National Institute of Fashion Technology, Jodhpur

Department of Fashion Technology

Entrepreneurship Management
Submitted To - Dr Ruchika Dawar
Submitted By - Sahil Tyagi

Introduction - FREE CHARGE

Freecharge was founded by Sandeep Tandon and Kunal Shah as a venture initially
called Paisaback. Paisaback was a company that dealt with promotional offers like
cash back, discounts, and coupons, like what Groupon did in the US.

They started this venture in Bombay. The two founders finally moved to the idea of
Freecharge, after they found that a mobile phone store was making all its profits
from the revenue its prepaid customer base was generating.

Finally, Tandon and Shah moved on from Paisaback and fired up Freecharge in
August 2010. The initial offering of this site was prepaid phone recharge. However,
they soon increased their payment verticals and included postpaid mobile phone
bills, DTH, data packs, and utility bills like water, electricity, gas, and landline bills.
 Turning points in business
•Freecharge struck gold when Sequoia Capital, one of India’s biggest investors in the startup
economy, decided to pitch in for its seed funding round in 2010. The amount invested in this
round has still remained undisclosed.

•The company, over the course of the next few years, has undergone 6 additional rounds of
funding from 2011 to 2017, which is a clear marker of confidence in the industry. Over this time
period, Freecharge has managed to raise a whopping 177.6 million USD in total, from 2011 to
2017. This made the company one of the frontrunners in the e-transaction arena.

•Freecharge, over all of its funding rounds, had 6 investors, which included Sequoia Capital
India (as mentioned before), RTP global, Snapdeal, Valiant Capital Partners, and Sofina.

•As funds came in, Freecharge also decided to branch out and acquire other companies. As a
part of this agenda, the company went on to acquire Preburn.

•Preburn was an app store that allowed application publishers to enhance their user base by
pre-installing their apps on devices before they are sold. Freecharge bought the company at an
undisclosed price in August 2014.
•True to its name and as mentioned before, Freecharge was a service to recharge or pay any
pending utility bills. In 2012, they further expanded the range of services offered and made
couponing a possibility.

•A user could use food coupons worth a certain value at popular supermarkets or food outlets,
depending on where the coupon was valid. The company had renowned partners across the
country such as Croma, the electronics store, Cafe Coffee Day, Puma, and Dominoes.

•The company also partnered up with several e-commerce platforms such as BookMyShow,
Jabong, and Myntra, where Freecharge coupons could be redeemed.

•In the same year, the company saw around 40,000 transactions each day, which amounted to a
total transaction value of Rs. 60,000,00 every day. And because this growth would only increase
through new users who would come in through smartphones, the company launched its Android
application.

•In 2012, as competition grew through other apps such as Rechargeitnow and PayTM, the
company founder Kunal Shah decided to step up and differentiate by calling Freecharge as a
“marketing company the users recharge as a medium”.

•In 2013, the founder Kunal Shah stepped down as CEO while still being a part of the top
management. The former COO of Redbus, Alok Goel, replaced Shah as the new CEO.

•It had been all smooth sailing and smart growth for the company until 2015. In 2015, the
competition ramped up and as mobile phones took over as the preferred medium, a lot of e-
commerce giants cropped up in the ecosystem. 80% of the Freecharge transactions were taking
place on mobiles and so, there had to be a new way forward, otherwise, the company was
bound to fizzle out.

•The new start for Freecharge came in the form of a Snapdeal acquisition. This cash plus stock
deal, which was estimated to be anywhere between 400 million to 450 million USD, was one of
the biggest ever mergers in the startup economy in India.

•As Snapdeal came to the fore, Alok Goel left Freecharge and Kunal Shah came back as the
CEO of the company.

•The company also launched an e-wallet service like its competitor PayTM, to allow a user-to-
user money exchange. This same e-wallet would also work with all of Freecharge’s initial retail
and e-commerce partners.

•A few months after the launch of the e-wallet, Freecharge also launched a Unified Payments
Interface (UPI) on the brink of demonetization, to allow bank-to-bank transfers between users.

•Soon, the numbers for the company started growing up again. In 2016, Freecharge claimed to
have a 99% success rate with an estimated payment time of 10 seconds. Also, 7% of
Freecharge users were recurring ones at a national average of 5 times a month.

•2017 was the year Freecharge’s parent company Snapdeal was feeling rocky. As a result of
this, there was a cash constraint in the company, even after Snapdeal put in another 60 million
USD.