Indian fintech CRED seeks funds at $5.5 billion valuation

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A source familiar with the matter told me that CRED has begun engaging with investors at a valuation of $5.5 billion as the Indian fintech startup looks at international expansion and inorganic growth.

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The startup has received several inbound requests from investors and has also held talks with a few in the recent past to raise capital at a pre-money valuation of $5.5 billion, the source said, adding that the three-year-old startup has been finalized. A few weeks later, a more than $200 million investment from Tiger Global and Falcon Edge Capital at a pre-money valuation of about $3.75 billion, according to several people familiar with the matter.

The source added that discussions for a new financing round are at a very early stage and the terms may change.

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The Bangalore-based startup disputed the claims.

In his interaction with investors, Kunal Shah, founder and chief executive of CRED, has said that he plans to invest in fintech startups and infuse capital to acquire them, people familiar with the matter said.

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The startup is already associated with several firms. It recently invested in CredAvenue, which recently unveiled $90 million in the nation’s largest Series A funding, and back fintech startup Uni at a valuation of more than $300 million, according to two people familiar with the matter. Talking to.

CRED, which helps people improve their credit scores by paying bills on time and has over 7.5 million members, has explored aggressively expanding its e-commerce platform this year as well.

On its app, the startup gives its members access to several premium brands. Earlier this year, CRED explored whether it should acquire some of the brands it sells on CRED.

The startup, unlike most others in India, doesn’t focus on India’s typical TAM – the world’s second most populous country with hundreds of millions of users – and instead caters to some of the most premium audiences.

“India has 57 million credit cards (versus 830 million debit cards) [that] Largely serves the high end market. The credit card industry is largely concentrated with the top 4 banks (HDFC, SBI, ICICI and Axis) controlling around 70% of the total market. This position is extremely profitable for these banks – as is evident from the SBI Cards IPO,” Bank of America analysts wrote in an earlier report.

“Very few start-ups like CRED are focusing on this high-end base and [have] Adopted a platform-based approach (acquire customers now and look for monetization later). Credit cards continue to be an aspirational product in India. Low penetration will ensure continued strong growth in the years to come. Over time, the form-factor may evolve (i.e. move from plastic cards to virtual cards), but the underlying demand for credit is expected to increase,” he said.

CRED has also expressed its intention to expand outside India to potential investors. In a conversation with one of them, Shah said he has identified an international market where CRED is looking to start its offering, said another person familiar with the matter. Nerdshala could not determine the name of the market.

CRED – backed by Tiger Global, Ribbit Capital and Sequoia Capital India and valued at $2.2 billion in an April round and $806 million in a round disclosed in January – has been aggressively expanding into new categories in recent quarters . The startup lends to its members, giving them the option to pay their rent and tuition fees from the app itself. In August, it launched Mint, a service through which it allows its members to lend to each other at an interest rate of up to 9% annually.



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