There are few entrepreneurs who garner investor interest time after time, no matter what the business. Serial entrepreneur Kunal Shah is one such example. From his digital payments platform Freecharge, in 2010, to his latest fintech start-up, Cred, launched in 2018, Shah has managed to attract a string of marquee global investors to back his ventures. Today, Cred is funded by the likes of Tiger Global Management, Falcon Edge Capital, and many more. In April this year, the start-up was valued at $2.2 billion, within a span of just two-and-half years of its launch. Known for its viral commercials, the credit card bill payment platform provides users Cred coins (as rewards) for paying their bills on time through its platform. The start-up caters to 7.5-million members — only those with a credit score of 750 and above. Users utilise the rewards to avail offers and discounts on products sold on the platform. It currently controls 25-27% of credit card bill payments in India.
The Idea!
When I was building Freecharge, we realised it was almost impossible to monetise all of India as the customer base because the per capita income is very low. Macroeconomic data is not known by most founders. Our idea was to aggregate creditworthy people in one place. We realised that focussing on right customers and solving their unique problems would be very powerful. So the insight was built around ‘how do we focus on a customer cohort that cares about their time, credit scores and doing the right financial things consistently’.
Early Struggle
We were building an original idea, and typically original ideas are laced with anxieties. Nobody knows if it will work. We were very fortunate to get access to capital to start the company because I had some successes in the past with my previous venture. The anxiety was largely around assembling the right team and getting the right people. It took a long time to launch. We did months of research, sharpened our thesis and then built it. There is a notion that funding solves everything. If that was true, then 100% of all funded start-ups would be successful.
Make Or Break Moment
After we launched, we suddenly realised that we had hit ₹100 crore in volume. What we achieved in Freecharge as transaction volume in a year’s time, we achieved within two months of Cred’s launch. That’s when it finally registered as a real and serious business. We launched in November 2018 and this happened somewhere in December/January.
The Business Model
Very few tech start-ups do high-quality research before launching. They just get emotional with an idea and start a business. And that’s the reason 99% of them fail. I don’t support the concept of ‘fail fast’. I would say plan better. That’s one big realisation I had while building the company.
Tech Challenge
When we built Freecharge it was challenged with technology. We had unlimited downtimes. Since I am a second-time founder, I solved the issue by hiring an extremely competent tech team. In the last few years, the downtime has been less than a few hours.
HR Challenge
The first lesson we learnt was the core concept of sharing wealth. A lot of our team members are motivated to have the mindset of a shareholder. We never wanted employees. From an average wealth creation per employee from a start-up perspective, we will be way ahead of others. I have not verified this, but from my understanding and investing in multiple start-ups [in personal capacity], I do feel that we have done a good job. I have realised that to build a good consumer start-up, you need a team that loves the applause of the consumer and not the founder.
Managing Investors
I have been a venture capitalist for a brief period. Investing in a start-up is similar to an arranged marriage. Imagine you are trying to get your daughter or son married. As a parent you would ensure that the marriage is successful. Just as investors are responsible for their LPs’ [limited partners] money, as a parent you are responsible for making a good decision for your son or daughter. VCs are deploying someone else’s capital and are responsible for making a good decision. As an entrepreneur looking for funding, you should do your homework about investors you are trying to approach. Figure out which of his or her invest- ments have been successes and which ones have failed. Be more like their successes. Have the nuance of understanding what investors are looking for.
Marketing & Sales Lessons
Our marketing was different because it was not done by people with marketing experience. If you want to stand out you need to address things differently. All our campaigns were designed to create conversations in the right cohort. In India, there is a chief technology officer in the age group of 12-20 who runs technology of the average Indian house. Unless you appeal to them, as well as the person who owns the credit card at home, you cannot reach your target audience. Our advertising campaigns were designed to appeal to both. Therefore, it worked well.
When Did You Think You Had Arrived? We have not arrived. We are a very young company. Honestly, these tags of unicorn and decacorn [privately-held companies valued at over $10 billion] don’t mean anything. Ultimately, we will be valuable when we can create returns for our inve- stors, create value for our members and team members.
Riding Through Toughest Times
It is the pandemic. There was a time when start-ups were letting go of employees, I still remember telling the team that no matter how long this pandemic will last, till the last dollar, we will make sure that everybody is safe and not without a job. It was a tough decision to make that call. We even did a proper appraisal like a normal year. Money making will happen.
What Next?
We have two simple missions: creating financial progress for creditworthy and trustworthy individuals, and making sure we create friction-less consumption for them. The goal is very simple. Focus on India’s high quality and trust-worthy community, and make it easy for partners to work with them.