Cred is a fintech startup founded by Kunal Shah, more popularly known for founding FreeCharge, which he then sold to Snapdeal. This startup, which is less than a year into its operations, is now seeking funds to the tune of $100 million.
Though there is no official confirmation from Shah or Cred, it is believed this round of investment in the startup will lift its current valuation of $75 million multiple times to $400 million. According to a report in the Economic Times, investors in this round are expected to the existing ones like Sequoia Capital apart from Hillhouse Capital, a China based investment firm that counts among the companies it has invested in in China, Tencent and JD.Com. In India too Hillhouse has exposure in startups like Swiggy, CarDekho and Hector Beverages. The last named is more popular with its Paper Boat brand of juices.
For the record, besides Hillhouse and Sequoia some of the other existing investors in Cred, Apoletto Asia and Ribbit Capital will also participate in this round.
The rapid rise in valuations is a trend seen among Indian startups of late. Udaan and ShareChat are at least two such startups which recorded huge growth in their valuations within short periods.
Now coming back to the business model of Cred, the company comes forward to settle dues of individuals on their credit cards and then collects them on a monthly basis. This is more like a personal loan and is activated through an app with the Unified Payments Interface, UPI acting as thee payment channel. The credit card holders will benefit from a decreased rate of interest they have to bear on the credit card balance they carry over. In addition, Cred gives them a number of offers in the form of rewards through tie-ups with merchants. It works as a win-win-win situation for all stakeholders. The 46 million-strong credit card owning fraternity is the target base for Cred to lure. The merchants gain business through the offers and the credit cards are swiped making the purchase easier and then Cred comes in and settles the dues to the bank issuing the card and recovers from the customer.
Going ahead, Cred may get into the credit card business itself plus diversify into insurance and other lending products within the fintech space.