Bengaluru-based credit card payment app CRED has raised $81 million in its Series C round at a post-money valuation of $806 million. In the process, the company has also bought shares worth $1.2 million (about ₹9 crore) from employees.
The employee stock ownership plan (ESOP) buyback was completed on 1 January. This is the first ESOP liquidity programme initiated by CRED, just two years into its operations. Employees who hold vested stocks were eligible to sell up to 50% of their vested ESOP shares in the company. The fundraise was led by existing investors DST Global along with Sequoia Capital, Ribbit Capital, Tiger Global, and General Catalyst. In addition, Sofina, Coatue and Satyan Gajwani of Times Internet also participated in this round.
“As we raise funds to support our next phase of growth, it’s important to acknowledge the role that employees have played in our success. We are committed to enabling wealth-creation opportunities for them and have allocated 10% of our cap table allocated for ESOPs even at the Series C stage. I am grateful for their conviction, as well as that of our investors, and am focused on creating value for them as the product and business evolves,” said Kunal Shah, Founder, CRED.
The startup said it grew to over 5.9 million high-trust individuals with a median credit score of 830. CRED processes 20% of all credit card bill payments in India. Over 35% of premium credit card holders in India are on CRED, with members spending 2X of the average credit card user in India. The recently launched CRED Pay offering takes the CRED experience to platforms of online merchants, who offer instant, one-click credit card payments for CRED members.
Several startups, including Unacademy, Zerodha, CarDekho, BharatPe, Meesho, and Swiggy announced ESOP buybacks in 2020. In November, Indian food-tech unicorn Swiggy initiated an ESOP liquidation programme worth around $7-9 million to reward its employees as the food delivery business is making a recovery to pre-covid levels.
ESOPs assume more significance when they happen in a year where many Indian startups have witnessed a financial crunch amid the covid-19 pandemic.
This article was first published on livemint.com