Two-year-old CRED has become the youngest Indian startup to be valued at $ 2 billion or more.
Bangalore-based CRED said on Tuesday it had raised $ 215 million in a new round of funding – a Series D – that valued the Indian start-up at $ 2.2 billion (after silver), up from around $ 800 million in the $ 81 million Series C round in January. this year.
New investor Falcon Edge Capital and existing investor Coatue Management led the new cycle. Insight Partners and existing investors DST Global, RTP Global, Tiger Global, Greenoaks Capital, Dragoneer Investment Group and Sofina also participated in the new round, bringing the total CRED raise to date to approximately $ 443 million.
TechCrunch reported last month that CRED was at an advanced stage of negotiations to raise around $ 200 million for a valuation of around $ 2 billion.
CRED operates an app that rewards customers for paying their credit card bills on time and gives them access to a range of additional services such as credit and a premium product catalog from premium brands.
A person must have a credit score of at least 750 in order to enroll in CRED. By keeping the bar this high, the startup says it’s making sure people are incentivized to improve their financial behavior. (More on that later.)
The startup now serves more than 6 million customers, or roughly 22% of all credit card holders – and 35% of all premium credit card holders – in the world’s second largest internet market.
Kunal Shah, founder and CEO of CRED, told TechCrunch in an interview that the startup intends to become the platform for affluent clients in India and not limit its offerings to financial services.
He said the startup’s e-commerce service, for example, is growing rapidly. He attributed the early success to clients appreciating custody of items on CRED and traders courting larger ticket size transactions.
CRED will deploy the new funds to expand its revenue channels and do more experimentation, he said.
When asked if CRED wanted to serve all credit card users in India, Shah said the selection criteria limited the startup to doing so, but said he was optimistic that more users will improve their scores in the future.
The startup, unlike most others in India, doesn’t focus on the usual TAM – hundreds of millions of users from the world’s second most populous country – and instead caters to some of the top audiences in the world. range.
“India has 57 million credit cards (compared to 830 million debit cards) [that] largely serves the high-end market. The credit card industry is highly concentrated, with the top 4 banks (HDFC, SBI, ICICI and Axis) controlling around 70% of the total market. This space is extremely profitable for these banks – as evidenced by the IPO of SBI Cards, ”Bank of America analysts wrote in a recent report to clients.
“Very few start-ups like CRED focus on this high-end base and [have] took a platform-based approach (acquire customers now and seek monetization later). The credit card in India remains an ambitious product. Underpenetration would likely ensure continued strong growth in the years to come. Over time, the form factor may change (ie move from plastic card to virtual card), but the inherent demand for credit is expected to increase, ”they added.
CRED has become one of the most talked about startups in India, in part because of the pace at which it has raised funds in recent times and its growing valuation. Some users have reported that CRED no longer gives them the perks it used a year ago.
Shah said CRED is addressing these concerns. A recent feature, which allows customers to redeem CRED points at thousands of merchants, for example, made the reward more attractive, he said, adding that the startup is slowly integrating this into its own commerce store. electronic.
“What will happen soon is that customers will realize that these points are an asset and not a liability. They will start to see the benefits of points in more places, ”he said, adding that the pandemic has derailed some of the things CRED had planned in the real world.
This is a developing story. More soon…