Freecharge Success Story – Kunal Shah – From selling CDs to founding a Company valued at $400M

Freecharge Success Story

Freecharge Success Story

Freecharge Success Story – Every Indian Startup now is assumed to copy from the West like OYO copied Airbnb, Flipkart and Snapdeal copied Amazon, but Freecharge is unique and so is its Founder. Kunal Shah, one of the recognised names in the Indian Startup Space, is assumed that would come with something new and exciting. He also believes in Innovation along with Entrepreneurship. Today I share with you the Freecharge Success Story, which is very Enthralling. Even a newbie might get interested into the world of Business after reading this post.

Eh, what free? What is Freecharge?

Freecharge Success Story

Freecharge is an Indian digital payments platform which enables users to do mobile recharges, pay bills and is backed by solid Cashback offers from Indian Retailers both Online and Offline etc. Founded by Indian Entrepreneur and investor Kunal Shah, Freecharge became one of the most promising startups in Indian history which now aims to compete with Alibaba-backed Paytm. In 2015, Freecharge was acquired by Snapdeal for $400 Million (₹2600 Crore). It became the second most expensive acquisition after Ibibo’s acquisition by Makemytrip for $1.8-$2 Billion/ ₹13,000 Crore! Kunal was one of 2016’s largest angel investors with being invested in 40-50 companies in the startup space.

Freecharge Success Story


To make the further reading even more worthwhile, I would like to showcase you the fact that Kunal, although Exceptionally Sound with thinking, does not have a Degree in any of the fields which would actually relate him to the Field of Entrepreneurship. Yes, you heard it right, no degree in Commerce, Science or Engineering, not even a Management degree. But rather a Degree in Philosophy. And according to him, this has helped him a lot in ‘How to Think?’ and this made him better off his Competitors who actually came to this rewiring of thinking skills at a stage of 1 year or more operations. And frankly, Flipkart still doesn’t carry any such power inside the Company, as we can notice by many Top Designation exits over past few months.


History and Idea Behind

Freecharge Success Story

Freecharge Success Story


Freecharge was founded by Kunal Shah and Sandeep Tandon in August 2010. Sandeep Tandon is an angel investor who hired Kunal at his BPO company. They both recognised each other and made a strong thousand plus outsourcing team together.Around 2009, Kunal decided to sign the papers and start his own venture Paisaback. He got hit with an Entrepreneurial rage and went on to create something new. He created Paisaback on the grounds of Cashback those days. He would tie up with localised centres of companies like McDonald’s, Barista Coffee, Dominos, Croma to offer cash back to the customers which were referred by Paisaback. But the model didn’t last long and got defeated by online players like Mysmartprice, CouponDunia and others. He noticed that for the idea to work, there should be less of the conventional business model and introduce something new to disrupt the system. This powered him to leave Paisaback behind and lay a business model for a better product which would also enable the company to make profits.

Investors, funders, partners, or your consumers are likely to give you a chance if you are persistent. But, as entrepreneurs, you need more than just persistence.

Freecharge Success Story

After Paisaback, Kunal focused on a new genre of entrepreneurship and that was Recharges! Along with Sandeep Tandon, Kunal saw that approximately 95% of invoices of a mobile store belonged to recharges. They got into the development of the product, and Sandeep being an engineer himself, they had pretty sweet experience working the Product development and Marketing companies. Freecharge was launched on Aug 15, 2011. One of their key initial partners were McDonald’s and which helped them grow rapidly.

Now they claim they’ve grown 1000% in 2014 itself making their customer base to around 30 Million.  He even states that most of the payments done via their platform are under 10 seconds which makes them successful in their ambition of having the customer spend less time using their service, that too coupled with cash back and offers leads to an amazing customer experience.

Funding Received

Kunal and Sandeep received a round of Seed Funding from Tandon Group and Sequoia Capital, an American Venture Capital firm in 2010 for an undisclosed amount. After that in 2011, they received a Series A funding of ₹20 Crores/$3 Million. Later in 2014, Freecharge received Series B funding of ₹220 Crores/$33 Million from Sequoia, Belgian-based holding company Sofina and Ru-Net. They received an addition Rs 535 crores/$ 80 Million from Hong Kong-based fund Tybourne Capital Management and SF-based fund Valiant Capital Management, and existing investors. In 2015 Freecharge got acquired by Snapdeal for ₹2700 crore/$400 Million making it the biggest takeover by any firm in the Indian Startup space.

While there were many who were ready to invest, they would often bracket us as just another online marketplace player. They never realised that we were bringing an original idea to the Indian market or the uniqueness of it. It was difficult to confide in people who did not understand what you were trying to do. But, we were focused on finding the investor who understood the value that our business model brought. We wanted an investor who believed as passionately as we did in our idea and that it could work. We wanted an investor who understood that every successful idea need not be a copy-paste model borrowed from the West or East. 

Kunal Shah to Yourstory

Kunal has also invested in 40-50 startups like TableHero, Razorpay, LifCare, and Zilingo. He says that doing homework is crucial for Entrepreneurs, and by that, he means investing a lot of time studying the market.

Glimpse of the Founder

Freecharge Success Story

Kunal lives primarily in Mumbai and is from a  business family which dealing in pharmaceutical operations in South Bombay and is married to Bhavna Shah, a freelance Graphic Designer. Coming from Entrepreneurial streaks, he decided not to opt for the same BTech and MBA option. He looked apart the elements of success and made a decision to go ahead with a degree in Philosophy instead. He is an MBA dropout by choice from the Narsee Monjee Institute of Management Studies (NMIMS); he also has Bachelor of Arts Degree in Philosophy from the Wilson College in Mumbai, one of the oldest institutions in India.

You’re wasting time and money doing MBA

He adds, that education system is not catching up with what the world has to offer us. The shelf life of business models have reduced from 30 years to 4 years. Colleges these days still believe in discussing random jargon and feeding it to students. But in today’s world you deal with some real people, who cannot be swayed by random jargons. The number of critical decisions taken in a week in companies today is probably more than what older corporates would take a quarter for.

– Kunal Shah at ISB Leadership Summit 2015, Hyderabad

Just like other Entrepreneurs out there, Kunal began early in the game of selling and buying. He chose not do continue with his family business and joined as a Programmer in a BPO firm. From there onwards, he continued his journey, funding himself from as early as 14 years selling Pirated CDs, Cards, etc.

He even said that as an Entrepreneur you face self-doubt each and every day with questions being raised from Society, Investors and even Outsides who hear about you being bootstrapped. He says as entrepreneurs we need to strike a balance between optimism and pessimism and keep propelling the business.

Delta Four Theory – Key Part of Freecharge Success Story

Freecharge Success Story

This is Kunal Shah’s theory to judge whether the business analysed is going to make profits anytime in near future or will it burn cash and time. He sees that in here in India, many Startups exist, but there are only few who are actually working on an idea that can actually solve some of the problems associated with the Indian society. Many reprint it from the West but execute it locally.

So he made a promise to himself that his Business Idea would be unique and would solve many problems in a go. He also believes in his theory of Delta 4, meaning that there should be a Huge difference in the amount of comfort and practicality if you think that your Business idea can disrupt an industry.

Freecharge Success Story

Held at the recent Techsparks Event, Delta Four theory compares two different business models, one that is existing and other which is about to be brought into the market via Entrepreneurs. He says whenever the Delta is greater than 4, you’ve found your Pot of Gold, which simply means that you are going to break through and earn money alongside great operation.

He gave a simple example to it and questioned audience full of aspiring Entrepreneurs,

  • How many of the ones sitting in the audience used the conventional cameras after using Smartphones?
  • Who used Meru Cabs after taking rides via Uber and Ola?
  • Who used Tatkal to order Railway Tickets after using IRCTC, online portal of the Indian Railways?

Most of the answers went like no and not at all. Why? And told the audience this was because the Delta Four Theory was working here extensively with all the principles being adhered to. He even used the term Growth Hacking extensively to highlight the fact that no one is coming to you unless you promote it with your skills. He claimed that users got to know about Truecaller because it spread due to the word of word marketing. The promotion of business took place between friends, at coffee shops and the best part being the innovative features that it came alongside.

Remember the day when people barely had started using Smartphones and this company called Truecaller promotes products by giving the identity of the person calling you without you being saving any contacts and information yourself!

Freecharge Success Story

He said when a retailer changes the payment method and gateway it takes it from 3 to 6, meaning the increase in Comfort for the user but not much increase in profits for the online company. And if the idea is poorly executed and held upon inefficient managerial staff and operations, the Delta may fall into Negative. He even iterated that after applying this principle, 30% of the founders sitting here would leave their idea, or will modernise it extensively to make it work.

It takes a lot of effort, innovation and operational skills to get that Delta Four work in your Favour

He told that he would often hang in malls asking people whether they would use the app for recharges if it went that simple. He talks that Entrepreneurs besides analytics and stats need these personal interactions that make them ready for questions being raised to them once they start the dream of receiving funding.

As an entrepreneur, it’s crucial to identify problems existing in the society and solve them effectively. Kunal nearly drove his idea to perfectionism and is chased by many clones in the industry.

My biggest learning is that you should have a ‘never say die’ spirit. That is the crux of entrepreneurship. I don’t think talent or smartness can make you successful. It is the ability to strive and survive every day that makes an entrepreneur. – Kunal Shah to Gadgetsnow

Takeover by SnapdealFreecharge Success Story


Freecharge Success Story

Freecharge got acquired by Snapdeal for ₹2700 crore/$400 Million including stock and equity transfers making it the most expensive acquisition in the startup space after Myntra’s acquisition by Flipkart for ₹2400 crore/$350 Million!

Why did Snapdeal acquire Freecharge at such a price?

  • Mobile is the Future of Commerce in India as 30% of their transaction were done via mobile in 2013 which rapidly grew to 65% in 2014. Now they’re expecting 95% transactions from mobile in 2017.
  • It helped them connect to suburban areas and villages in 2nd Tier and 3rd Tier Cities as it helps them capture new market and customers with ease.
  • Consolidate them in the Indian Startup Space extensively to have a grip over operations.

Although according to the recent news and reports, Snapdeal is said to be in a serious Crisis as they are laying off 500-600 employees. The company is said to be in doldrums after they’ve left with only $100 Million in banks. Snapdeal made renovations to the brand and its image by spending addition ₹200-250 Crore on it’s new Vermillion theme and Unbox Zindagi advertisements. Even it’s founders Rohit Bansal and Kunal Bahl taking 100% salary cut for a Temporary period.


Freecharge Success StoryFreecharge Success Story


Ambition alone doesn’t work. Missions do – Kunal Shah

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Freecharge Success Story

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