CRED: A money guzzling startup worth $800 million

CRED logo

CRED, a members only only credit card bill payment platform that rewards its members for clearing their credit card bills on time. CRED members get access to exclusive rewards and experiences from premier brands upon clearing their credit card bills on CRED. All good for the users, but what about the investors?

There are more than 5.9 million users of CRED. Quite a high number of users for a company that is less than 3 years old. The company has grown massively in number of its users, but does this translate in revenue and profits? How much was spent to acquire one customer? Many such questions linger, especially when one baulks at the mammoth $800 million valuation of this company.

Financial Analysis

To date, CRED has raised $256.5 million (₹1869 crores) over five funding rounds. CRED is backed by several distinguished investors such as DST Global, Sequoia Capital and Tiger Global Management, among others.


The operating revenue of the company stood at a miniscule ₹52 lakhs for the financial year ended 31st March 2020. However, the company’s massive fixed deposits and current investments earned an interest of ₹17.56 crores. The company’s total income stood at a little over ₹18 crores, which is a 497% increase from last year’s ₹3.03 crore.


During FY20, CRED’s expenses increased multifold. Direct costs increased by 450% to ₹59.14 crores, while employee benefit expenses increased by 327% to ₹72.51 crores; finance costs increased from zero to ₹1.24 crores; and, other expenses, which includes the company’s spending on rent, fuel, conveyance, legal and advertising expenses, among others, increased by 597% to ₹244.45 crores. 

The company’s total expenses stood at ₹378.39 crores, an increase of 492% from FY19 when it recorded expenses worth ₹63.90 crores. Hence, the company’s after-tax loss stood at ₹360.31 crores, an increase of 492% from the FY19 loss of ₹60.86 crores. CRED’s massive marketing campaign meant that for every rupee earned in revenue, it has spent ₹770. 

Investor’s fate

CRED’s lack of revenue and massive cash burn, combined with a massive valuation suggests that this is a pure valuation play by the investors looking to offload the company at the earliest. However, this begs the question, “Will the investors ever be able to have a massive exit?” , considering there are just a handful of companies capable of acquiring such a behemoth. What is the logic behind such a valuation? All we know is that all kinds of accounting and valuation concepts have gone straight out of the window!

Will CRED be able to grow organically? Will it survive without further investment? These are questions that only time can answer.

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