Three individuals familiar with the subject stated that Indian fintech CRED is in negotiations to invest in Bengaluru-based startup Smallcase, as the Tiger Global and Alpha Wave Global-backed business wants to extend its wealth products to consumers. According to one source, CRED’s projected investment in Smallcase is between $300 million to $400 million. The magnitude of the investment is unknown, and sources requested anonymity since the discussions are still in the early stages and are confidential.
CRED did not respond to a request for comment. A request for comment from Smallcase’s founder was not immediately returned. Smallcase runs a platform that enables a new generation of Indian investors to participate in the stock market.
Over 3 million users are served by the startup, which connects them to an in-house team of certified professionals that offer over 100 stock and ETF portfolios, as well as access to independent investment managers, brokerages, and wealth platforms. Smallcase collaborates with a variety of stock broker services, including Kite and Upstox, and has investors such as Amazon, Sequoia Capital India, Blume Ventures, and Arkam Ventures.
CRED will be able to expand its wealth management product by investing in Smallcase. Kunal Shah started the company, which includes three major products. It encourages consumers to improve their financial habits by rewarding them for paying their credit card bills on time. It also aids them in paying and keeping track of their rent, education, and a variety of other bills.
Wealth management is the company’s third service. Last year, CRED introduced Mint, a peer-to-peer lending business that allows clients to invest in ways that beat inflation. If the acquisition goes through, it will be the most recent in a string of CRED investments in recent quarters. Last year, the firm sponsored business-to-business finance startup CredAvenue and bought Happay, which offers a corporate cost management platform, and was valued at $4 billion in its most recent fundraising round.
“Only a few businesses, such as CRED, are focused on this high-end market and [have] adopted a platform-based strategy” (acquire customers now and look for monetization later). In India, a credit card is still a luxury item. The underpenetration will very certainly assure considerable growth in the next years. The form factor may change over time (for example, moving from a physical card to a virtual card), but the intrinsic need for credit is projected to rise,” they noted.
The business does not say what it intends to do with the fresh funding. However, according to TechCrunch, CRED has been in negotiations to invest in other fintech businesses in recent weeks. According to TechCrunch, CRED recently invested $5 million in CredAvenue, which just announced a $90 million Series A fundraising round and is in talks to invest in fintech company Uni at a valuation of over $300 million.