Cred turns unicorn, raises $215 million at a valuation of $2.2 billion

The company, which bought back employee stock options worth $1.2 million during its Series C round of funding, has announced an ESOP buyback worth $5 million with the current round.

April 06, 2021 / 03:00 PM IST
 Cred logo on phone screen stock image. Editorial credit: sdx15 / Shutterstock.com

Cred logo on phone screen stock image. Editorial credit: sdx15 / Shutterstock.com

Fintech platform Cred has raised $215 million in its Series D round of funding for a post-money valuation of $2.2 billion, making it India’s newest unicorn, two and a half years after it was founded.

The round was led by new investor Falcon Edge Capital and existing investor Coatue, with other existing and new investors also participating in the round.

Cred will be the sixth unicorn -- firms valued at over a billion dollar --  to emerge from India this year, after Digit Insurance, Innovaccer, Infra.Market, Five Star Business Finance and Meesho.

Cred founder and CEO Kunal Shah shared the development with employees earlier today. “I’m very happy to share that three months after our Series C, continued interest from leading institutional investors has resulted in us closing a Series D. Falcon Edge Capital (new investor) and Coatue Management LLP (existing investor) will lead this round, while Insight Partners (new investor) joins our cap table. Existing investors DST Global, RTP Global, Tiger Global, Greenoaks Capital, Dragoneer Investment Group, and Sofina are also investing in this round. With this, we have raised $215 million, at a post-money valuation of $2.2 billion," Shah said in an email.

Valuation more than doubles in three months

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Cred’s valuation has more than doubled in just three months, as it was valued at $800 million in January this year when it raised $81 million in Series C, led by DST Global. Its other investors include Sequoia Capital, Tiger Global Management, Ribbit Capital, and General Catalyst.

"We’ve grown rapidly over the past 2.5 years, with 35 percent of premium credit card holders and processing 22 percent of all credit card payments in India on a monthly basis. As the credit card category continues to grow rapidly in India, our opportunity is to imagine new use-cases, empower Cred members to use credit responsibly, and reward them for good financial behaviour,” Shah told employees.

Cred is a credit-card repayment platform that rewards users with points for paying their bills, which can be used for offers and discounts on various products. It only caters to the most creditworthy customers in India, whose credit score is above 750. Currently, it has nearly 6 million users. It also has CRED Pay, which offers users a one-click checkout experience using credit cards saved on the platform. It has also forayed into rent payments and lending.

Cred has started giving personal loans with a tenor of up to 48 months and is partnering with IDFC First Bank, according to a recent report from The Morning Context. It has disbursed about Rs 1,000 crore in the last 5-6 months at a rate of 12-15 percent -- the industry standard.

Interestingly, Cred, which bought back employee stock options worth $1.2 million during its Series C round of funding, has announced another buyback worth $5 million with the current round.

"While most of you were keen on retaining your stock options during the Series C, we are committed to a culture of creating wealth for stakeholders, and are, therefore, offering another ESOP buyback opportunity to you. The cumulative buyback will be up to $5 million," Shah said in the email.

Moneycontrol first reported last year that Falcon Edge is investing in Cred and reported last week that two Chinese investors and some of its angels may exit as part of its current round. Details of who have exited were not immediately available at the time of publication.

Shah has said in the past that the best way to visualise Cred is like a large gated community or club, with chosen customers who are creditworthy, but it will never be the app that caters to hundreds of millions of customers. Instead, it will go after the top 20-30 million and focus on providing products, services and experiences.

Shah, a widely-followed entrepreneur and an active investor, earlier founded digital wallet Freecharge. He sold it to Snapdeal for over $400 million in 2015, in what was then one of the biggest deals in the Indian startup space.

The investment in Cred comes at a time when the startup ecosystem is seeing heightened funding and deal activity. Industry insiders describe it as a funding party.

Moneycontrol recently reported that Chargebee, Moglix, and ShareChat are also raising rounds that will take their valuation to over a billion dollars.
Chandra R Srikanth is Editor- Tech, Startups, and New Economy
M. Sriram
first published: Apr 6, 2021 03:00 pm

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