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Looking Beyond CRED's Valuation Marvel

Updated: Nov 6, 2021

News Flash: Cred raised another $251 million in Oct'21 at a valuation of $4.01 Bil. Just 6 months back we reported in awe of its 3 times jump in valuation up to $2.2 Bil.

When you and I look at Cred, we can probably summarize what it does in one or two lines- it rewards people in myriad ways for paying their credit card bills on time. And it probably earns a commission from brands that list their offers and coupons as rewards. Right? So, what’s the big deal? It’s not really disrupting anything here! So why does it deserve all the hype from international investors? So much so that they come back in every 3-6 months to put more money in double/triple the last valuation!

Well, that’s where the miracle of Kunal Shah (founder and CEO of Cred) begins. So, when you’re looking at Cred’s latest valuation and scratching your head, we’re looking at Kunal Shah and sharing a smile. To understand why Cred deserves all the hype, you’ll need to know 2 things:

Why Kunal Shah Deserves the Hype

Age IIT Engineering tag

38 No, Philosophy major

Formula for success

B-School dropout (the most lethal of the lot)

Kunal Shah is one of those very few Indian Unicorn Startup entrepreneurs who don’t have an IIT/IIM/engineering/investment banking background. As he likes to put it,

today, there’s an insanely high supply of engineers and extremely low supply of people who can detect what to build next.
Reason 1: Quick Glory

Kunal kicked off his entrepreneurial journey in 2009 with his venture PaisaBack that would help retailers do cash back rewards in their stores. From that he quickly pivoted to FreeCharge, his first official feather in the cap that he co-founded with his longtime friend Sandeep Tandon. It’s main line of buz.: It worked as an online facility for recharging prepaid telephone connections in return for equivalent worth of discount coupons from established brands.

Sounds familiar, doesn’t it? Turns out Kunal Shah’s deepest interest lies in encashing off businesses’ need for online presence in return for enkindling public consumption which he achieves by digitizing habit-forming activities and creating a cash back loop for the audience. Or as he likes to call it,

Habit Commerce

The initial dream run of FreeCharge in itself became the 1st hand proof of Kunal’s genius. Freecharge pioneered the online payments industry in India and quickly attracted 10 to 15 clones, including the likes of Paytm, Mobikwik, etc., who found the mechanism as the easiest way to scale up. Kunal finally sold off the company to Snapdeal in 2015 for a whopping $450 Mil, which was considered to be the largest acquisition deal in Indian startup space back then.

Reason 2: Kunal’s marriage with Sequoia Capital

The most consistent believer of Kunal’s prowess has been India’s all-time most active foreign VC, Sequoia Capital. Right from the seed round of FreeCharge, Sequoia participated in EVERY round of FreeCharge till the Company’s sale to Snapdeal in 2015.

The extent of trust that Kunal enjoyed with Sequoia was especially proven when he was offered to join as an advisor to Sequoia in 2017.

If this isn’t enough, probably this will help: In 2018 Kunal started his new venture Cred with a seed capital of $30 Mil led by Sequoia itself. Ever since, Sequoia has participated in all the rounds of investment at Cred up to Series C.

-From Sequoia to Kunal it was the leap of faith they took with him during his early days that really moved Kunal and made him fall back to Sequoia whenever he needed capital and guidance. As he recalls in one of the interviews with Sequoia,

I remember sending Shailendra [Managing Partner at Sequoia] a text saying, “Thanks for having faith in me, I promise to make this big”

-From Kunal to Sequoia it has been his ability to deliver time and time again that has really concretized Sequoia’s trust in him.

-And their enduring partnership through different ventures and different phases tell us that Kunal has definitely got what it takes to lead a change.

Bonus: In Aug’21, Kunal Shah got appointed as a director of fintech unicorn PineLabs as the latter is decking up its board in order to go public in the US bourses. And who asked them to do so? Sequoia Capital- PineLabs’ earliest investor.

Reason 3: Kunal's obsession with Sharing Wealth

When you have not had money all your life, the value that you have for money is what it can do to other people’s lives.

-Kunal Shah

Kunal is a wise man. We know it because he shows us EVERYDAY on twitter. To sum up his twitter feed into 3 baskets, his wisdom shapes into Leadership advice, Life advice and the Idea of Sharing Wealth. More on Sharing Wealth: Ever since Kunal made a bazillion from selling his startup FreeCharge to Snapdeal, he turned into an early-stage startup investor. And since he’s a master of scaling up, Kunal scaled up in this as well. Even though he himself refrains from putting a number to it, MoneyControl estimates his total investment basket as a whopping 200+ startups, making him arguably the most active angel investor of India. (Next in line: Kunal Bahl, co-founder of Snapdeal with close to 100 investments).

As he likes to put it:

I don’t track my investments. You can do philanthropy or fund job creators. India needs job creators.

Some of his notable investments include startups like: Razorpay, Unacademy, Innov8, TinyOwl, MPL, CoinSwitch Kuber, BigBasket. And some of the recent ones include: Masai School, Expertrons, FloBiz and Remitr.

Entrepreneurs flock to Kunal to add him on the cap table because of his massive connections in the Tech Ecosystem. As RazorPay’s co-founder and CEO Mathur puts it,

He is the most helpful angel investor we have ever come across.

Another big way in which Kunal Shah propagates sharing wealth is by actively campaigning for adding employees to the cap table of the startup (through ESOPs) to unleash their real potential.

Three tweets from the last 3 months to catch the pulse

Proof of pudding lies in eating

Cred is one of the very few startups that has accomplished buy back of Employee Stock Options from Series C itself. Through Series C and D rounds of funding, Cred has created a cumulative wealth of INR 46 Crore ($6.2 Mil) for its employees through ESOP buy backs till date and has dedicated 10% of the cap table for Employee Stocks, which is extremely commendable considering its nimble age.

Reason 4: Kunal’s vision with Cred

Many have called out Cred for having a lack of any concrete business model or a clear-cut direction. That’s because most are busy trying to make sense of the idea instead of looking at the man who’s running the show. After learning about this man’s accolades today, it’ll be naive to think that he could start a business without a big plan. The fact is that we’ve been perceiving the idea wrong from the get-go. As he himself puts it,

People think we’re a fintech firm. No. We’re a lifestyle Company... We are creating a network of high-trust people and eventually we want the members to do interesting things.

Cred is one of those rare Indian Startups that is not promising massive scale to its investors at the back of India’s mammoth addressable population but is instead assuring stratospherically higher degree of monetization of its miniscule audience- the top 1% wealthy of India.

What’s happening at Cred

So, like we said, Cred is betting big on the high disposable income of its niche audience. Now let's see what their numbers suggest:

  1. Cred hit INR 100 Crore in transaction volume in just 2 months from its launch. It took Kunal 1 year in FreeCharge to reach the same volume.

  2. Over 35% of premium credit card holders are already on Cred. 25% of all the credit card bills of the country are cleared through Cred.

  3. Cred already has 7.5 Mn registered users (all having credit score above 750 and credit cards). FreeCharge had 10 Mn users at the time Kunal sold it off to Snapdeal.

  4. Even though its financials are not yet filed, it has projected a growth of 208X in its topline for the year ended 31 March 2021.

Cred can use the credit card data of its user base to determine spending patterns and identify avenues of creating value. Ever since its launch, it has flagged off new services for its coveted club every 4-6 months.

It’s latest product- Cred Mint- a Peer to Peer lending platform promising 9% p.a. returns, is the first to actually leverage the advantages of a creditworthy community and one can expect a lot more of such products to follow up.

Its other service offerings include:

Cred Store- a member only e-commerce platform,

Cred RentPay- a service enabling users to pay their monthly rents through credit cards,

Cred Pay- a mechanism to pay in other merchant platforms through Cred Coins that is the reward you get for paying your credit card bills on time and finally

Cred Cash- a short term loan facility of upto INR 5 lakh that boasts a bad loan % of less than 1%.


So now that you know about Kunal Shah and what Cred is really up to, it’s easier to explain to you what happened with Cred’s valuation. You see, first he went to his investor spouse Sequoia Capital and showed them the moon with the idea of Cred. They quickly bought into it because its Kunal Shah! He’ll definitely get us somewhere! Which explains why Cred came to the limelight from the get-go:

The 2nd phase is where Kunal Shah actually took the investors to the moon! That happened a little too quickly and that’s when he got them absolutely locked in and the cycle continues. To put it simply, while Cred is monetizing on the Country’s cream TODAY, other entrepreneurs are still sugarcoating their startup vision that’s probably still a decade away. And what’s that one thing that’s better than the smell of money coming from tomorrow? -It’s the taste of money coming today!


This article is a part of October'21 edition of our Startup Newsletter. Here's the complete publication:

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