InCred becomes India's latest unicorn - The 2nd of 2023!

Hey there,

After Zepto, InCred becomes India’s 2nd 2023 unicorn with profitable lending across students, SMEs & consumers.

But in today's challenging market, how did InCred achieve this milestone?

To start with some context, InCred, founded by Bhupinder Singh in 2016, is a loan-based business. Unlike many other fintech companies that start with a different business model and pivot to lending for better revenue, InCred took a direct path to lending.

As a result, it has seen some impressive statistics:

- Over 3.5 lakh borrowers
- 3,000 loans processed daily
- 15,000+ SMEs impacted
- 10,000+ digital merchants financed
- 5,000+ students supported

Here's a look at how they achieved this in just 7 years:

1. A clear focus on lending: While others like PayTM and PhonePe started with different models and later shifted to lending, InCred was clear about its path. They began with a focus on lending, securing an NBFC license right from the start.

2. Diversifying within lending: InCred's strategy wasn't just about diversifying across industries. They diversified within the lending sector itself, offering student loans, merchant loans, personal loans, and more, each executed with excellence.

3. Strategic partnerships and acquisitions: InCred knew the importance of partnerships. They acquired Ziploans for microloans, collaborated with KKR, entered asset management by acquiring Vishudhdha Capital, and took over the personal loan marketplace Qbera.

4. Impressive asset management and growth: InCred's Assets Under Management saw a significant jump, growing from ₹3844 crores to ₹6063 crores in FY23. This 58% growth in AUM showcases its effective asset management and growth strategy.

5. Strong financial performance: The company's Profit Before Tax saw a remarkable increase, growing fourfold from ₹48.17 crores in FY 2021-22 to ₹207.01 crores in FY 2022-23. This underlines InCred’s profitability and operational efficiency.

This rapid growth while staying profitability positive since 2018 enabled InCred to gain unicorn status after raising its Series D round. Unlike many loss-making fintechs, InCred has been operationally profitable from early on.

InCred’s success poses a key strategic question – is a focused lending model the only viable path for fintech startups compared to payments or other sectors? Let us know your thoughts in the comments!

✏️ Jargon of the day

PBT vs. PAT:

PBT or Profit Before Tax is the profit a company makes from its operations before deducting the tax expenses.

PAT or Profit After Tax is the net profit left over after deducting all tax liabilities from the PBT.

In essence, PBT includes just operating expenses while PAT also accounts for taxes owed, giving a true picture of final profitability.

Loved this edition? Or have some thoughts to share? We'd love to hear from you

Cheers,
Karthik