CRED expands ESOP pool size to $500 million

Kunal Shah-led fintech platform CRED is expanding employee stock ownership plan (ESOP) pool size, as it looks to attract and retain people amid a war for talent in the startup space.

The company has expanded the ESOP pool size by $143 million to a total of $500 million. This currently accounts for 12.5% of the company's equity base.

In November 2021, the Bengaluru-based startup had announced that its cumulative ESOP buyback for the year 2021 was expected to be upto Rs 100 crore. The firm had rolled out an Accelerated Wealth Program in August last year that enabled employees to choose up to 50% of their annual cash compensation in the form of special grant ESOPs. These grants were expected to be completely vested one year after the allocation date.

CRED currently employs about 600 people and every staff member, regardless of their job profile or tenure, are part of the company's ESOP pool, a company spokesperson said.

"Our growth is due to the commitment of our team and we will continue to support them to leverage ESOPs for their own wealth creation journeys. Expanding the size of our ESOPs pool and initiatives like the Accelerated Wealth Program advance us towards this goal. Our ratio of ESOP pool per employee is amongst the highest in the industry" the spokesperson said in a statement. The development was first reported by Entrackr.

Startups are increasingly announcing ESOP buybacks to retain and hire top talent amid an intensely competitive market. 2021 saw a significant number of ESOP buybacks from startups like Swiggy, Meesho, Urban Company, Razorpay, and PhonePe among many others. This is apart from firms like Zomato, Nykaa and PolicyBazaar which went public last year, delivering handsome returns for its employees.

CRED started in 2018 as an invite-only app credit card payments platform rewarding users with points for paying their bills but has since added products such as rent payments and personal loans, as it seeks to become a full-fledged financial services provider.

The Bengaluru-based startup says it has 9.5 million members on its platform, which accounts for more than 35 percent of premium credit cardholders in India. CRED also claims to process 25% of all credit card bill payments in the country.

In August, CRED introduced CRED Mint, a peer-to-peer lending product offering members returns of up to 9 percent per annum. Members can lend/borrow in between Rs 1 lakh - Rs 10 lakh. The company also provides a short-term lending product, CRED Cash, and has a loan book of over Rs 2,000 crore.

The company was last valued at $4 billion when it closed a $251 million funding round in October last year. The round was led by existing backers Tiger Global Management and Falcon Edge Capital with two new investors - hedge funds Marshall Wace and Steadfast Capital - also joining in. Other existing investors DST Global, Insight Partners, Coatue Management, Sofina and RTP Global also participated in the financing round.

In December, CRED announced that it will acquire Happay in a cash-and-stock deal, valuing the corporate expense management platform up to $180 million.