Wednesday, October 29, 2014

Who said there is No Free Lunch - FreeCharge [Business Model]

Are you living in world, when you go for shopping when your favorite brands have announced discount offers.  Alternatively, how many times has been a case that you got attracted to advertisement of your preferred brands highlights free products? But the terms and conditions of offer and mathematics ‘with offer’ and ‘without offer’ failed to excite you. Then it’s time to bid farewell to such incidents and enter world of  Freecharge as its name suggest provides discount coupons to its user on undertaking any telecom payment transaction on its portal.

Like all of us who adore the ‘receiving stuff for free’, the concept of ‘free’ products would excite Kunal Shah. So he thought about it, brainstormed the ideas related to offers and promotions with his teammates and ventured out with along with Sandeep Tandon in 2010

Freecharge provides its user making any monetary transaction for mobile recharge, postpaid mobile bill payment, DTH and data card payment on its portal with discount coupons. The discount coupons are equivalent to amount of user payment to telecom operators. So, if the user recharges its mobile phone connection for Rs.250 by paying it online on, then the user will receive discount coupons worth Rs. 250. Further, the users have option to select offers from list of retailers and brands. Unlike, other individual brands, they do not restrict user on selection of offers. This discount coupon can be redeemed at any of the outlet of selected retailers.  It covers companies from food, entertainment, store, care travel, clothing and many others.

Freecharge is user friendly application. As they do not spam message to any of its registered user email Id. By offering free hand in selection offers and no spamming, Freecharge was able to win customers trust and confidence.  

Funds raised
Venture Capitalist
Amount Raised
Use of Funds
Sep 2014
Sequoia Capital, Sofina, and Russian VC firm ru-Net
Series B
$33 million (Rs. 200 cr)
The funds will be used to build a transactional advertising platform for India and emerging markets.
It will also be used for other  marketing related activities
Jan 2012
Sequoia Capital
Series A
Rs. 20cr
The funds were used to build the team, improve both hardware and software for the business to grow.

Revenue Model
Company earns revenue in form of commission
  • Telecom companies pay commission for recharge done from freecharge website or its mobile applications
  • Brands and other merchants pay commission for selling its discount coupon 
  • Customers pay nominal amount in form of processing fees 
Model 1 (Talktime to discount coupons)
(Representative icon adapted from

Model 2 (offline purchase to talktime)

User buying any products offline of brands registered with freecharge would receive equivalent amount of talktime. This talktime can be redeemed on freecharge portal.  Also, if the user is buying any products or services on websites Myntra or MakeMyTrip after logging in on to Freecharge, they are eligible for cash back into their mobile wallets.

(Representative icon adapted from

So, next time double your pocket money by conducting all transaction through