CRED Club: A Dubious Case Study
CRED Club: A Dubious Case Study

CRED Club: A Dubious Case Study

Published Date

Unicorn Startups by Industry and Lessons from the $1B+ Club

notion image
Uber. Ever heard of it? Of course you have — it’s a verb these days. That doesn’t mean it’s easy to become a household name, since not every startup can grab growth by the horn. It takes a brave and talented team to establish a company these days, especially when the failure rate after five years is over 50% and over 70% after the ten-year mark. However, an elite group of startups has managed to successfully navigate the challenges of the venture world and billion-dollar organizations — or as we like to call them, unicorns. And this mystical herd only continues to grow year after year.
Becoming a unicorn is the envy of all startups, so what can you do to make it there? This guide dives into some of the factors that make unicorns unique, including geographical placement, industry breakdown and lessons you can apply to your startup. That way, you can better understand unicorn land and how to model your startup.

What Makes a Unicorn Startup?

notion image
Coined in 2013 by venture capitalist Aileen Lee, the term “unicorn startup” refers to a private company valued at or over $1 billion — because just like the mythical creature, the statistical rarity of such a successful business venture is improbable, but not impossible. Roughly 25% of unicorns are now from China, another 48% from the U.S. and the rest come from other parts of the world.
Secondly, there’s the popularized phenomena of mega rounds or venture capital deals of $100 million dollars or more. In 2013 when the term first became a buzzword, a nine-figure venture round was a rare occurrence, but as times change, venture capital (VC) evolves.
Although VC funding is down from previous years due to the turmoil of a global pandemic, it still reached $129 billion in the first half of 2020 alone

Introduction: What is cred?

Cred is an Indian startup company that works on making the life of credit card users easy. Currently, the start-up is in its growth stage and is backed by some of the most well-known venture capitalist firms from all over the world. Lately, they have been implementing a number of marketing strategies that have helped it gather some great traction. That’s why in this case study, we’ll be understanding Cred in greater detail by going through its business model and the marketing strategies that have caught the world’s attention for their quirkiness.
So, let us begin this case study by first learning more about Cred:
Cred Business Model is one of the latest Indian unicorn and fascinating business case studies in the Indian startup ecosystem. This is a fintech startup founded by Kunal shah. In just 2 years, cred went from 0 to hit a $2.2 Billion valuation and became one of the youngest Indian startups to reach this milestone. The Peculiarity of cred is that in 2020 alone, it incurred a massive loss of 360 crores which is massively increased from 2019 by 492%. And for every rupee of revenue generated, they spend 727 rupees which is a massive cash burn. That makes a massive expenditure in creative marketing. Cred helps users to pay credit card bills & Wins Amazing rewards, and check credit scores. The startup has raised a total of $471.2M. Their latest funding was raised on 6 April 2021.
“ Dragon investment group and Tiger global management was a most recent investor. Cred is a great business idea.”
notion image
Cred was founded by Kunal Shah, who interestingly is a philosopher from Mumbai‘s Wilson college and does not have any engineering background. Kunal Shah is interested in reading business books. Kunal Shah founded their first venture in 2010 called Freeharge, and Snapdeal later acquired it in 2015. He is also an active angel.

How CRED Club was started?

After selling Freecharge in 2015, Kunal Shah was researching another idea to make people’s life better. While researching, he found that so many things are automated in the developed nations like super markets with no cashiers, petrol pumps with no attendant, etc but there’s no such trustworthy system that helps the individuals to pay the right amount of credit card bills on time with zero additional charges. According to one Kunal Shah’s interview with Yourstory, There are over 30 hidden charges and exorbitant interest costs that haunt you even if you pay a single rupee less than your full bill. The current model thrives on you making an error. It wants you to falter. The system has taken the good guys for granted for far too long. Creditworthy individuals deserve better. But the problem was, why would people pay their credit card bills through their APP, then the idea came to reward the trustworthy credit card users, who pay their credit card bills on time. With this strategy to attract users, CRED was started in April, 2018.

CRED App Features

CRED offers you to manage all your credit cards at one place. Whenever you pay your credit card bills you’ll get some CRED Coins that you can use to get discounts on various brands partnered with CRED. It analyzes your total spending, hidden charges, and tracks credit limits and reminds you about all these to avoid such additional charges.
Apart from all these, few more amazing features of CRED:
  1. CRED Protect – CRED protect is the feature of the app that reads the statements from the email and gives information about- balance, due date, bank charges, and expense bifurcation.
  1. Smart Statements – This feature helps the user to streamline their expenses by analyzing the CREDit card statements.
  1. CRED Powerplay – It is the new feature of CRED after it has become the official partner of IPL 2020. It enables 100% cashback on the entire bill provided the bill is paid in the first six overs of both the innings. Also, the winner gets an exclusive spot in the virtual fan box.

CRED VC Funding Rounds

Announced Date
Funding Round Type
Money Raised
Lead Investors
Nov 6, 2018
$30 Million
Sequoia Capital India, Ribbit Capital, RTP Global
Jan 1, 2019
Rainmatter Capital
Apr 16, 2019
₹1.8 Billion
Sriram Krishnan, Sriharsha Majety, Rainmatter Capital, Nithin Kamath, Nami Zarringhalam, Mukesh Bansal, Haresh Chawla, Amrish Rau, Amit Mital, Alan Mamedi
Jul 26, 2019
$120 Million
Gemini Investments, Ribbit Capital, Sequoia Capital India, Tiger Global Management, Hillhouse Capital Group, General Catalyst, Greenoaks Capital, Dragoneer Investment Group.
$4 Million
Sequoia Capital India
$80 Million
DST Global, Ribbit Capital, Sequoia Capital, and Tiger Global
^According to YourStory
notion image
^from Kunal Shah’s Twitter after a success VC funding round

Business Model

Currently there is no business model of CRED. Currently, CRED is focused on expanding its user base and not focuses on making any profit. Though the primary vision is to create a trustworthy community and company will further build their business model. Various sources say they’re earning money from listing the brands in their CRED Coin redemption but it’s a conflict but CRED might use this in the future.
There’s a prediction that it will use their data to monetize their business. Currently, the app creates a database of users based on the bank details, bill payment history, rewards used, and interests but not share this data with any 3rd party. Therefore they can do multiple uses of users’ data in the future and can make a profitable business model around it.
notion image
^Kunal Shah tweets about the latest numbers of CRED and CRED's goals
“When asked whether CRED would like to serve all credit card users in India someday, Shah said the selection criteria limits the startup from doing so, but he was optimistic that more users will improve their scores in the future.
The startup, unlike most others in India, doesn’t focus on the usual TAM (addressable market) hundreds of millions of users of the world’s second-most populated nation — and instead caters to some of the most premium audiences.”
notion image
Consumer segmentation and addressable market for fintech firms in India (BofA Research)

How CRED Entered a non existing market and Future Growth

Cred most fascinating business case studies in the Indian startup ecosystem, in just 2 years CRED went from 0 to hitting that $2 Billion valuation and became the youngest Indian startups to reach this milestone now the peculiarity of CRED is that in 2020 alone CRED record a massive loss of 360 Crore which is a massive increases of 492% from 2019 loss and for every Rs.1 of revenue they generated the spend 727 Croces, which is a massive cash and we all have seen the result of that massive expenditure into creative marketing.
notion image
So now the question is even with such massive losses how good it is that CRED is getting so much funding and what exactly is Kunal Shah’s strategy. When the beauty of this case studies is that if you only understand what CRED is doing, you will more or less understand a large chunk of Indian startup ecosystem because most of the giant companies like Jio, Ola, PharmEasy also operate in a similar fashion and the most important factor which is common in all of them is that, they extensively work on altering the Behavioural Design of the society and the anticipation of the behavioural design is whats makes them a Billion dollar companies and this Golden stategy works in 4 Golden steps:

1.Cash Burn

The burn rate is used by startup companies and investors to track the amount of monthly cash that a company spends before it starts generating its own income. This starts when a company identifies a problem in the society, then it designs a system to solve the problem, it raises a million $$ in funding and at last it entices the customer by giving unbelievably offers which are almost too good to be true. A very simple exam of these will is Jio:
Jio identified internet accessibility as a problem in india and then reliance spend 1.5 Lakh Crores to build the infrastructure for Jio and then in 2016 they started giving free Mobile sim cards with 4G with free calls, data etc. Which was too good to be true.
Just like this one cred rolled out in 2018 they identified 3 of the biggest pains of a credit card holder:
  1. Hidden charges
  1. Late fees due to forgetfulness
  1. Extra interest due to late repayment and they rolled out massive cashbacks and offers to incentivize the act also on time payment and these almost as amazing as free flight to give extremely good discounts and Rs.1000/Cashbacks to everyone
Fast forward to today CRED has 30 Lakh users and it is processing 20% of all premium credit card transactions in india. So this is how a company present incentives to join there platform to eventually increase their customer base.


Once a user bought a Jio sim they never bothered about talktime, data,etc. The same thing happened to all CRED users who stopped using their conventional modes of repaying credit card bills and only used CRED as it was easy timesaving and rewarding.
notion image


Classic example of this is Google Maps where users are so dependent upon the service that they cannot function properly without the availability of the same. And due to this most of the people these days don't bother to even remember a landmark or location. And now in the case of CRED users no longer have to remember to pay the credit card bills, when exactly is there due dates etc. So once these companies have come in there has been an irreversible change in the society. "CRED is yet to complete this phase, and chance a significant part of the consumer behavior."


Now this phase is the goldmine every investor waits for where the company starts making huge profits. When you look at the numbers it literally looks like a goldmine to put this into perspective let us look at the profits no of Jio, In just 1.5 years Jio became profitable at Rs.504 Cr in the 3rd Quarter of 2017 and from then it has been on a run wherein in 2020 Jio posted a net profit of Rs.5,562 Croces
And the reason why CRED is also sitting on a goldmine is because customers of CRED are by default the richest 1% of the country. These people are literally the dream customers of any company, their incomes are high so they make expensive purchases on a regular basis which results in massive profit margins for every company.


CRED could also in future leverage it’s golden customer base in 3 very powerful ways:
  1. CRED can become this must have Expense management app which will also allow users to also fill in for income tax and help them save charges and tax through Income tax rebate by turning it into a simple and fast process.
  1. CRED the most valuable data of customer purchases, so cred and show you relevant AD’s or items to buy making money on commission.
  1. CRED could also become a bank for the top 1% of India

Who can be a member of the CRED club?

CRED club membership is offered based on the credit scores of the users. It only allows consumers with credit scores higher than 750. This puts cred into a limited elite segment of the customer base who are the top 1% of the india credit card users. Who pays their bills on time ,and have due to the availability of extra money they usually buy expensive items very frequently on there credit cards and this gives CRED the opportunity of collecting the fees and retaining the customers on the platform because they are able to easily pay all there CC’s bills in 1 app instead of going to individual apps.


  1. The failed transaction is one of the main concerns with such payment apps. Recently there have been complaints regarding failed payments.
  1. Another issue with this app is if someone pays off their credit card bill not using the app it will continue to show you payment due.
The company identified all issues and tried to improve their services.
notion image
CRED also has great security features to protect the user from faulty charges by the credit card company and curate all the bills into 1 for east reach.

Indian Credit Card Market

To understand the case study of CREAD, first, we need to understand the Indian Credit Card Market. As per 2019 data, the Indian credit card user number reached 46 million, and the credit card market is anticipating a slow growth at a CAGR of more than 25% during 2020-2025. According to the Reserve Bank of India in April 2020, the total number of debit cards is 829.4 million (95.3% of the total number of operational cards), adding 800,000 cards over March 2020. While there is only a total of 57.4 million credit cards in operation, losing 300,000 cardholders over March 2020.
notion image
Compared to India, the United States has about 1.5 billion active credit cards (67% of the total number of operational cards in the United States). For every 100 people in India, there are only 3 credit cards compare to America's 320.

Revenue Model

Ever since it has launched CRED has created a lot of buzzes. In FY19 it has spent 64 Cr with ZERO operating revenue. Like other startups, CRED is focusing on customer acquisition by giving them rewards. With India’s growing Credit Card market the company has a huge future opportunity. CRED can generate revenue by
notion image
● Offer listing fees
● User’s data.

1.Offer Listing Fees

CRED displays the products and offers from businesses and generates revenue from businesses. There are offers from fashion retailers, to spas, to Amazon gift cards, and much more. Users can select their offer by using the CRED Coins from the app which he/she can earn by paying their credit card bills.Businesses pays fees to CRED for sending the business to them. Currently this is the main source of Revenue and comes primarily in the Revenue model of CRED

2.User’s Data

As you continue to pay bills and use the app, CRED collects your financial data to offer you better offers in the future. Financial institutions always want the most viable customers for their credit cards, loans, and other financial products.
notion image