Credit card repayment startup and second venture of Freecharge co-founder Kunal Shah, Cred, is in talks to raise nearly $100 million at a valuation ranging between $700 million and $800 million, three people aware of the matter told Moneycontrol, requesting anonymity.
At least half of this fundraising will be contributed by existing investors like Sequoia Capital, Tiger Global Management and Hillhouse Capital. While the deal is far from being closed, new investors in this round could include Falcon Edge Capital and Belgian investment firm Sofina, among others, sources quoted above said.
Shah, Falcon Edge and Sofina did not respond to mails seeking comment.
Cred is a mobile application where customers make their credit card payments in lieu of Cred points that could be used for various discounts and offers on the platform. Cred has partnered with companies such as online fashion retailer Myntra, fitness startup Curefit, and Samsung to provide offers and discounts.
Cred’s growth has also been driven by its marketing campaign during the ongoing Indian Premier League (IPL) cricket tournament. Over the last few weeks, users signing up to use Cred have risen 6-7 times, Shailendra Singh, managing director at Sequoia Capital and a board member of Cred, tweeted on September 24.
Cred was valued at $450 million in August last year when it raised $120 million in Series A round from a number of top technology investors such as Ribbit Capital, General Catalyst, Greenoaks Capital, Dragoneer Investment Group and Apoletto Asia- the personal investment vehicle of Israeli-Russian billionaire Yuri Milner.
Before this, Cred raised $30 million in a seed-funding round in late 2018, one of the largest seed rounds in Indian startups.
“The valuation can be attributed to their IPL-led growth, but for investors, investing in a second time founder is seen as a relatively safe bet,” said a person tracking the company, who did not want to be named.
If Falcon Edge does invest, it is likely to invest via Alpha Wave Incubation, a $300 million fund whose sole investor is Abu Dhabi’s ADQ- a state-owned company having stakes in its non-oil assets.
Last week, Cred also appointed Miten Sampat, who was previously the Chief Strategy Officer at Times Internet. His exact role at Cred, barring helping with growth, is unknown.
In 2015, Shah sold Freecharge to Snapdeal for $400 million, at the time. In 2017, Axis Bank acquired FreeCharge from Snapdeal for Rs 385 crore.
Investors are betting that Cred can monetize its current user base- the country’s most loan-worthy customers with a credit score of 750 and above, and lend to them. Cred doesn’t make any money currently and wants to offer personal loans by partnering with banks and non-banking firms (NBFCs).