Startup Spotlight #7: A Faster, Simpler Way
This startup's success proves one simple principle: it's all about the money.
Investors unanimously agree that adding financial services for customers is the best way to scale niche cloud services and marketplaces. But why take such a complicated route if, in the end, we’ll arrive at the financial services market anyway?
About the project
Kudos is a service designed to maximize the rewards users earn on purchases they were already planning to make. By integrating all your credit cards into the Kudos wallet app and installing its browser extension, the service simplifies payment processes and optimizes your benefits.
When you reach the payment stage while shopping online, Kudos autofills your card details. What sets this tool apart is that it intelligently selects the card that offers the highest rewards for the specific store, such as cash-back or other perks. If you prefer, you can manually select a card from the dropdown menu of all your linked accounts.
The complexity of tracking reward programs from various banks — each running different promotions with select merchants — can be overwhelming. Kudos automates this task, ensuring users always get the best rewards.
Kudos also runs its own promotional campaigns with merchants. For purchases made through these partnerships, Kudos matches the bank’s rewards, effectively doubling the benefit for users. The platform earns a commission from these merchants for directing customer traffic their way, making the model sustainable.
For significant purchases where every reward point counts, users can consult Kudos for advice on opening a new card that maximizes potential benefits. Kudos also proactively suggests cards that align with a user’s shopping habits, powered by MariaGPT—an AI assistant specifically designed for this task. MariaGPT keeps track of reward structures for over 3,000 types of cards issued by U.S. banks.
Since its launch in late 2022, Kudos has grown significantly, now boasting 200,000 registered users and facilitating $200 million in annual transactions. The startup recently raised $10.2 million, bringing total funding to $17.2 million.
What’s the Gist?
Kudos provides tangible value to people with multiple credit cards. But is it possible to build a billion-dollar company based solely on this one feature?
Probably not. That’s why Kudos continues to evolve:
It plans to develop its AI assistant, MariaGPT, into a comprehensive advisor for all personal finance matters. Kudos also aims to launch a marketplace for booking flights, where users can pay with rewards earned through Kudos. And it’s likely that flights won’t be the only offering on this platform.
In fact, many fintech services grow in this gradual manner. They start with a simple, useful tool that attracts buyers, payers, or cardholders. This helps them build an audience that they can later introduce to more advanced and profitable products.
For example, this approach was taken by the Indian startup FPL Technologies. They began by releasing a free app called OneScore for checking credit scores. A year and a half later, they launched co-branded OneCard credit cards in partnership with several Indian banks for the audience they had gathered.
They operate under the name OneConsumer, claiming to be “serial creators” of financial brands. I assume their product line won’t stop with OneScore and OneCard. Combined, the startup has raised about $240 million in funding for these two products.
Another Indian startup, Flash, is at a similar stage to Kudos today—and has also raised $12.5 million for development.
Flash offers users a dedicated email address under the domain flash.co, which can be used for registering with online stores. This ensures that all notifications and newsletters are sent to this address rather than the user’s primary email. This offers two major advantages:
1. All purchase notifications are separated from spam and conveniently organized, allowing users to see a simple list of what they ordered, when it will arrive, and access their purchase history.
2. The service analyzes users’ shopping habits and highlights interesting and relevant deals from received newsletters, as well as from other online stores that don’t send them emails directly.
Khyaal is another example, also coming from India. It claims to have created the “#1 app for seniors,” where users can access educational courses, consult experts for help with common issues, shop on an integrated marketplace, and even find part-time jobs with companies willing to leverage the expertise of older individuals.
Having built an audience this way, the startup began offering its users a branded credit card issued in partnership with a bank. This effort has attracted $10.6 million in funding, $4.2 million of which was raised in February of this year, after my initial review.
Key Takeaways
1. Scalable financial tools: Kudos shows how a single, helpful feature—reward optimization — can attract users and lay the groundwork for a broader fintech ecosystem.
2. Iterative growth model: Startups can achieve scalability by solving specific problems first, then expanding into adjacent financial services like rewards marketplaces or co-branded credit cards.
3. Diverse target audience: Kudos primarily appeals to two groups:
• High-income individuals with multiple cards to maximize rewards.
• Credit-hungry users managing debts through multiple banks.
4. Opportunity in financial simplicity: the success of Kudos underscores the value of small, convenient tools in the financial sector. These solutions can attract diverse user bases and create avenues for launching more profitable services, such as direct credit issuance or card products.
What ideas would you come up with? Whether it’s simplifying expenses, improving credit access, or rethinking rewards programs, there’s still massive room for innovation in this space.
Company info:
Website: https://joinkudos.com/
Last funding round: $10.2 million, 17.05.2024
Total funds raised: $17.2 million over 3 rounds