Cred's valuation slump signals caution for fintech firms

Fintech player Cred's recent fundraise of $75 million has come at a sharp reset of its valuations—signalling that the exuberance in the sector is coming down.

- SHIVANI SHINDE & PEERZADA ABRAR

After the fundraise, the firm's valuation has gone down to $3.5 billion, a fall of 45 per cent from the $6.4 billion in 2022. Valuations have fallen even as existing investors put money in the company, including Kunal Shah, founder and chief executive officer (CEO), Cred.

"Between 2022 and now, there has been a reset in the fintech market, both domestically and internationally. We have seen valuations come down and that is evident in the Cred fundraise. It will be fair to say that the market is much more realistic now," said a person in the know.

"When Cred made its entry, it genuinely had a different offering. But now, it has also got into credit. How is it different from any other fintech? There is not much innovation there. If you look at the credit segment (personal loans), almost all the fintechs have a write-off in the range of 12-13 per cent. I don't think Cred will be any different," said an investor when asked why the firm has seen its valuation drop so low.