Credit card payment platform Cred, owned and operated by Dreamplug Technologies Pvt Ltd, has expanded its employee stock option plan to $500 million, a month after the company raised a little over $250 million at a valuation of almost $4 billion.
Dreamplug Technologies allocated an additional number of 1,12,504 options, taking the total number of employee options to 3,92,958, which constitute 12.50% stake of the company on a fully diluted basis as of 11 December, the company’s filings with the Ministry of Corporate Affairs (MCA) show. The ESOP pool, thus expands to $498.92 million according to VCCircle estimates. Cred had an ESOP pool of 10% of the company’s total shares earlier.
The filings also show that Cred had raised $250.13 (about Rs 1,861 crore) million in December from Tiger Global Management, Falcon Edge Capital, Dragoneer Investment Group and Sofina Group, among other investors. As a part of the transaction, the company allotted 1,97,215 Series E compulsorily convertible cumulative preference shares (CCCPS) having a face value of Rs 100 each at a premium of Rs 95,123.54 rupees each. According to VCCircle estimates, the fundraise values the company at $3.99 billion.
An email sent to the company did not elicit an immediate response.
VCCircle had reported in October that the Kunal Shah-led company had closed a round of roughly $251 million as a part of its Series E funding, co-led by Tiger Global Management and Falcon Edge Capital.
Tiger Global and Falcon Edge each invested about $67.84 million through their funds Internet Fund V Pte Ltd and Alpha Wave Ventures II, while Sofina Group invested about $10 million through its venture Sofina Ventures SA, with the rest coming from Insight Partners, Steadfast Capital and others.
In November, Cred had said that the company’s cumulative buyback for the year would be worth Rs 100 crore. In December, the company said that it will buy Happay in a cash and stock deal for about $180 million, and will also expand its ESOP pool to all of Happay’s 230 employees.
Cred’s expansion of ESOP pool follows a slew of technology companies increasingly adopting the ESOP option to acquire and retain talent. VCCircle had reported last month that in calendar year 2021, as many as 32 Indian startups spent close to Rs 3,000 crore, or about $440 million, to buy back ESOPs, against 12 companies taking the option in 2020 and spending only about $50 million on ESOPs. Unicorns including upGrad, Sharechat, Zetwerk, Meesho, Licious, Vedantu, Moglix, PharmEasy, Acko, among other startups took the ESOP buyback option.
ESOPs are allocated to qualifying employees of a company at the time of hiring, during appraisals or at the time of rewarding employees. ESOPs have a vesting period during which the employees cannot sell their holdings, but, after the vesting period is over, the company chooses to facilitate a buyback option. Employees may choose to sell their shares as part of the secondary offering during the time of a fundraising exercise in the company to liquidate their holdings.
In January last year, Cred had bought back ESOPs shares worth $1.2 million from existing and former employees, in what was its first ever buyback. Employees then had an option to sell as much as 50% of their vested ESOP shares.
Founded by former Freecharge founder Shah in 2018, Cred is a members-only app that lets users pay credit card bills and rewards them in the form of credit coins, which can be redeemed across many partner businesses. The company also counts DST Global and Sequoia Capital as its backers.
