$81 mn fund raise pushes Credit card app CRED's valuation past $806 mn

Existing investor, billionaire Yuri Milner's fund DST Global leads round, along with Sequoia Capital, Tiger Global, and others. Existing and past employees liquidate ESOPs worth Rs 9 cr

CRED, an app that allows users to pay their credit card bills and gives rewards in return, has raised $81 million in its Series C round at a post-money valuation of $806 million. The partners of existing CRED investor Israeli-Russian billionaire Yuri Milner's investment fund DST Global led the round, along with Sequoia Capital, Ribbit Capital, Tiger Global, and General Catalyst. In addition, other investors, Sofina, Coatue and Satyan Gajwani of Times Internet also invested in this round.

In the process, existing and former employees have liquidated their ESOPs (employee stock ownership plan), collectively worth $1.2 million (Rs nine crore). The ESOP buyback was completed on Jan 01, 2021. This is the first ESOP liquidity program initiated by CRED, just two years into its operations. Employees who hold vested stocks were eligible to sell up to 50 per cent of their vested ESOP shares in the company.

“As we raise funds to support our next phase of growth, it's important to acknowledge the role that employees have played in our success. We are committed to enabling wealth-creation opportunities for them and have allocated 10 per cent of our capital allocated for ESOPs even at the Series C stage,” said Kunal Shah, founder, CRED. “I am grateful for their conviction, as well as that of our investors, and am focused on creating value for them as the product and business evolve.”

 

CRED is Shah's second venture after he sold online recharge platform Freecharge to e-commerce company Snapdeal in 2015 for $400 million.

In two years, the CRED community has grown to over 5.9 million high-trust individuals with a median credit score of 830. CRED processes 20 per cent of all credit card bill payments in India. Over 35 per cent of premium credit card holders in India are on CRED, with members spending 2X of the average credit card user in India. This premium member base has made CRED an attractive proposition for hundreds of merchants and financial institutions intending to engage the creditworthy community. The recently launched CRED Pay offering takes the CRED experience to platforms of online merchants, who offer instant, one-click credit card payments for CRED members.

The company said one in five waitlisted individuals, work to bring their credit scores above 750 and become members, validating CRED’s potential in enhancing financial well-being.

 

The Indian credit card industry is expected to grow at a CAGR of more than 25 per cent during 2020 - 2025 due to the increasing popularity of credit cards and the growing trend of purchasing products first and paying later, according to the report ‘Customer Priorities - Credit Card Users in India.’ The number of credit card users in India in 2019 touched 52 million. Yet there are only about 3 credit cards for every 100 people in India, when compared to 32 cards in the USA. This shows that there is a higher penetration opportunity in India. With the increasing popularity of credit cards, banks are focusing on urban and semi-urban markets in order to increase their share in the market.