Thread by @ruthviking17

✨The Show business of CRED✨

They are not in the #Fintech business or the #Lifestyle business but the #Show business.

👇 Expand this thread to learn more about the $2.2 billion valuation of #CRED!

Had an interesting discussion with my fellow cohort members @StoaHQ about @CRED_club and its massive $215 million in a Series D, which values the business at a whopping $2.2 billion.

To understand what these ✨"marquee" VCs✨ might have seen in CRED, let's do a good old SWOT analysis of CRED.

✨✨ S - Strengths ✨✨
1. Kunal Shah
2. CRED Brand
3. Money

1. Kunal Shah(@kunalb11 ): Brilliant marketer with a proven track record of providing a great Freecharge exit. This track record is not building profitable companies but in showing MoM/YoY inorganic growth, which pushes the valuation up and up. Precisely what most VCs want.

2. Brand: CRED managed to position itself as a #luxury brand while providing the same or similar products as other fintech players like #Paytm.

3. Money: With the current funding round, CRED is now in a position to gate-keep its niche market of high-income individuals. If some company comes up with a brilliant idea, CRED can easily replicate, overspend and push the competitor out of business.

✨✨W - Weaknesses✨✨
1. No proper product 🌟YET🌟

1. No proper product: CRED has Stash, Rent pay, and an e-commerce platform. The current and future revenue from these areas is very little to matter at the billions of dollars valuation CRED is right now at. It is to be seen if CRED comes up with any other innovative offering.

✨✨O - Opportunities:✨✨
1. Bubbly VC scene
2. Credit Card statements Data
3. Niche market

1. Bubbly VC scene: With valuations nearing the dot com bubble levels, this is the perfect time for companies like CRED to raise money from VC firms at massive valuations. Burn and burn but make sure the churn is not out of hand, you're good to go.

2. CC Data: Data is the new gold, and CRED is sitting on top of a goldmine with access to millions of its customers' credit card statements. They can use this data for understanding the purchase patterns for partnership proposals to companies and targeted selling.

3. Niche market: How significant or insignificant one might feel about targeting the top 25 million high-income individuals and building a community around them; one can't deny a sizable opportunity to be had here. But CRED's existing services will not justify the valuation.

✨✨T - Threats✨✨
1. Bigger players
2. Bubble burst

1. Bigger players: It is to be seen if any big players like Reliance Jio or Amazon will enter these muddy waters with all guns blazing.

2. Bubble burst: With VCs taking massive valuation markups on their own investments in the previous rounds, companies are billions a dozen. When fundings dry up and the reality kicks in, cash-burning startups like CRED will feel the heat if they don't turn profitable.

It is to be seen who will come out of this as Mark Cubans and which companies will slow/go down as Yahoo, WeWork, Snapdeal, or even Freecharge. It has been a great grazing season for the unicorns of India 🦄🦄🦄. Hope the horns are not fake.

--Ruthvik

Let me know what you think about this thread.
Sources: @sumathr articles on @TheKenWeb, @StoaHQ members, historical evidence, and own analysis.
the-ken.com/story/decacorn…
the-ken.com/story/the-inte…

Next, I'll be writing a detailed thread on valuation markup practice by VCs that are driving startup valuations to crazy numbers.
✌️Follow me to not miss any of these threads!
See you on my next thread. 😃

Got many comments on this. CRED might not sell/share the data with other companies, but they can most certainly use the insights, just like how Facebook and Google use data to provide contextual advertising. With this approach, they can still claim that they value data privacy.