Kunal Shah founded Cred bumps up valuation 173% in three months to $2.2 bn

Credit card bill-based rewards marketplace Cred sprinted into the coveted club of unicorns on Tuesday barely three years after being founded. Cred parent Dreamplug Technologies said it had raised $215 million growth funding at a post-money valuation of $2.2 billion. 

New investor New York-based global alternative asset manager Falcon Edge Capital, and returning investor New York-based global investment firm Coatue Management led the round, dubbed Series D, as per a statement. 

Other investors in the round included new investor Insight Partners, and returning investors DST Global, RTP Global, Tiger Global, Greenoaks Capital, Dragoneer Investment Group, and Sofina. 

The Bengaluru based startup added that it will also offer its employees with a new stock option buyback opportunity worth $5 million. 

“With the credit card category in India expanding rapidly, we have a massive opportunity to shape responsible behaviour, imagine new use-cases, and create a rewarding platform for members. Our growth in the past year has demonstrated the potential value of the high-trust, low-friction platform the Cred team has been building, and we are delighted to share the value created with investors, team members, as well as partners and the Cred community,” Shah said in the statement. 

The company last raised capital in a $81 million Series C funding round, led by returning investor DST Global, in January. Sequoia Capital, Ribbit Capital, Tiger Global, General Catalyst, Sofina, Coatue and Satyan Gajwani of Times Internet also participated in the round. 

The investment was made at a post-money valuation of $806 million.  

Around the same time, the company bought back employee stock ownership plan (ESOP) shares worth $1.2 million from existing and former employees. In its first ever buyback initiative, eligible employees were able to sell up to 50% of their vested ESOP shares. 

Set up by Freecharge founder Shah in 2018, Cred is a members-only app that allows users pay credit card bills and rewards them in the form of credit coins, which can be redeemed across partner businesses including CureFit, Ixigo, BookMyShow and FreshMenu. This also gives the app an insight into customer spends, which can be used to cross-sell and up-sell products. 

In terms of its financials in the last known financial period, ended March 2020, Cred ballooned its total loss by 491.9% in its latest yearly financials update for a period in which the company said it saw no Covid-19 related impact on its revenues or expenses. 

The company recently filed projections for its financial year 2020-21 (FY21) to FY26 estimates with the Ministry of Corporate Affairs. 

As per the document dated November 28, 2020, the company expects to close the financial year ended March 2021 with Rs 115.00 crore. Such revenue collections would make for a drastic jump from Rs 18.09 crore in FY20. 

Additionally, it sees a path to profitability come to fruition in FY25 with Rs 525.68 crore in profits, and subsequent 5x profit jump of Rs 2,560.86 crore in FY26, as per the filing.