Fables of ESOP
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Fables of ESOP

April sees ESOP Liquidity pools drying out, while founders and top executives benefit from Share Buyback Programs

April was a peculiar month from an ESOP Liquidity standpoint. While the coffers seemed to have dried up from providing liquidity to large set of startup employees, the month did witness a handful share-buyback deals to benefit the promoters and top executives.

What’s the difference you ask? Well in the former, company deploys a budget to execute a structured liquidity program to enable employees surrender a percentage of their vested options in return for cash as per the buyback price. In the latter, a limited set of individuals are offered an opportunity to surrender/sell their shares to the company or a third party.

Let’s do a quick round-up of liquidity programs announced.

PineLabs executes a share buyback worth $6 million post their ESOP buyback last month

PineLabs which was in the news for announcing a $13.5 million ESOP buyback last month has also announced a share buyback program worth $6 million for its top-level executives including the CEO. This comes after a $50 million fundraise from Vitruvian Partners, a London-based international investment firm, at a valuation of $5 billion. The company has also increased its ESOP pool to 1.44 million options worth $ 680.23 million after adding 70,000 more options.

Whether this $6 million is part of the earlier $13.5 million or in addition to it is not completely known. The executives who participated in the buyback are: Amrish Rau, Kumar Sudarsan (QwikCilver), Kush Mehra (CBO), Dev Anand Sharma (VP) and Rakesh Sharma (SVP).

Classplus conducts share buyback program worth $3.15 million

Edtech startup Classplus executed its maiden equity share buyback plan worth Rs 24 crore which was participated by the company’s founders, a set of early angels and employees. This represents 4.86% of the paid up equity share capital of ClassPlus. The Tiger Global-backed company had recently announced its new round of $70 million at over $600 million valuation

Livspace executes share buyback worth $9.5 million

Home interior platform Livspace [implemented a share buyback program](https://entrackr.com/2022/04/exclusive-livspace-executes-share-buyback-worth-9-5-mn/#:~:text=Livspace has passed a special,regulatory filings in Singapore shows.) from its top-level executives which represents 6.06% of the total equity shares of the company. Livspace had turned a unicorn following a $180 million series F round led by KKR & Co at a valuation of $1.2 billion in February 2022

Upstox to buy back shares worth $4 million from Founders and employees

Investment platform Upstox announces a share buyback program worth Rs 29 crore from its founders and employees including Ravi Kumar, Shrinivas Vishwanath, Kavitha Subramanian. Upstox had raised $25 million from existing investor Tiger Global at a valuation of $3.3 billion in November 2021.

In other news:

To sum-up, after a record year of ESOP Liquidity in 2021, we are witnessing an interesting pause in both the volume and quantum of liquidity programs.

Whether this is an isolated aberration or a harbinger of an imminent dry season, time alone will tell.

While we definitely hope for good monsoons,

We at Qapita are building solutions to provide liquidity for all seasons!

If you are a startup and wish to offer liquidity to your employees and shareholders do reach out to us and we can help you execute a customized innovative program to meet your structuring requirements and employee objectives deploying our tech-enabled marketplace solutions.

Connect with me: srikanth@qapitacorp.com; LinkedIn; Twitter

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Srikanth Prabhu

Srikanth Prabhu

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Srikanth is an ex-VC turned Operator & currently leads GTM for Qapita, a Fintech SaaS that helps startups manage Captables & ESOP. Mail: srikanth@qapitacorp.com