Mumbai: Cred, the second venture of FreeCharge co-founder Kunal Shah, is close to finalizing a $125 million Series A round of fundraise, at a post-money valuation of between $450 and $500 million, said two people aware of the matter, requesting anonymity.
This would be one of the largest-ever Series A funding round for an Indian startup. Cred incentivizes credit card payments with reward points.
Existing investors Sequoia Capital, US-based Ribbit Capital and Apoletto Asia, the personal investment vehicle of Israeli-Russian billionaire Yuri Milner, have already invested the first tranche of $65 million in the company, said the first of the two people cited above.
The other new investors expected to join the round include China’s Hillhouse Capital and US-based Tiger Global Management, both of whom have been quite active in India this year.
Hillhouse, Tiger, Apoletto and Ribbit did not respond to mails seeking comment, while Sequoia declined to comment. Shah did not respond to a mail seeking comment.
Despite a hitherto unproven record for the eight-month-old startup, investors seem to be queuing up to invest in the company because of the size of the opportunity and Shah’s previous record, of selling payments platform FreeCharge to e-commerce firm Snapdeal for $400 million in 2015. It was the biggest exit in the Indian startup ecosystem at that time. Snapdeal later sold the company to Axis Bank for $60 million in 2017.
“The company’s valuation is definitely far ahead of its current performance. But very few entrepreneurs in India have the kind of experience and track record that Kunal (Shah) does, and investors are betting on that experience," said an investor aware of the negotiations, on the condition of anonymity.
“The company has a large volume of flows. It now needs to build a sustainable business, and this kind of capital should snuff out any lingering competition and give space to grow fast," said a second investor, who too declined to be named.
Individuals with high credit scores can make credit card payments on Cred’s platform. Timely payments fetch rewards and offers and discounts for shopping, health services and other services.
The app will also discover hidden charges in credit cards and point them out to customers. Cred has partnered companies such as furniture rental platform Furlenco, travel booking site Ixigo, healthcare startup Curefit, and holiday rental platform Airbnb to provide offers and discounts. The offers increase in value as customers use Cred more, Mint reported on 27 November.
Cred, run by Dreamplug Technologies Pvt. Ltd, raised a $30 million seed funding round in November, from Sequoia, Ribbit, Chinese venture capital firm Morningside Ventures, and Apoletto.
As part of the Series A, a number of prolific angel investors have also joined Cred’s list of investors. Amrish Rau, co-founder of Citrus Pay, Swiggy co-founder Sriharsha Majety, Truecaller co-founder Alan Mamedi, and Myntra and Curefit co-founder Mukesh Bansal, among others, have invested a few crores collectively, according to the people cited above.
The Economic Times reported in April that Hillhouse may invest in Cred, while The Times of India reported in May that Tiger is in talks to invest in Cred.