Think about the earlier days where purchasing anything was based on a barter system, in which for every good or service to be gained, another good or service of some value would have to be exchanged. The system was both cumbersome, as well as lopsided. As fiat currency emerged, plenty of these issues began to be steadily resolved yet the problem remained that often, people don’t possess enough money to manage their expenses. In such scenarios, the magic of credit cards makes its place, i.e, the art of purchasing in advance and paying for it later.
We all love to splurge and we love to use credit cards to do it! These cards hold an integral place in our lives and the one criteria we prioritize is to be able to perform these credit card payments in a simple and easy manner. This becomes difficult in a scenario where we possess a collection of credit cards across different banks, each one of them having a separate billing cycle. Now imagine their being an app which gathers all this information, sends you reminders to carry out timely payments and even offers you rewards for it. This is exactly where CRED steps in. Recently occupying the status of a unicorn in April, 2021, this app becomes a single platform to handle all our credit cards.
"Our goal was very simple. Can we create a platform where we actually make life better and systematically allow more and more privileges and benefits to come to people for having good credit scores and therefore, creating a flywheel effect for more people wanting to improve their scores? "
- Kunal Shah, Founder of CRED, in an interview by Bloomberg
Established in 2018, CRED is a members-only application which facilitates its users with exclusive rewards for paying their credit card bills.
The platform has been established with the purpose of making credit card bill payments easier and to offer the users rewards upon timely payments. The application functions in a simple manner. It requires them to give their phone number to inspect their credit score through Cibil, CRIF and Experian.
“For too long, startups and governments have focussed on the masses, We want to focus on the others, the ones who pay taxes. Nobody has been solving their problems.”
- Kunal Shah, Founder of CRED, in an interview by Forbes India
If a user’s credit score is 750 or higher, they are granted access to the CRED app or else they are put on the waitlist. The app examines all the credit cards linked to the user’s phone number and adds them to the app.
Every time the user pays their credit card bills they are credited with CRED coins which can be burned in exchange for exclusive partner deals across a variety of lifestyle categories. These coins can then be adopted for claiming rewards via vendors like Ixigo and FreshMenu, as well as others.
“We empower members with visibility into their credit cards, helping them avoid the debt trap and use the credit they have earned in a responsible manner,”
The members are also rewarded with offers like vouchers at more than 1,000 retail outlets from Levi’s or Gap or various online stores like Amazon and Flipkart, and offers on platforms like Zomato and Cult. For every penny extended towards payment through credit cards, the members are rewarded with CRED coins that can be adopted for purchasing vouchers.
“If you look at history, nobody has been rewarded for paying back on time. We want to fix that.”
- Kunal Shah, CRED’s Founder
The Founder of CRED
CRED was established by Kunal Shah, who interestingly is a philosophy graduate from Mumbai’s Wilson college and does not have any engineering background. He dropped out of his MBA from the Narsee Monjee Institute of Management Studies (NMIMS).
He has been an advisor to the board of Bennett Coleman & Co Limited, Y Combinator, and Sequoia Capital India and was also the Chairman of the Internet and Mobile Association of India from 2015-2017.
He is also an active angel investor and has essayed the role of a mentor for many of Asia’s popular startups which include Unacademy, RazorPay, Go-Jek, and Zilingo as well as others.
Kunal’s initial established venture had been PaisaBack, which was a cashback and promotional platform for organized retailers. He later closed down the platform to establish FreeCharge in August 2010 alongside Sandeep Tandon, which was later in 2015, acquired by Snapdeal although the platform continued to operate as an independent entity under his leadership. After he exited the platform in October 2016 it was later acquired by Axis Bank in the month of July, 2017. Finally in 2018, Kunal announced the establishment of CRED.
The Origin of CRED
As highlighted in a Your Story article, after Kunal’s first venture FreeCharge had been sold to Snapdeal back in 2015, he spent a great deal of time traveling and in learning about developed nations. One common point that he noticed, in particular, was that in these nations there was a high degree of trust extended by the system upon the public. For instance, they had petrol pumps without any attendants or self-checkout counters in supermarkets, without any cashiers.
This resulted in him acknowledging the advantages of a frictionless environment i.e an environment in which all costs and restraints relating to transactions are absent. In a LinkedIn post, he had emphasized how the system was trusted by the public as it constantly rewarded them for being dependable and respectable individuals.
Yet here, in the Indian nation, the segment of the public which was dependable, had to pay the price for the acts of others and the absence of transparency and irregularity of information led to a lack of trust. He stated how the present model is stringent and left a great degree of scope for confusion and errors which the trustworthy segment of the public does not deserve. This led to the establishment of CRED.
"I felt the need to create a system that rewards trustworthy and creditworthy individuals of India and inspires others to be like them."
- Kunal Shah, Founder of CRED
Revenue Sources of CRED
Till now, CRED’s main focus has been on expanding its user base rather than on making profits. Yet there are a number of possible sources of revenue for the platform which it can capitalize on in the coming future.
"At this point of time, the company is going to be solely focused on growing both revenue as well as scale of the company and prioritise profit once we have managed to get a significant market share of these customers."
- Kunal Shah, Founder of CRED
CRED Recent Growth
As confirmed in a recent Business Standard article, the platform has finally been heading towards monetizing its platform after 21 months of its establishment.
The platform has been aiming to use four products that it had launched amidst the lockdown, for managing its tasks during the COVID19 pandemic, as their source of revenue.
In April 2020, the platform had set up two lending products, namely “Rent Pay” as well as a credit line. “Rent Pay” had been set up with the purpose of allowing users to pay regular and repeating household expenses and rent payments per month via credit cards. Meanwhile, the credit line has been set up to offer credit at one-third of the existing interest rates in the market in association with banks. A brand discovery platform named “Discover”, was also set up around the same time.
The platform is hoping to gain revenue by charging a fee for leveraging Rentpay aside from the revenue share gained from its credit line offering. It also plans to charge a fee from brands for listing their products on the 'Discover' platform where the users can spend CRED coins to avail of discounts.
The growth of CRED’s platform has also largely been propelled by its marketing campaign amidst the ongoing Indian Premier League (IPL) cricket tournament.
As per an article by TechStory, the company has reported an increase in both its user base as well as on the fundings it is receiving. The platform’s board director, Shailendra Singh tweeted that it has been registering a 6-7 times increase in new users since IPL began. The massive audience of the cricket tournament has definitely helped boost the popularity of the application.
“IPL 2020 is kicking off the festive season this year, and at CRED we wanted to make the extra party special for millions of cricket lovers tuning in. As much as cricket is about discipline and strategy, it’s also a rewarding experience for players and viewers. By making credit card bill payments equally delightful, we are incentivizing every credit card-holder watching the matches to make digital payments, clear debt and improve their credit scores.” The offers provided by the app and promotion in the IPL is actually helping the startup’s promotion.
- Kunal Shah, Founder of CRED
As confirmed by TechStory the platform is presently in talks to hoist around $100 million at a valuation ranging between $700 million and $800 million
The platform had raised $120 million in a Series A funding round back in August 2019. A number of top technology investors participated in the round included Ribbit Capital, General Catalyst, Greenoaks Capital, Dragoneer Investment Group as well as Apoletto Asia.
After this funding, the company also raised $4 million from Sequoia Capital India.
Prior to this, in its first funding round, in late 2018, the platform had raised $30 million, from a group of investors headed by venture capital firm Sequoia Capital.
Cred raised $80 million in a round-headed by DST Global towards the end of 2020.
The platform raised $81 million in a Series C round in January 2021.
In April 2021 CRED raised $215 million in a series D funding, which valued the Indian startup at $2.2 billion, giving it the status of a unicorn.
Cred then raised $251 million in Oct 2021 in a Series E funding round co-led by Tiger Global and Falcon Edge at a valuation of $4.01 billion.
"The best way to visualise what CRED is going to become is a large gated community or club, with chosen customers who are creditworthy. It will be a large gated community for a select audience, and will never be the app that caters to hundreds of millions of customers. It will have top 20-30 million families using products and services, creating interesting experiences.. Once we create a community of trust and like mindedness, we will remove the line between fintech and lifestyle and serve their needs. "
- Kunal Shah, in an interview with Times Now
Despite not making any money currently and aiming at facilitating personal loans in collaboration with banks and non-banking firms (NBFCs), CRED has been a buzzing phenomenon in the past recent couple of months, largely owing to the IPL, and has intrigued and sparked the interest of many of the audience.