending in India. This is our primary focus,” said Shah, who previously led financial services company Freecharge and oversaw a successful exit. He also pointed out that the main obstacle to reaching customers in smaller Indian cities and towns is limited purchasing power.

For this model to succeed, India’s GDP – where the average annual income is around $2,000 – needs to increase. Shah emphasized the need for greater female participation in the workforce, noting that currently, less than 10% of the female population in India is employed, compared to over 90% in China.

Currently, CRED presents an interesting opportunity to potentially license data regarding the performance of D2C brands on its platform to venture capital firms, providing valuable insights for investment decisions.

Shah emphasized the company’s commitment to data privacy but indicated they are exploring ways to assist venture firms in identifying promising companies. “We are considering launching a newsletter to highlight these brands to the investment community,” he said.

Finally, regarding the potential launch of a credit card or other banking products, Shah stated, “Could we collaborate with banks to offer all of their existing products? The answer is yes,” while also noting that the company is not rushing to expand its offerings.