Cred Valuation: Indian Fintech Reaches $4 Billion After Funding

CRED Secures $251 Million in New Funding

Fintech company CRED, based in India, announced on Tuesday that it has successfully raised $251 million in a new financing round. This marks the company’s third funding event within the current year.

The funding round results in a valuation of $4.01 billion for the Bangalore-based startup.

Series E Funding Details

Tiger Global and Falcon Edge Capital jointly led CRED’s Series E financing round. Participation also came from Marshall Wace and Steadfast, alongside existing investors including DST Global, Insight Partners, Coatue, Sofina, RTP, and Dragoneer.

Previously, CRED achieved a valuation of $2.2 billion in April and $806 million in January of this year.

Recent Valuation Reports

Last week, TechCrunch reported that CRED had finalized a financing round with a pre-money valuation of $3.75 billion.

The report also suggested potential discussions regarding a subsequent round that could value the company around $5.5 billion. A spokesperson for CRED refuted the accuracy of the report at the time.

The current valuation is calculated as follows: $3.75 billion (pre-money valuation) + $251 million (new investment) = $4.01 billion (post-money valuation).

CRED’s Core Functionality and User Base

CRED focuses on assisting users in enhancing their credit scores. This is achieved by incentivizing timely credit card bill payments.

The platform has grown to encompass a membership base exceeding 7.5 million users. This is within the context of approximately 25 million unique credit card users in India.

Target Audience and Business Model

Unlike many Indian startups, CRED doesn’t target the broad Indian market. Instead, it concentrates on a more affluent customer segment.

The app provides members with exclusive access to a curated selection of premium brands.

The Indian Credit Card Market

Analysts at Bank of America highlight that India has 57 million credit cards compared to 830 million debit cards, primarily serving a higher-income demographic.

The credit card industry is largely dominated by four major banks – HDFC, SBI, ICICI, and Axis – collectively controlling around 70% of the market.

These banks experience significant profitability within this sector, as demonstrated by the SBI Cards IPO.

CRED’s Strategic Approach

CRED adopts a platform-based strategy, prioritizing customer acquisition with a focus on future monetization.

Credit cards remain an aspirational product in India, and the limited penetration suggests continued growth potential. The format may evolve, but the demand for credit is expected to increase.