Bengaluru: After raising $25 million from Sequoia Capital and others, Cred—the latest venture of Freecharge co-founder Kunal Shah—will launch a product for credit card payments on Monday. The platform will let users pay their credit card bills and reward them for timely payments with offers and discounts on shopping, health services and other sites. It will also discover hidden charges in credit cards and point them out to customers, who can then choose to get them removed.
Cred will initially offer its product to only those customers whose credit scores are at least 750. People with lower scores will be initially waitlisted.
“This product is for people who have high credit scores. Our focus here is to reward people who have paid their bills on time. And right now, credit score is an objective metric," Shah said in an interview.
Cred has partnered with companies including furniture rental platform Furlenco, travel booking site Ixigo, and healthcare startup CureFit, to provide offers and discounts to customers. These offers increase in value as customers use Cred more.
Shah estimates the addressable market for Cred, which will launch more financial services in the coming months, at about 50 million users.
The basic premise of the startup is that it wants people with high credit scores to get preferential treatment than those who don’t pay their bills on time.
“It’s unfair that the good actors get the same financial terms as the bad actors (delinquents). We want to achieve three main things for our customers. We want to make them pay less interest, less charges, lower their cost of insurance and similar areas. We want to make them earn more by increasing their avenues of income. And we want to make them invest better by providing them sufficient knowledge (about money management)," Shah said.
Cred will enter a crowded fintech space that is heavily populated by lending, insurance and wealth managements startups. It is one of the most keenly-awaited ventures in India’s startup ecosystem because of Shah’s stature as an entrepreneur and a tech-product expert. In 2015, Shah sold his first venture Freecharge, an online bill payment platform, to Snapdeal for $400 million, which is the third-largest internet deal in India after the merger of travel sites GoIbibo and Makemytrip and the $16 billion buyout of Flipkart by Walmart. Since then he has been investing in startups including content platforms such as Unacademy, Pocket Aces and used-car marketplace Spinny.
Even before launching his venture, Shah had secured capital of $25 million from a clutch of investors including Sequoia Capital, Ribbit Capital and Ru-net. Another 20 angel investors who have experience in building fin tech and other companies will participate in the round, which is the largest-ever early stage financing round in the startup business in the country.
The capital will be invested largely on building technology and paying team members.
The app tracks its members’ financial behaviour; depending on their timely bill payments, the company will further incentivise or remove them from the platform.
Cred has already hired some 50 people across tech, product, sales and other functions.
To reinforce its goal within the company, Cred only hires people with high credit scores.
“Every single team member has a credit score of higher than 800. We had to reject 20% of the people we interviewed (at the top) because their credit scores were too low," said Shah, whose own credit score is 838.