afaqs! news bureau

Why is CRED not profitable yet?

Fintech platform CRED recorded a net loss of Rs1279 crore in FY22, despite the platform’s revenue surging from Rs 95 crore in FY21 to Rs 422 crore in FY22. 

Highlighting the company's losses that have more than doubled from Rs523 crore in 2021, an Instagram user anonymously asked the platform’s founder, Kunal Shah, why CRED isn’t profitable yet. Shah answered the question through an Instagram Story.

According to Shah, tech companies invest most of their capital in generating engagement and building the brand. He wrote, “Tech companies invest capital for several years in building large distribution and engagement before they monetize.”

Why is CRED not profitable yet?

According to the brand, the user base of the platform has reached 11.2 million members in 2022, opposed to 7.5 million in FY21. With a significant growth in the revenue, and a healthy spike in memberships, why is the platform not churning out profits?

Well, CRED has been consistent in its advertising efforts for years now. The start-up’s marketing and business promotion expenses accounted for more than Rs 975 crore for the year 2022.

In the Instagram Story, Shah expressed the need for tech startups in India. He said, “India is in early stages to understand venture funding and tech startups and therefore will continue to mock loss making companies.”

“We shouldn’t forget 90% of funded companies may die as they may fail to monetise or make profits. But mocking risk takers will only create a government job seeking mindset.”

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