CRED's Down Round, Unacademy Cofounders To Exit, and PayPal Gets RBI Approval

Once a poster child of fintech innovation, CRED announced a new funding round of $75 million at a valuation of $3.5 billion - a sharp 45% drop from its previous $6.4 billion valuation in 2022. The round, led by existing investor GIC, also saw participation from RTP Global and Sofina. Notably, founder Kunal Shah is contributing approximately $20 million of his own money to this round.

At first glance, this might seem like a founder doubling down on his vision, showcasing commitment during tough times. But beneath the surface, questions arise. Is this infusion a strategic move to extend the runway, anticipating a market rebound for a potential IPO? Or is it a necessary lifeline, signaling deeper issues within the company's core operations?

Our first thought is that this is a reflection of CRED moving downmarket and of still not finding a single compelling use case.

As long-time users, we've observed this shift firsthand. We still remember when CRED launched back in 2018, it wasn’t like every other app. One couldn’t just sign up just like that - they needed a high credit score to sign up. When we got access, it felt special and exclusive. Like being part of a club, only a few could enter. And the app was actually useful. It brought all our credit card payments into one place and rewarded with cashback and perks that, at the time, felt genuinely valuable. It was like a status symbol that we showed off to our friends. But what began as an exclusive platform for the creditworthy has, over time, lost some of its sheen. The once-premium feel has given way to a more mass-market approach, potentially diluting its brand value.

CRED's financials show a mixed picture. In FY24, the company reported revenues of ₹2,473 crore, a 66% increase from the previous year. However, net losses also rose to ₹1,644 crore, up 22% year-on-year. A significant portion of its expenses likely goes into maintaining its premium image and acquiring users. While exact figures for marketing costs as a percentage of total expenses aren't available for FY24, previous reports indicate a substantial spend. Operating losses did see a reduction in FY24, dropping 41% to ₹609 crore, primarily due to a 36% cut in marketing expenses.

Still, even with all those efforts, they haven't been able to generate any profits. The company's business model, initially centered around rewarding timely credit card payments, has diversified into areas like e-commerce, travel bookings, and even used car sales. However, many users feel that the platform's offerings have become cluttered, with the rewards section now filled with promotions for fantasy gaming apps and other less-than-premium deals.

We also think that competition has also intensified - be it UPI, e-commerce and Q-commerce, or travel bookings. The competitors are aggressively expanding their offerings, making it harder for CRED to maintain a unique value proposition.

Coming back to this down round, Kunal Shah putting his own money in it can mean a few different things. It might be a genuine show of faith in the company's future, aiming to re-assure existing investors. Alternatively, it could be a condition set by investors, requiring the founder to have more skin in the game before committing additional funds.

Historically, Shah's ventures have seen mixed outcomes. FreeCharge, his previous startup, sold to Snapdeal during a period of abundant liquidity at $450 million but later Snapdeal ended up selling it to Axis Bank for $60 million. CRED, however, operates in a more cautious funding environment, with investors prioritizing clear paths to profitability.

CRED's funding story always amazed us. Its valuation rose exponentially from just over $2 million in 2018 to $6.4 billion by 2022, having raised in roughly $900 million in total from investors. We've always felt that CRED's value was a bit inflated due to extra money floating around in the market back then. This recent drop in value suggests things are getting more realistic. Still, even at $3.5 billion, we think CRED is still valued too high, especially since it's still losing money and is in a more competitive environment.

In conclusion, while this down round provides CRED with additional capital to navigate the current landscape, it also underscores the challenges ahead. The runway is extended, but the mission is clear: CRED must now build something useful and profitable, or risk becoming just another cautionary tale for investors.

Let’s go through what else is happening in Indian startup world - Grab your simmering cup of StartupChai.in and unwind with our hand-brewed memes.

“Humara Jaane Ka Samay Ho Gaya”: Unacademy Cofounders Gaurav Munjal & Roman Saini To Exit

In a rare shake-up, Unacademy’s original co-founders Gaurav Munjal and Roman Saini are reportedly signing off to build their next act—AirLearn, a language learning app making early waves in the U.S.

With co-founder Hemesh Singh already out, that leaves Graphy’s Sumit Jain poised to take the lead. From unicorn to new frontier, it’s a bold pivot from India’s edtech veterans.

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“Strategize. Adapt. Survive”: Captain Fresh Appoints Three Independent Directors Ahead Of IPO

Captain Fresh is reeling in big moves ahead of its IPO — it just added three new independent directors to its board: Durgesh Kumar Singh, Anil Berera, and Harita Gupta.

The seafood B2B startup isn’t just fishing for talent though; it’s netting ₹27.3 Cr in fresh equity led by Centrum Wealth. All signs point to a deep dive into the public markets soon, with a $350–400 Mn IPO on the horizon.

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“Waah Kya Scene Hai”: CCI Greenlights Jumbotail’s Proposal To Acquire Solv India

The Competition Commission of India has given Jumbotail the go-ahead to gobble up Solv India in a 100% acquisition deal - though the price tag stays hush-hush.

Backed by SC Ventures, Solv had already signaled green lights for the merger earlier this year. With this move, Jumbotail is stacking its B2B grocery cart higher than ever.

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“Humari Bhi Haan Hai”: PayPal Gets RBI’s In-Principle Nod To Operate As PA For Cross Border Export

PayPal just scored the RBI’s in-principle nod to operate as a Payment Aggregator for cross-border exports - a big win for Indian SMBs eyeing global markets.

With exports touching $73.8B in April, the timing couldn’t be better. PayPal now gears up to streamline payments across 200 markets, one digital handshake at a time.

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1. After a three-year break, fintech unicorn CRED is raising $75M in an internal round led by GIC, with founder Kunal Shah chipping in $20M. This is CRED’s down round in three years - it raised $140M in 2022 at a $6.4B valuation.
   Read more here

2. Agritech startup GROWiT has harvested $3 Mn in fresh funding led by GVFL, with a lush lineup of backers including JITO and Hyderabad Angels. The green boost will likely fuel its growth in sustainable farming tech across India.
   Read more here

3. Myntra just got a cash infusion of ₹1,062 Cr from its Singapore-based parent, fresh off its FY24 profitability milestone. Looks like Flipkart’s fashion arm is strutting into FY25 with serious runway capital.
   Read more here

4. Ahmedabad-based Orbitt Space has raised $1M in pre-seed funding led by pi Ventures to fuel its mission of building electric propulsion systems for ultra-low Earth orbit. With the satellite game heading closer to Earth, Orbitt’s tech could be a true low-flyer with high impact.
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5. ILIOS 72 Alternative Capital has secured ₹1 Cr in seed funding from a clutch of family offices, marking its debut external raise. The wealth firm now looks to scale its alternate investment playbook with fresh backing.
   Read more here

“Kala Ka Samman Karna”: P-TAL Crafts a Sustainable Future Through Ancient Artistry

P-TAL, a Panchkula-based startup, is on a heartfelt mission to revive the Thathera community’s fading metalcraft from Amritsar, blending age-old brass and copper artistry with modern design.

Born as a college project, their passion caught national spotlight on Shark Tank India Season 3, where all five sharks pitched in with ₹1 crore. Today, P-TAL isn’t just preserving tradition; it’s transforming artisan livelihoods and aiming to take this UNESCO-listed craft to homes worldwide.

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