Without loss-making companies, Indian fintech would not have seen such growth: CRED’s Kunal Shah

The CRED chief believes that a bulk of the UPI growth has come with the help of such companies as they create distribution and a positive change of consumer behaviour.

Without loss-making companies, the Indian fintech ecosystem could not have achieved its current level of growth, said Kunal Shah, the founder and CEO of fintech unicorn CRED, at a time when the startup ecosystem seems to have shifted its focus from growth to profitability.

“Unless we had these loss-making companies, we would have not seen the fintech growth that we have seen so far,” said Shah in a conversation with CNBC-TV18’s Shereen Bhan at the Global Fintech Fest 2023.

The CRED chief believes that a bulk of the UPI growth has come with the help of such companies as they create distribution and a positive change of consumer behaviour.

The company recorded a net loss of Rs 1,279 crore in FY22, doubling its losses from Rs 524 crore in FY21. CRED’s revenue, meanwhile grew by almost 340 percent from Rs 95 crore in FY21 to R 422 crore in FY22.

“To me, making money - large scale revenues and profits, it's a choice that companies make based on what kind of capital support they can grow to match their ambitions,” he added.

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A majority of the Indian unicorns that have managed to cross $100-200 million revenue run rate, as per Shah are fintechs.  According to him, about 40 percent of 183 companies that have more than Rs 1,000 crore PAT in India, are within financial services.

“We are very far away from life, expecting profit to do something else but financial services can make money. And if you have investors who support your ambition to build at scale, we found ourselves in a very lucky opportunity to focus on credit cards and credit,” he said.

Shah, who is also an angel investor, said he has invested in over 70-80 fintechs to date with an average ticket size of $50,000.