How did CRED become a Unicorn despite having NO profits?

WHAT is @CRED_club ?
An app that makes it super easy & simple to pay credit card bills…. & rewards you for doing so!

CRED has added more offerings which include RentPay, instant credit (CRED cash), e-commerce & CRED UPI.
WHO founded CRED?
Kunal Shah (@kunalb11 )
Earlier founded Freecharge which was acquired by Snapdeal.
He is one of the most popular & reputed names in the Indian startup ecosystem.

He also personally invests in startups.
What’s the VALUATION?
Earlier this year, CRED raised $215 Million in its Series D round.. at a valuation of $2.2 BILLION post-money!

This made CRED the youngest Indian startup to be valued at $2 Billion or higher!
So what does @CRED_club have that makes it so valuable & special?

Let’s dive into the details:
1. Only individuals with a credit score of 750+ can become users of the CRED app. This means ALL of its users are highly “credit-worthy”.
They constitute the elite & premium category of Users in the fintech space!
2. CRED now has over 6 million users! It claimed to have processed over 20% of all credit card bill payments in the country! This is HUGE!

CRED has captured a substantial chunk of the 2nd largest internet market in the world.. & with no strong competition in sight!
3. In the digital era, they say “DATA IS THE NEW OIL”. Within a short journey, CRED owns some of the most premium Oil in Indian fintech!
CRED has data of credit cards, their spending habits, payment info, etc.

This data has more value than we can imagine!
4. Kunal Shah mentioned that 45% of their users improved their credit ratings after joining the app. This is a MASSIVE behavioural change! CRED is causing changes in CONSUMER BEHAVIOUR!

How many fintech startups can say this?
5. CRED is using AI to curate products to sell to the consumers basis the Data collected by the app.

Premium data + AI = highly personalised / customised offerings!

This makes it easier to align behaviours with monetisation.
6. CRED has started providing an instant credit line to its users! Means you can directly get a loan from the app without documentation or hassles!

Since the users are already vetted, this offering is more seamless than you can find anywhere else.
7. CRED’s primary features are BIG problem solvers!
Reminders to pay bills on time, detecting hidden charges, avoiding unnecessary fees, etc… these are all pain points for CC users.
Add the incentive of rewards / discounts and it’s a proposition you CANNOT SAY NO TO!
So yes, it is easy to see why CRED is one-of-a-kind… a special player in the booming Indian FINTECH space.

BUT how does such a young company reach a soaring valuation of $2.2 Billion?
Few things to consider here:
a. The model of valuation applied here is what’s usually seen in a lot of western startups! Facebook, WhatsApp, Amazon spent many years ONLY acquiring customers & market share!

Without worrying about revenue….
b. Valuations for such startups are based on an estimated FUTURE value, which considers the fact that the day CRED starts focusing on monetisation, it will generate a LOT of revenue even if a small % of the users turn into paying customers.
This is exactly what Facebook did & succeeded at. No revenue for years & then BOOM, one tweak and the entire landscape of the company changed.
c. The DATA that CRED has so far, & continues to gather, will become so immensely valuable in the future that they will be leaps & bounds ahead of others in terms of understanding the customer & targeting a sale!
A big MOAT according to me.
d. India has close to 60 million credit cards but the number of debit cards is 830 million! Add to this the fact that financial literacy & internet penetration is growing rapidly….

e. Kunal Shah has a history of success, he is one of the thought leaders in the startup ecosystem.
He brings immense credibility as an entrepreneur.
This drives trust among the investors that he can execute groundbreaking plans again!
Put all of the above factors together & you will see that this is no small passing breeze but a brewing STORM!

What it could become - the possibilities are endless!
It could become the biggest Fintech AI co in the world, or the largest credit company, or a premium e-commerce or All of these together!

Only time will tell if the investors were right in evaluating the company the way they have.
Whatever the case, CRED is a company we must all study & follow.. a lot to learn from it.

I have been a CRED user from the days of its beta testing. I do not have any other affiliation or relationship with the company.


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