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Fintech startup, Cred leapt to unicorn status with a $215 million fundraise at a valuation of $2.2 billion in a funding round led by new investor Falcon Edge Capital and existing investor Coatue Management LLP.
Cred’s latest Series D round comes just a couple of months after the Kunal Shah-led company raised $81 million at a valuation of $806 million.
New investor Insight Partners also participated, along with existing investors DST Global, RTP Global, Tiger Global, Greenoaks Capital, Dragoneer Investment Group and Sofina.
With this round, the company has raised close to $300 million in investments in just three months.
Almost 70% of the current round was subscribed by existing investors, Cred’s founder and serial entrepreneur Shah said. The investments will be used to scale the products Cred launched last year.
“We have chosen the conscious path of focusing on growth over monetization. Today, Cred controls 22% of all credit card payments in the country, and our focus is to grow this market share. We will be busy scaling our growth and current revenue levers, and are obsessed with scaling our user base even if it comes as a short-term loss for a long-term profit,” Shah said over a video call.
In an internal memo about the fundraiser, Shah also announced a $5 million employee stock ownership plan (ESOP) buyback.
“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. Eligible team members can now sell a portion of your vested shares. The cumulative buyback will be up to $5 million.
As the funding helps Cred invest in its future, hopefully, the buyback will help some of you do that too,” the memo read.
Cred was launched in 2018 to help users pay credit card bills easily and earn rewards. It has since expanded to lending through Cred Cash, and also enabled online commerce and brand discovery through its ‘Store’ and ‘Discover’ platforms.
Currently, it has close to 1,800 brands on its ‘Store’ platform. The company also introduced Cred Pay to help with easy checkouts on its in-app e-commerce platform.
The Bengaluru-based startup saw its total losses widen to ₹360.31 crore in FY20 from ₹60.87 crore a year earlier. Revenues stood at ₹52 lakh, with an additional ₹17.56 crore coming from interest on deposits.
“While valuation is a milestone that many celebrate, we view it as a responsibility and an opportunity to create member value. We’ve grown rapidly over the past 2.5 years, with 35% of premium credit cardholders. 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 said in the memo.
He said Cred’s existing lines of business have been steadily growing and offer significant revenue opportunities for the company.
“For monetization products such as lending and commerce, we have seen good traction. And the cohort Cred has chosen is slightly easier to monetize. In the long run, we are focused on the revenue scale and profit collection that we can show,” said Shah.
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