$6.4B Indian credit card payment app CRED will probably never make as much money as it raised!
- Raised $800m since founding in 2018
- $48m rev with $156m loss in FY22. Spends $4.25 to make $1.
- Valued at 133x rev multiple
Easy to build brand, hard to build business.
I wonder how these startups can keep fueling a 400%+ revenue growth while trying to cut costs which increase at 200%+ YoY.
With unproven unit economics, and a tiny addressable market size of high credit Indians, I can't see how!
That's not to say CRED will necessarily fail. They have a lot of money in the bank. An "undisclosed" acquisition is possible. Founder might sell secondaries.
Or I might be totally off base and they'll figure out how to cut cost by 50% while 4x-ing rev!
Many think I'm always negative about about India. I'm not!
India is not the only place that startups are feeling the heat in this market. But it is one of the few places where private company financials are reported to the MCA, and publicly available!
Anecdotally, many well-known US startups are running into the same issues.
In the US however, my sense is the issue is usually execution risk, not a fundamentally unproven TAM and unit economics.
There are many incredible startup businesses in India as well ā Zoho, Zerodha and Dream11!
Unfortunately, many of the others have a long way to go beyond a fat valuation to prove out their true value.
Turning $1 into 90š isn't business.