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OkCredit’s losses soar 88X to Rs 156.6 Cr with zero operating revenue in FY20

Accelerating growth in startups is expensive and it often comes at a high price. Many startups burn a lot of capital to maintain leadership or advance growth trajectory. Companies such as ShareChat and Dunzo have been losing mind-boggling money fiscal after fiscal without any significant and meaningful topline.

Lightspeed-backed OkCredit seems to be in the same category as the company has recorded no operating revenue in its third fiscal year: FY20. OkCredit has registered nil operating revenues for a second consecutive year. Meanwhile, it has been spending capital to build up its base of customers among the unorganised retailers making up 92% of the $ 1.1 trillion Indian retail markets.

The only collections were in the form of financial income from interest on deposits and mutual funds which amounted to Rs 91.2 lakh in FY20 for the Bengaluru-based firm.

OkCredit saw its total expenditure shoot up 86X to a little over Rs 157.5 crore in FY20 from annual expenses of around Rs 1.83 crore FY19. Most of these costs were spent on customer acquisition, shows its expense sheet.


Advertisement and business promotion expenses made up nearly 71% of the annual costs, growing from less than Rs 2 lakhs in FY19 to around Rs 111 crore during FY20. Employee benefit expenses also ballooned over 16X to Rs 16.2 crore in FY20 from around Rs 1 crore in FY19 as the company increased its talent pool to handle the scale of operations.

Further, the company spent a little over Rs 18.06 crore on IT and software during FY20, growing about 133X from Rs 13.5 lakhs spent on the same in FY19. The company spent another Rs 3.3 crore on rent and related expenses, pushing the net cash outflow from operations to jump 56.2X to Rs140.5 crore in FY20, as compared to outflows of Rs 2.5 crore in FY Rs 2.5 crore.

Incessant cash burn to achieve scale has been the theme for a number of early-stage startups in the Indian ecosystem and OkCredit is not different. The company lost Rs 156.6 crore during the fiscal ended in March 2020, ballooning 88X from Rs 1.8 crore it lost in FY19.

While external revenues are non-existent, the company has been fueling its expenses from investor funds. It had raised $67 million in its series B round from Tiger Global and Lightspeed in September 2019.

Over the past 8-10 months, the fight to grab a pie of the fledgeling SMEs space has intensified. While OkCredit directly competes with Khatabook in the bookkeeping space, it had also launched OkShop — an instant digital storefront enabler in September last year. With this new business line, the company is competing with a clutch of venture-backed startups such as Dukaan, DotPe, Magicpin, Khatabook’s MyStore, among others.

While OkCredit has managed to control burn in the ongoing fiscal in its core bookkeeping business, the company’s expenses are unlikely to slow down in FY21 as it has been marketing OkShop on the similar lines it pushed its core business in FY20.

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