India’s 9-month-old CRED raises $120M to help people improve their financial behavior

Many Silicon Valley companies and fintech startups in India today share a common mission: They all want to bring their financial services to the next billion users. Dozens of fintech startups that we have spoken to in recent months have told us that they all want to address much of India, one of the last great growth markets globally, in the next few years.

So you can imagine our excitement when we learned there is at least one startup that is going after just a few million users in the immediate future. We’re talking about CRED, a nine-month-old, Bangalore-based startup that is building solutions to incentivize credit card users in India to become more responsible with money and thereby improve their credit score.

CRED has raised $120 million in a Series B financing round, Kunal Shah, founder and CEO of the startup, told TechCrunch on Monday. He declined to share more information. The startup, which has raised about $145 million to date, is now valued between $430 million to $450 million, a person familiar with the matter told TechCrunch.

According to a regulatory filing, existing investors Sequoia Capital, Ribbit Capital and DST Global’s Gemini Investments led the round, with participation from Tiger Global, Hillhouse Capital, General Catalyst, Greenoaks Capital and Dragoneer.

Hundreds of millions of Indians today don’t have a credit score because they have never taken a loan from a recognized entity nor owned a credit card. According to the government’s official figures, fewer than 50 million credit cards are in circulation in India currently, with industry reports suggesting that the actual number of unique credit card holders is about half of that.

“Nobody taught us about how to use money,” Shah told TechCrunch in a recent interview. “This has created a huge trust gap in India. If you look at developed markets, systematic trust is very high between all the entities. Members don’t have to rely on third-parties. In India, even if you wanted to rent a flat, you look for brokers, for instance.”

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You can build that trust when you know how someone handles their money, and how they have handled it in recent history. “Our aim is to create a big membership community with high credit worthiness, therefore open up more opportunities for them,” Shah explained.

Shah is not going after the masses. He wants to focus on just the credit card users for now, and if he could win the trust of just half of those plastic card holders in India, he would consider it a success.

“Instead of chasing the mythological mass customers who are currently useful only on paper if you wanted to boast about your daily active user or monthly active user metric, our goal is to serve the existing users,” he said.

On CRED, users are offered a range of features, including the ability to better track their spending, get reminders and check their credit score, but more importantly, access to a range of lofty offers such as membership to a gym at a discounted price, access to good restaurants at low prices and subscription to various services at little to no charge. Users can access these features by earning points, which they can secure every time they pay their bills on time.

Varun Krishnan, editor of technology news site FoneArena, told TechCrunch that he has found CRED useful in getting reminders to pay his bills and likes that he can pay them through a range of payment options, including UPI apps and debit cards. “I have several cards and it is hard to track amounts and due dates of payment for each one. They send all these alerts on WhatsApp, which is a blessing,” he said.

These are the reasons that attracted many people like Krishnan to join CRED. That, and some incentive to pay his bills — though he hopes that CRED expands the range of offers it currently provides to customers.

That wish may soon come true. In the coming months, CRED will enable these highly sought-after customers to access some financial services from banks in a single-click. Additionally, it is also exploring expansion to some international markets, the aforementioned source said.

CRED does not charge users any money for joining its platform, nor for availing any of the features it offers. But it is generating revenue from some of the partners that are supplying offers on the app.

Generating revenue, however, is not the biggest focus for Shah currently. And he is one of the few people in the industry who can build a business with such conviction.

An industry veteran known for speaking the uncomfortable truth at conferences, it’s no surprise that Shah has won the trust of so many investors already. He built one of the biggest payment apps in India, Freecharge, and sold it to e-commerce giant Snapdeal for a whopping $400 million in one of the increasingly rare exits that India’s fintech market has seen to date.

Daily Crunch: A big funding round for Boll & Branch

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. Bedding startup Boll & Branch raises $100M

The company sells sustainably sourced sheets, pillows, mattresses and towels. Until now, it had only raised $12 million in outside capital.

This new funding comes from L Catterton. CEO Scott Tannen compared Boll & Branch to the firm’s previous investments The Honest Company and Peloton — companies that “have become the winner in the startup competition” and are ready to “really become household names.”

2. Nvidia and VMware team up to make GPU virtualization easier

Nvidia today announced that it has been working with VMware to bring its virtual GPU technology to VMware’s vSphere and VMware Cloud on AWS.

3. Megvii, the Chinese startup unicorn known for facial recognition tech, files to go public in Hong Kong

Founded by three Tsinghua University graduates in 2011, Megvii is among China’s leading AI startups, with its peers (and rivals) including SenseTime and Yitu. Its clients include Alibaba, Ant Financial, Lenovo, China Mobile and Chinese government entities.

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4. Watch the first look at ‘Star Wars: The Rise of Skywalker’ from Disney’s big fan event

This video goes really heavy on the nostalgia.

5. Experimental US Air Force space plane breaks previous record for orbital spaceflight

The Boeing-built X-37B space plane commissioned and operated by the U.S. Air Force has now broken its own record for time spent in space. Its latest mission has lasted 719 days as of today.

6. Is Knotel poised to turn WeWork from a Unicorn into an Icarus?

Knotel has reversed the WeWork “co-working” model. Instead of “WeWork” branding everywhere, Knotel simply leases buildings, takes a small office for its staff and then kits out the space in a way where a company can just move straight in and call it their own. (Extra Crunch membership required.)

7. This week’s TechCrunch podcasts

John Vrionis of Unusual Ventures joins Equity to talk about why he thinks “stage-agnostic” investing doesn’t make any sense. And on Original Content, we review the Netflix movie “The Red Sea Diving Resort.”

Bedding startup Boll & Branch raises $100M

Boll & Branch, which sells sustainably-sourced sheets, pillows, mattresses and towels, is announcing that it has raised $100 million in a strategic investment from L Catterton’s Flagship Buyout Fund.

This looks like a big change from the company’s previous approach to  funding. It was self-funded for its first two years (resulting CEO Scott Tannen described as “a lot of maxed out credit cards and five mortgages on my house”), and even when it started looking at venture capital, it only raised a total of $12 million from a single institutional backer, Silas Capital.

In fact, when Recode wrote about Boll & Branch’s Series B last year, it described the startup as one “that wants to raise as little venture capital as possible.”

Tannen said that when he founded the company with his wife Missy, they wanted to “build a sustainable business from the ground up,” and that wasn’t just about the products — they didn’t want to build a company that was “ultimately designed from day one to be sold.”

As a result, he said, Boll & Branch has been profitable for the past four years and is now bringing in “nine-figure revenue.” He compared it to other L Catterton investments like The Honest Company and Peloton, companies that “have become the winner in the startup competition” and are ready to “really become household names.”

In a statement, L Catterton’s Nik Thukral described Boll & Branch as “one of the most beloved bedding brands” and said it “capitalizes on several compelling trends including the emergence of authentic, pure, and chemical free products that can be traced back to their origin, as well as consumers’ heightened focus on healthy living.”

The company’s next steps include expanding internationally — Tannen said that while the company doesn’t currently sell outside the United States, “It’s hard to imagine a country or market in the world that doesn’t make sense for Boll & Branch.”

It will also continue expanding the product lineup. Tannen hinted at “really interesting product introductions” coming in the next few months. They might not be the most obvious additions to the lineup, but he said these decisions come from asking, “What does the home goods brand of the future look like?”

He added, “That’s what we’re trying to be, versus trying to look in the shopping mall and just creating a new version of something [that already exists].”

Style recommendation startup Stylitics raises $15M

Stylitics, a startup powering outfit-based shopping recommendations for online retailers, is announcing that it has raised $15 million in Series B funding.

The company was initially known for ClosetSpace, a mobile app that provided consumers with outfit recommendations and inspiration.

While the app is still live, Stylitics’ focus has shifted to its retailer tools — for example, when you look at this blouse on the LOFT website or this shirt on the Banana Republic site, Stylitics is powering the “Ways to Wear It” and “Wear It With” widgets recommending other products that you could purchase to complete the outfit.

The company said it’s drawing on brand merchandising guidelines, engagement and purchase data from the retailer, broader trend data and stylists’ expertise to create these recommendations, which are updated as products sell out.

In an email, founder and CEO Reuben Deuskar (pictured above) added that Stylistics is able to provide useful recommendations from the start, without requiring time to train with a retailer’s data.

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“We have billions of data points from powering outfitting on dozens of sites for more than four years, so we have a very good idea on Day One what an excellent and high performing outfit should look like for each product for a new customer,” Deuskar said.

Stylitics says it has driven $300 million for its retail partners — a group grown in the past year to include Ann Taylor, Calvin Klein, Chico’s, Gap, Kohl’s, Macy’s, Under Armour and White House Black Market.

The startup has now raised a total of $21 million. The new round was led by PeakSpan Capital, with participation from Trestle LP. PeakSpan co-founder Phil Dur is joining the Stylitics board.

“With the rapid growth of digital commerce, retailers are scrambling to keep pace with the consumer demand for more visually exciting and compelling shopping experiences,” Dur said in a statement.

The startup said it will use the money to grow its sales and marketing team while new developing new types of shoppable content and in-store experiences

India’s FreshToHome raises $20M to grow its fish, meat, vegetable, and milk e-commerce platform

FreshToHome, a Bangalore-based e-commerce startup that sells fresh fish, chicken, and other kinds of meat, has raised $20 million in a new financing round as it looks to expand its footprint in the nation.

The Series B round for the startup was led by Iron Pillar, with Joe Hirao, the founder of Japan’s ZIGExn also participating in the round. The startup, which closed its $11 million Series A financing round three months ago, has raised $33 million to date.

FreshToHome sells “100 percent” pure and fresh — it adds no preservative or any other chemicals —  vegetables and meat in Bangalore, Mumbai, and Pune — the latter two of which it recently entered. Unlike most other marketplaces, FreshToHome has built its own supply chain network, giving it better control over delivery.

As a result of this, FreshToHome is able to deliver the perishables on the same day and as soon as up to two hours, Shan Kadavil, CEO of FreshToHome, told TechCrunch in an interview. The startup also delivers perishables in the UAE.

The startup has amassed 650,000 customers and recently started to sell milk in Bangalore, another market segment that remains largely unstructured in the nation.

And that growth has helped the startup attract some attention. Several major players in the nation, including Amazon India and Walmart that have recently expanded to include perishable category, has held talks with FreshToHome to acquire a stake in the startup, a person familiar with the matter told TechCrunch.

The cold-chain market of India is estimated to grow to $37 billion in next five years.

More to follow…

India’s BharatPe raises $50M to help merchants accept digital payments and secure working capital

BharatPe, a New Delhi-based firm that is enabling hundreds of thousands of merchants to start accepting digital payments for the first time each month and also giving them access to working capital, has raised $50 million as it looks to scale its business in the nation.

The Series B round for the one-year old startup was led by San Francisco-headquartered VC firm Ribbit Capital and London-based Steadview Capital, both of which have previously invested in a number of financial services in India.

Existing investors Sequoia Capital, Beenext Capital, and Insight Partners also participated in the round, pushing BharatPe’s all-time raise to $65 million. The new round valued the startup at $225 million, Ashneer Grover, cofounder and CEO of BharatPe, told TechCrunch in an interview.

Google and Amazon, both of which offer payment services in India, were also in advanced stages of talks to fund BharatPe’s Series B financing round, but the startup’s founding team was not keen on diluting their stakes especially in the wake of BharatPe’s recent growth, a person familiar with the matter told TechCrunch.

BharatPe operates an eponymous service to help offline merchants accept digital payments. Even as India has already emerged as the second largest internet market with over 500 million users, much of country remains offline. Among those outside of the reach of the internet are merchants running small businesses such as roadside tea stalls.

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To make these merchants comfortable in accepting digital payments, BharatPe relies on QR codes built as part of government-backed UPI payments infrastructure. “We get them to put up a QR code in their shops, and any customer that uses a UPI-powered payments app — which is now supported by nearly every payments app in India — can pay these shop owners digitally,” said Grover.

Through BharatPe, these merchants also get access to a simplified dashboard on their phones to track the customers who owe them money and get periodic reminders.

BharatPe has amassed more than 1.5 million merchants on its platform. It processes over 21 million transactions a month worth more than $83 million, Grover said.

BharatPe also allows merchants to secure short-term loans. New merchants can secure about $500 for a period of three months from BharatPe. As merchants spend more time on BharatPe, the firm expands the amount to about $2000.

The lending business is crucial to BharatPe. Payment apps make little to no money through making transactions on their platforms. Those processing UPI payments can not even charge a small commission to merchants. “There is no money to be made in doing payments in India,” Grover said. So you charge small interest on loans.

Access to working capital is a major challenge in developed markets such as India. According to a World Bank report, more than 2 billion people globally do not have access to working capital.

Grover said BharatPe aims to use the fund to add about 3.5 million merchants in the next 12 months. The firm has more than 2000 sales people who are adding 400,000 new merchants to BharatPe each month, he said.

Rest of the money will go into financing the loans on the platform and building new solutions. Later today, BharatPe will launch a new service to connect suppliers and merchants through BharatPe so that their accounts are in sync.

Is Knotel poised to turn WeWork from a Unicorn into an Icarus?

The day of reckoning for the ‘flexible office space as a startup’ is coming, and it’s coming up fast. WeWork’s IPO filing has fired the starting gun on the race to become the game-changer both in the future of property and real estate but also the future of how we live and work. As Churchill once said, ‘we shape our buildings and afterwards our buildings shape us’.

Until recently WeWork was the ruler by which other flexible space startups were measured, but questions are now being asked if it deserves its valuation. The profitable IWG plc, formerly Regus, has been a business providing serviced offices, virtual offices, meeting rooms, and the rest, for years and yet WeWork is valued by ten times more.

That’s not to mention how it exposes landlords to $40 billion in rent commitments, something which a few of them are starting to feel rather nervous about.

Some analysts even say WeWork’s IPO is a ‘masterpiece of obfuscation’

Frontier technologies are moving closer to the center of venture investment

As the technologies that were once considered science fiction become the purview of science, the venture capital firms that were once investing at the industry’s fringes are now finding themselves at the heart of the technology industry.

Investing in the commercialization of technologies like genetic engineering, quantum computing, digital avatars, augmented reality, new human-computer interfaces, machine learning, autonomous vehicles, robots, and space travel that were once considered “frontier” investments are now front-and-center priorities for many venture capital firms and the limited partners that back them.

Earlier this month, Lux Capital raised $1.1 billion across two funds that invest in just these kinds of companies. “[Limited partners] are now more interested in frontier tech than ever before,” said Bilal Zuberi, a partner with the firm.

He sees a few factors encouraging limited partners (the investors who provide financing for venture capital funds) to invest in the firms that are financing companies developing technologies that were once considered outside of the mainstream.

Watch YC CEO Michael Seibel chat startups, prices, and tech’s center of gravity

This week, nearly 200 startups convened at Y Combinator Demo Day to pitch venture capitalists, angels and other folks looking to spend some money.

YC chief executive officer Michael Seibel took some time out of his busy schedule to join us on a special episode of Equity, TechCrunch’s venture-capital-focused podcast. Given that we had Seibel to chat with, Kate and Alex decided to drop the regular format and riff interview-style about what the accelerator program is up to.

We discussed the new startup batch (roundups here, here, and here), recent changes to the program, rising deal prices, SAFEs versus convertible notes and the future of technology in San Francisco. Regarding price, here’s what Seibel had to say:

“It’s a competitive market where investors are bidding against each other. So if you see pricing go up you have to ask yourself the question, ‘where is the money supply coming from?’ The big trend over the last six years has been institutional investors moving from just kind of Series A funds and growth funds down to the seed level. When you looked at Demo Day when I was going through the first time it was full of angels – people investing off their own personal balance sheet. And if you look at the room today it’s full of funds. The reality is that, as the pool of capital increases in the seed world, the seed investors are competing against each other and one of the easier ways for investors to compete is to bid up price.”

But, Seibel continued, YC doesn’t necessarily consider the situation a net-positive, because companies that raise such huge rounds can spend money as though they had reached the fabled “product-market fit,” when in reality they have not. They just have money, which can feel the same but is not.

Ultimately, the thing that’s going to kill you, Seibel says, isn’t fundraising or who you raised from. The thing that’s going to kill you, he says, is that you didn’t build something your customers wanted.

Watch a clip from the interview here:

To hear more from Seibel and watch four more video clips discussing YC, the new class, and the startup game in San Francisco and beyond, become an Extra Crunch member. You can learn more and try it for free. 

Crimson Education, a platform to help students get into top universities, nabs $5M at a $245M valuation

Earlier this year, the world turned very sour on a group of rich and famous parents who were exposed for having paid big money to get their not-so-academic offspring into competitive universities, using tactics like cheating on tests and more to get those offers. But even if you put illegal manoeuvres to one side, money and power have (frustratingly) long played roles in gaming the system to access higher learning.

Now, a startup that’s created an alternative route for those who are smart and willing to put in the work to get into those hallowed halls has raised some funding as it continues to grow. New Zealand’s Crimson Education, which has built a tech platform and consulting service to help students identify top schools and what they need to do in terms of academic and other activity to get in, has closed a $5 million round of funding. With this latest investment, the company is now valued at $245 million post-money, a big jump on the $160 million (NZ$220 million) valuation Crimson had in 2016 when Tiger Global invested $30 million.

This latest is a small but strategic round: the money is coming from Solborn Investment, the VC arm of the Korean holding company Solborn, and it’s specifically aimed at helping Crimson build out its business in that country (Korea has a huge population of young people who are very keen to study outside the country.) The startup has raised $42 million to date, and from what we understand it’s quietly gearing up to raise another round to double down on another new market for the company: students in the US, looking for better guidance to get into schools in the US.

The leap in Crimson’s valuation is due to the startup’s success, both in terms of student achievements and the business model that has been built around this.

The company currently works with 1,500 tutors and has had 20,000 students use its platform to date. There have been more than 60 offers of places at Ivy League schools to Crimson students; a further 160+ to Oxford, Cambridge and other competitive schools; and over 500 successful applications to the top 50 universities in the US.

As for the business model, pricing varies depending on the stage of the student (it offers programs for kids as young as 11), and what that student does — eg straight SAT tutoring or a full-service program that includes identifying schools, getting the right qualifications in order and applying — but in either case, it’s lucrative for Crimson. The average revenue per student in the US ranges between $5,000 and $10,000. Tutoring starts at $80 per hour, and $2,000 per module for the younger program.

These costs are not small — you might even say it sounds like an extra year or two of college education — and indeed some 15% of students get some form of financial aid to use Crimson.

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Crimson was started in 2014 after one of the founders, Jamie Beaton, decided he wanted to apply to top schools beyond his native New Zealand. He eventually ended up at Harvard, and on the way he identified a gap in the market for international students who wanted to do the same but found navigating how to map one country’s educational system and experience onto another’s. So, he decided to build his own experience and methods into a business with two equally ambitious co-founders (Sharndre Kushor, pictured below with Beaton, and Fangzhou Jiang). He was still a student at Harvard when the startup was incorporated, hence the “Crimson” of the name.

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The company today is based around not just a network of human tutors, but a set of proprietary algorithms to identify what a student needs to do and the likelihood of achieving it, an app, a popular YouTube channel, a Q&A board, and a “philanthropy” arm which is focused on providing financial aid to people to use Crimson, and to help Crimson students access and get scholarships and other financial aid to study.

Initially focused on international students who need help navigating the waters of applying to schools elsewhere, it turns out that domestic students need and want the same kind of advice and help, too.

Beaton is now 24, and unsurprisingly he has become something of a poster child for Crimson because of his own grit-and-determination success.

But to be clear, Beaton was not your average high school student, and he isn’t even your average over-achiever.

Before he turned 18, he’d done some 10 A-Levels (somewhat akin to AP exams in the US, but more rigorous. Focused on the whole of your last two years of school and mandatory, most people take only three focused on what they eventually want to major in in undergrad).

Beaton had made the effort to engage outside tutors to work with for all the subjects that his New Zealand high school could not accommodate, and engaged others to help him prepare for US-specific exams like the SAT, as well as work through the application process for the many schools whose admissions applications he filled out.

And since his undergrad years at Harvard, where he studied applied mathematics, he received a masters at Harvard in the subject, then an MBA and a masters of education at Stanford, and is now a Rhodes Scholar at Oxford studying public policy.

So as the company continues to grow, it will be worth watching how it navigates its brand, its message, and the inevitable involvement of more than the early adopting high-achievers who have used Crimson to date.

That is to say, the company naturally attracts parents and kids who — even if they are only fractionally as self-motivated as Beaton seems to be — will already have a lot of focus and academic ability and may therefore be predisposed to succeeding through the platform. How will that change as it grows in popularity, and how will Crimson measure its success?

In answer to the question, Beaton said that there is already a lot of academic analysis in place to make sure that Crimson is not effectively an echo chamber, providing help to those who are already well along the way to academic success. “When we bring a student on board we do a lot of academic assessments,” Beaton said. “We then look at baseline achievement level, and we can use that to track our contribution.”

Similarly, the aim is not just for prestigious schools — even though that is essentially what it is right now — it’s to find the right school and right subject for the right person.

If Crimson can capture that sucessfully, there is a lot of potential for the company to transcend the university admissions use case and provide an effective platform to replace those slightly stilted, standardised careers quizzes that exist today to help wayward teenagers figure out what they might want to do, and how to get there.

“This is about helping to unlock future opportunities and providing advice,” Beaton said. “You can’t just push students into something.”