Cred Seeking New Funding as Valuation Falls 30% to $4 Billion

According to a media report, Cred, a credit card payment network, is in negotiations to raise $100–200 million in new capital, mostly from current investors. The startup established by Kunal Shah would be valued down at about $4 billion in the acquisition, compared to $6.4 billion three years prior. The Singapore state fund GIC, which spearheaded the last infusion in 2022, is probably going to lead this financing. Participation is also anticipated from other significant Cred shareholders, including Peak XV Partners, Tiger Global, Ribbit Capital, and QED Innovation Labs. According to many media sources, talks are in progress with investors, but the valuation will be less than its 2022 round. On the basis of better financial performance and a decrease in the company's financial burn, new funds are to be raised. Three years ago, Cred amassed $140 million in a variety of main and secondary deals, led by GIC, as the fintech company's valuation increased from $3.8 billion to $6.3 billion.

Cred to Focus on Profitability

Cred is focused on profitability and plans to enter the public markets in around two years. A few profitable quarters prior to its IPO (initial public offering) is the internal strategy. According to a media report, the valuation decrease is consistent with the IPO pricing strategy. The lower valuation coincides with a worldwide reset in the IT industry across all industries. Last year, the payments juggernaut Stripe, based in Silicon Valley, reduced its valuation from its top of $95 billion in 2021 to $50 billion. Employee shares were purchased by investors for $91.5 billion earlier this year through a tender offer. The capitalisation of Swedish finance company Klarna fell from $46 billion to $6.7 billion. Aiming for a valuation of more than $15 billion for its IPO, Klarna has postponed listing.

Cred Cutting Cost to Reduce Cash Burn

Cred has been reducing expenses in an effort to lower cash burn over the past year as it seeks to become profitable. Cred has not yet submitted its most recent financial statements, although its revenue has been increasing year over year. Various media reports state that it recorded total revenues of about INR 3,000 crore in FY25. With operating losses dropping to INR 609 crore from roughly INR 1,024 crore in FY24, Cred claimed total revenue of INR 2,473 crore. As part of a larger plan to expand credit distribution beyond unsecured personal loans, one of the company's main sources of income, the fintech company introduced loans backed by mutual funds in February.

Cred also runs Newtap Finance, which, as of the end of December 2024, had a net loss of INR 5.3 crore and total assets under control of INR 1,141 crore. Shah, the founder of Cred, owns all of Newtap Technologies, which is the primary owner of Newtap Finance. Originally founded in 2018 as a platform for paying credit card bills, the firm has subsequently expanded into credit, commerce, insurance, and transactions via the Unified Payments Interface (UPI). In terms of the quantity of transactions handled, it is now the seventh-largest UPI payment app. There were 144 million transactions in March. It settled compensation totalling INR 55,000 crore, which is one of the biggest amounts in the sector.