In the glitzy world of Indian startups, Cred has become a poster child for growth-at-all-costs. Founded in 2018 by Kunal Shah (also co-founder of FreeCharge), the fintech app has dazzled investors with flashy marketing and sky-high valuations, yet it has never made a profit. In fact, over seven years Cred has mustered roughly ₹4,500–4,600 crore in total revenue against a staggering ₹5,215 crore in accumulated losses. This disconnect has ignited a fiery debate:
Why do we lionize founders like Shah and startups like cred when their companies bleed cash year after year?
A recent LinkedIn post by Deloitte consultant Adarsh Samalopanan bluntly posed the question. He noted that Shah’s ventures, FreeCharge and now Cred, have never shown a profitable year, despite more than 15 years in business. “Fifteen years into entrepreneurship, he has yet to record a single profitable financial year—so remind me again why we celebrate him?” Samalopanan wrote. That challenge caught fire online: critics demanded clarity on inflated valuations, while fans lauded Shah’s long-term vision. But the facts are sobering. Cred’s cumulative numbers underscore a decade of relentless cash burn, prompting this analysis of Cred’s finances and the broader Indian startup frenzy that celebrates founders even as red ink flows.
Cred’s Money Pit: Revenues vs. Losses
From the outset, Cred’s model has been to spend heavily to acquire users. The app offers big sign-up bonuses and cashbacks on credit-card bill payments, subsidized by venture capital. And invest they have. In June 2025 Cred raised about ₹617 crore (≈$72 million) from Singapore’s GIC and other investors; but crucially at a sharply reduced valuation. Cred’s price tag was slashed 45% to $3.5 billion, down from $6.4 billion just three years earlier. This down round was framed by analysts not as a failing, but as part of a broader “shift” in fintech: “investors are placing greater emphasis on sustainable growth and IPO readiness over breakneck expansion”.
Yet the underlying figures remain unsettling. According to regulatory filings, Cred’s fiscal 2024 revenue jumped 66% to ₹2,473 crore, but losses barely budged as it still ran an operating loss of ₹609 crore (down only from ₹1,024 crore the year before). Over its entire life, Cred has logged roughly ₹4,493 crore in revenue against ₹5,215 crore in net losses. In other words, even as its top line (sales) has grown, its bottom line (profit) is still deeply negative. And the full-year 2025 burn rate (hundreds of crores lost per year) outstrips the revenue Cred earns.
To put Cred’s trajectory in context, consider Kunal Shah’s track record. He first found success (and controversy) with FreeCharge, a mobile recharge startup launched in 2010. By 2015 FreeCharge was generating ₹35 crore in revenue but had burned ₹269 crore in losses through cashback promotions. It was sold to Snapdeal for ₹2,800 crore, a heady sum. But just two years later Snapdeal sold FreeCharge to Axis Bank for ₹370 crore; barely 14% of that earlier price. Shah used his FreeCharge windfall to found Cred, only to see history repeat: blitz-scale growth financed by massive losses.
Cred’s narrative has been one of hype: glossy advertising campaigns, endorsements from celebrities, and an aura of exclusivity (only creditworthy users get invites). But as investors are now soberly admitting, credibility can’t last without a path to profit. Critics point out that Cred’s revenues, while growing, are still tiny relative to its valuation, and its “cash burn” is enormous. As one analyst summed it up, Cred’s recent valuation cut wasn’t a blip but a signal that “breakneck expansion” without profits is no longer the investor priority.
FreeCharge to Cred: The Founder’s Arc
Understanding Cred requires a quick detour back to FreeCharge. Shah’s first major exit offers a cautionary prequel. FreeCharge burned investors’ cash with lavish user subsidies. By mid-2015 it reported only ₹35 crore in revenue against ₹269 crore in losses. Its big exit to Snapdeal looked like a victory, but the discounted Axis sale revealed the thin margins: Snapdeal paid ~7.5x peak revenue, but held it for just two years before effectively taking a 86% loss on that investment.
This pattern should have been a warning sign. Instead, Shah launched Cred with similar tactics, perhaps even more aggressive. By mid-2025, Cred had raised over a thousand crores from marquee backers like Tiger Global and DST, and its valuation briefly made Shah a unicorn-founder. But the economics remained elusive.
To summarize Cred’s journey:
- 2018: Cred founded by Kunal Shah (then 15 years into entrepreneurship).
- 2018–2024: Cumulative revenue ~₹4,500 crore; cumulative net losses ~₹5,215 crore.
- June 2025: Cred raises ₹617 crore at a $3.5 billion valuation (45% lower than 2022 peak).
- FY24 Metrics: ₹2,473 crore revenue, ₹609 crore loss – an improvement in revenue but still deep in the red.
These numbers invite scrutiny. One LinkedIn user quipped sarcastically about the logic: “With the same logic, WhatsApp never made profit, so the founder is useless,” poking fun at the idea that profitless growth equals greatness. Others defended Shah, praising him for “redefining rules” even while profits lagged. Yet the fact remains: after seven years and thousands of crores spent, Cred’s profitability horizon is still nebulous.
Is Cred’s strategy working? Its own data suggests users love some of its products (loan offerings, insurance via Cred Garage, etc.), but none are yet big enough to offset spending on rewards and marketing. The company proudly touted a 66% surge in topline for FY24, but that simply underscores how far from profit it is: higher revenue, yes, but still a ₹600+ crore gap in the ledger.
Kunal Shah and his supporters argue that this is how tech giants are built; you “earn market share first, profits later.” Shah himself recently responded to critics with the now-familiar startup defense: that we should “celebrate everyone who is taking risk in life and being an entrepreneur”, especially in a future shaped by AI and innovation. He reminds skeptics that Cash-Rich winners like WhatsApp also went years without profit. But not everyone is convinced by that rationale: writing off endless losses as part of a visionary plan skirts accountability.
The Cult of the Founder: Idolizing Vision over Viability
Cred’s case is part of a larger phenomenon in India’s startup ecosystem: founders become cult figures, and early valuations are treated as proof of genius rather than market sentiment. The adulation of founders often precedes scrutiny of their financials. Kunal Shah is far from alone in this. In recent years, charismatic entrepreneurs like Byju Raveendran (Byju’s), Vijay Shekhar Sharma (Paytm), and others have been lauded as industry rock stars even as their companies burn money.
Bloomberg captured the froth in 2024: “India looked like the next big market for technology startups. Now, the country’s leading startups are struggling to survive and funding for the next generation of founders is drying up.” It noted how flagship names fell from grace: Byju’s, once valued at $22 billion, saw its valuation plunge over 90%; Paytm’s 2021 IPO was the largest in India until its stock collapsed by about 80%. Social media was abuzz: one commenter mockingly linked WhatsApp’s decades of losses to dismiss Paytm and others.
In this fevered climate, much of the discussion around losses is phrased as a test of faith. Defenders say profit isn’t everything, especially in early-stage tech; market disruption and scale are what matter. One fan posted on LinkedIn: “FreeCharge revolutionized digital payments before UPI even existed. CRED turned credit card bills into a premium experience; Profitability? Not yet.” This echoes a common script: if you “change markets,” eventually the rewards will come.
Yet critics argue that this script is increasingly hollow. The founder-as-fashion mentality encourages investors to pour in without clear benchmarks. When 95% of startups are loss-making, as IvyCap’s Vikram Gupta observes, one must ask why investors keep underwriting deficits. If venture capital is a bet on the future, Indian VCs seem to have been betting on the persona of the founder and the promise of user adoption more than on sound unit economics.
For Cred specifically, the founder-hype factor is real. Shah has become a poster boy for fintech innovation. But as Samalopanan’s question implies, fame doesn’t pay the bills. If we cheer every pivot and branding achievement without demanding a profit motive, investors risk repeating past busts disguised as booms.
Burning Cash at Home: The Widening Red Ink
Cred’s woes are emblematic of a broader trend: Indian startups burning capital as they chase unicorn status. Many of the country’s most celebrated companies have similar stories.
- Byju’s (EdTech): Once the darling of the ecosystem at a $22 billion peak valuation, Byju’s crashed spectacularly. Its revenue did not collapse, but its losses exploded. In one year (FY2020–21) losses jumped from ₹252 crore to ₹4,564 crore, reflecting heavy marketing and acquisitions. By 2023, investors had all but reset Byju’s valuation from billions to merely $1–3 billion. The founders faced calls to step down as fundraising turned desperate. This fall was foretold by similarly unsustainable spending and opaque accounting; hallmarks of hype outweighing fundamentals.
- Paytm (Fintech): India’s first big fintech success story also became a cautionary tale. Its IPO in 2021 was a blockbuster, but the market quickly soured. Paytm’s stock “collapsed about 80%” after listing. Behind the scenes, Paytm had racked up huge losses on its payments and lending businesses. Regulatory crackdowns (like an RBI ban on its bank arm) sent its share price tumbling 55% in weeks. Despite these warning signs, many VCs had poured money into Paytm betting on market leadership. Today, investors ask: was the chase for India’s “Cash App” worth it?
- OYO (Hospitality): The hotel startup OYO soared to a ~$10 billion valuation by aggressively partnering with small hotels worldwide. But by 2021 the model was breaking down. SoftBank’s analyses and the market found that deep discounts and expansion were bleeding cash. OYO’s IPO plans have been deferred as the company undergoes repeated valuation cuts. In SoftBank’s accounts, OYO’s woes contributed to quarterly losses in the billions. In short, another unicorn setback where initial hype yielded to harsh market reality.
- Swiggy and Ola (Delivery/Auto): Food delivery giant Swiggy and ride-sharing leader Ola (and its electric vehicle spin-off Ola Electric) have similarly shown that unlimited subsidies only last so long. Swiggy’s revenues may grow, but its losses nearly doubled in one recent quarter (from ~₹555 crore to ₹1,081 crore) as it tried to scale. Ola Electric reported a ₹564 crore quarterly loss on thin sales and heavy discounts. Share prices fell roughly 40% for both companies amid these challenges. SoftBank’s Vision Fund 2 (which backed many of these startups) suffered a ¥526 billion loss in part because its Indian holdings like Swiggy and Ola saw deep markdowns.
- Other Unicorns (Unacademy, Meesho, Lenskart, Udaan): Even edtech challenger Unacademy, e-commerce platforms Meesho and Udaan, and eyewear retailer Lenskart have endured major valuation cuts. Unacademy’s valuation was halved after its fundraising. Meesho’s share price drop cost billions on SoftBank’s books. Lenskart took roughly $1.5 billion in write-downs. This litany of markdowns suggests the era of evergreen unicorn growth is coming to an end.
The bottom line: When the big names stumble, investor sentiment quickly chills. The chart-topping valuations of 2020–21 are now memories. As Bloomberg put it, India’s $45 billion of supposed startup wealth “has turned to dust”. Companies that once seemed invincible are now under intense scrutiny.
Why Do VCs Keep Funding Losses?
Given this backdrop, a natural question arises: Why did VCs ever give these companies so much rope? The answer lies partly in the nature of venture funding and the intoxicating buzz of high-growth potential.
- Betting on the Future: VCs make (and lose) money on the expectation of future cash flows, not current profits. As IvyCap’s Vikram Gupta explains, startup valuations hinge on long-term assumptions. “Valuation is not directly proportional to profits,” he notes, because a company’s worth is theoretically the present value of all future profits. In early stages those assumptions are wild guesses, often based on market potential and scalability. Gupta points out that “nearly 95 percent” of Indian startups may be loss-making today, yet “many of them raised funds and some even raised money in IPOs”. This reflects how investors often reward growth metrics (user count, market share) over immediate profitability.
- Growth-at-All-Costs Era: For years, Indian VCs chased the playbook popular in Silicon Valley: subsidize everything to grab market share. Cheap capital was abundant, and FOMO drove funds to pour into any pitch of hyper-growth. As Unlisted Intel’s analysis notes, “grow fast, raise capital, and expand aggressively even at the cost of profitability” was the prevailing mantra. Crucially, this wasn’t unique to India – it was a global trend. In this context, Cred’s war-chest and loss-making ways made sense to many backers: if it could corner the credit-market niche now, profits would follow later.
- The Amazon Example: Investors often rationalize losses by pointing to tech giants that were unprofitable for years. Amazon, for instance, spent decades without profit, yet is now immensely valuable. Startups and VCs invoke this narrative constantly. Cred’s supporters might similarly say “wait 5–10 years and see.” But history also has countless examples of early leaders burning out when they never found a sustainable edge. The danger is assuming past success stories will repeat with every new startup.
- Customer Base and Network Effects: A large, sticky user base can justify losses. In fintech or social commerce, the logic is that once millions are hooked on the platform, monetization becomes easier. Many VCs thus gauge startups by metrics like monthly active users or total transaction volume. In fact, Vikram Gupta highlights that for any investor, “a customer base is one of the fundamental criteria” for backing a startup. Cred, for instance, touts its growing community of credit-card users and the “premium” experience it offers. But a large user base alone doesn’t pay salaries or servers; only revenue does.
- Herd Mentality and Brand Worship: There’s an element of bandwagon in startup funding. When top funds invest in a company, others often follow to avoid missing out. Simultaneously, charismatic founders become marketable assets. In India, founders like Shah, Raveendran, and Sharma have been widely credited with “visionary” insights. That cult of personality can blind investors to the numbers. A StartupTalky explanation captures this: many investors, especially younger ones, are drawn by a company’s brand image and mission rather than current profits. For example, investors once lined up to fund Paytm and Zomato largely on their brand recognition.
- Risk Diversification and High Upside: Some VCs adopt a “lottery ticket” strategy: they know most bets will fail, but a few will pay off massively. Hence, they’re willing to fund a dozen loss-making startups, hoping one will be the next big winner. As one StartupTalky writer suggests, big investors can afford to “gamble” with their portfolios, expecting that even if many startups flame out, the winners will cover the losses.
- Market Expectations and Exits: In India, many entrepreneurs see IPOs or acquisitions as the endgame. VCs fund heavy losses if they believe it will lead to a big exit. Until recently, India barred heavily loss-making companies from IPOs, but that changed in 2021. Now even unprofitable startups can list (subject to conditions), so investors might push growth to hit IPO thresholds. The hope is that a public listing or sale will justify years of investment, as long as the company looks big enough at the top line.
Put simply: VCs are betting that these companies will eventually turn profits or exit at huge valuations. They’re betting on the ecosystem too: India’s huge population and increasing tech adoption mean that a company capturing even a small percentage of the market can be very valuable.
However, this philosophy carries risks. Vikram Gupta warns that public markets are no longer rewarding unbridled growth. He notes a recent correction in tech stocks and tighter funding conditions. Now, he argues, only “sound businesses at more realistic valuations” will thrive. In this more cautious climate, many investors are finally demanding a clear path to profit before putting in more money.
A Funding Winter – Is the Party Ending?
Signs of reckoning are everywhere. By 2023–2024, the “frothy boom” had given way to a funding slowdown. The flood of cheap dollars has receded, and investors have grown more discriminating. According to Unlisted Intel, “by 2023 and 2024, the funding slowdown had forced many startups to rethink their strategies. High-growth but loss-making companies that previously raised capital with ease suddenly faced investor scrutiny”. Well-known unicorns have begun cutting costs and chasing profitability. E‑commerce and delivery startups which once splurged on deep discounts are tightening belts and focusing on unit economics.
In finance-specific news, SoftBank’s recent results underscore a global reckoning. Its Vision Fund 2’s largest losses came from markdowns in Indian startups, reversing what could have been a huge quarterly profit. This has put pressure on funds to demand better performance. Cred’s own 45% valuation cut in June 2025 wasn’t just about one company – it echoed a sector-wide shift. The fact that Cred attracted more funding even at a lower valuation shows there’s still interest, but investors have made it clear: “sustainable growth and IPO readiness” now matter more than aggressive burn.
Even in boardrooms, questions are changing. The exuberance of 2018–2021, when venture capital seemed boundless, has dimmed. Investors and entrepreneurs alike are asking: When will the losses stop? Cred’s path forward is under new scrutiny: can it really turn profitable within its self-imposed timeline (Shah has hinted at an IPO in a couple of years)? And if not Cred, which companies will? The recent data suggests that without a massive shift in strategy, many of these ventures will continue accruing losses for the foreseeable future.
Reconciling Hype with Reality
So where does that leave us? The Cred saga, and its parallels across India’s startup landscape is deeply instructive. It highlights the dangers of mania over metrics. Burning vast sums without a clear profit plan may boost headlines and valuations temporarily, but eventually the numbers must add up.
Cred’s defenders will insist that innovation and scale require sacrifice, that today’s losses are seeds for tomorrow’s gains. Yet for an ecosystem to mature, voices of skepticism must be heeded. As one consultant asked, “why do we celebrate” a founder who has not delivered profits in 15 years? This inquiry is less a personal attack on Shah than a critique of the values driving the startup culture.
Investors have reasons to keep faith. A deep-pocketed fund might view a high-priced down round as a bargain if it believes in the long game. Founders have reasons too: their businesses often solve real problems or offer novel services, and they genuinely hope profitability is on the horizon. But it’s wise to remember that venture success stories are rare. For every Amazon, there are hundreds of lost investments.
India’s tech future is often tied to these big names, but it doesn’t have to be. A healthier startup scene would balance visionary ideas with sound financial discipline. Cred can still become profitable, perhaps as digital lending or insurance scales, but it needs to slow the burn and grow revenues faster. Other companies must also focus on sustainable units, not just headlines.
Ultimately, celebrating founders is good, but blind celebration can be dangerous. The real marvel would be consistent value creation. If Kunal Shah and peers can someday pivot from eye-catching marketing to actual earnings, the cheerleading will be justified. Until then, the rest of us (and especially the investors on the hook) may find the bravado disturbing. As losses mount and valuations oscillate, a dose of cynicism is in order. In the end, cash doesn’t lie, and the ledgers of Cred, Byju’s, Paytm, and others show that India’s startup dream will have to reconcile with the hard math of profits, sooner or later.
