Funding Winter Thawing Corporate Governance

RBI had blocked CRED from increasing its stake in Newtap Finance citing “corporate governance” and “management” issues. During funding winter a list of high-profile startups has come under scrutiny because of these same issues:

1. BharatPe: “BharatPe is not a company anymore, it’s a $3 billion write-off” – Ashneer Grover
2. Zillingo: ‘Zilingo Set For Liquidation After Months-Long Struggle For Survival”
3. DeHaat: “Auditor concerns, governance lapses, and fast-depleting funds”
4. Pristyn Care: “Pristyn Care suspends Lybrate founders after 12 months of its acquisition”
5. GoMechanic: “GoMechanic Cofounders Eye New Startups Six Months After Fake Revenue Fiasco”
6. Mojocare: “After putting in over $20 million, investors suspect breaches at Mojocare, order forensic audit”

Even though 13% of all credit card bill payments happen through CRED, this would not generate any revenue for CRED and acts only as an acquisition strategy for premium customers.

Corporate Governance becomes crucial for CRED since it is betting heavily on lending, a sector beleaguered by high delinquency rates nowadays.

• Newtap Finance is a NBFC which is looking to raise $50-70 Mn.
• CRED had acquired CreditVidya, a lending tech startup in Nov’22.
• Also, CRED has invested in Liquiloans, a P2P lending platform.

CRED has raised almost $800 Mn and definitely have to cash to burn, but at what cost?