How a $4 billion Indian startup won Meta's backing but lost its founder to WhatsApp

MUMBAI, MAHARASHTRA, INDIA - 2022/09/20: A man checks his phone near the Cred logo during the Global Fintech Fest in Mumbai.

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Indian fintech startup Cred will raise $900 million in a funding round led by Mark Zuckerberg's Meta— but has lost its founder and chief executive, Kunal Shah, to WhatsApp.

The startup, where Meta will soon become a minority investor, was valued at over $4 billion in its latest funding round, the Indian firm said in a press release on Monday. These funds will be used to "accelerate growth, build institutional muscle, and extend its leadership across categories," it added.

Cred is a platform built for affluent and creditworthy Indians that rewards them for using it to manage and pay credit card bills. It was founded by Shah less than 10 years ago and, according to the company, now processes over 40% of credit card bill payments in the country and is building a lending business.

Meanwhile, Meta's WhatsApp has 500 million people in India using its messaging services, but is struggling to popularize its payment tool, WhatsApp Pay, in the country's hyper-competitive digital payments space.

The social media giant will not gain access to Cred's member data, the release said. Instead, Meta now has access to Shah, who takes over a leadership role at WhatsApp, replacing Will Cathcart.

"While it's come very far, the delta between WhatsApp today and its full potential is massive," Shah said in a post on X.

According to investors in Cred, the serial fintech entrepreneur has been pivotal to the firm's success, creating an engaged userbase of over 170 million creditworthy Indians.

"The company [Cred] has created a category, amassed millions of highly engaged users, and built a sound economic engine," Shailendra Singh, managing director of PeakXV Partners, said in the release.

He added that a lot of the credit for Cred's "unusual success goes to Kunal [Shah]."

But even as Cred scores high in generating engagement, data from the Indian startup intelligence platform Tracxn shows it is yet to turn profitable. Though Shah, in his post on X, has claimed that the firm has had its "first profitable quarter."

While Shah will move to Meta, Miten Sampat, who was driving strategy and finance at Cred, will take over as the interim CEO. Simultaneously, the board will be in the process of "constituting the right leadership structure towards eventual IPO," the Indian company said.