Fables of ESOP: After $100m buyback in H1 2021, an ‘olympic’ start to the second!
Its Olympics season and some amount of athleticism seems to have rubbed off on our startup ecosystem, given the accelerated pace of ESOP buybacks in the first half of the year. The momentum seem to be continuing and building in the second.
As per Entrackr Report, about $100 million worth ESOPs were liquidated in H1 2021. That’s a record figure resulting in some serious wealth creation for the heavy-lifter employees in startups.
To put some context, it was estimated that there were buybacks executed worth INR 500CR ($70 million) in the whole of 2020. And we have exceeded that number just in the first half!
And guess what — in July 2021 alone, we have surpassed the $100 million buyback mark! With Flipkart announcing ~$86m and Upgrad about ~$30m.
Overall, it’s a net-positive for the startup ecosystem as a good chunk of this wealth will find its way back into the startups in the form of Angel round cheques thus fuelling more entrepreneurial activity.
ESOP Buyback Roundup — July 2021
It has been a rather busy month from ESOP buyback standpoint. In the first half of the month, we had announcements from Flipkart ($86 million) and Upgrad ($30 million) undertaking large ESOP buyback programs. We had written about it a couple of weeks back in our Fables Of ESOP post. Let’s talk about the other liquidity events that were announced in July.
Whatfix announces $4.3 million buyback program
Whatfix announced its first ever buyback program earlier in July soon after it announced it’s $90 million Series D round in June led by Softbank. The pool size is less than 5% of the funding raised and about 175 eligible employees can liquidate upto 35% of their vested ESOPs. The report also interestingly suggests that over 80% of the 175 eligible employees have chosen not to participate in the buyback program. Also note that the buyback was offered at no discount to the Series-D round.
Moglix executes $3 million ESOP buyback
Apart from closing a $3 million buyback program, Moglix also expanded it’s ESOP pool to $10 million. Key features:
- All eligible employees can sell 25% of their vested shares
- ESOP Pool expanded to $10 million to include more than 300 employees
- Pool size is rather small relative to the investment raised in the last round: $120 million which is ~2.5%
Locus designates $4 million for ESOP Buyback
Logistics startup Locus announced a $4 million buyback pool following the news of its $50 million Series C funding in June led by GIC. Both its current and previous employees with vested options can participate in the buyback program. It was also mentioned that the buyback price will be at part with the Series C price at no discount. This is Locus’ second buyback program.
Gupshup announces an ESOP buyback program with its $240 million fundraise
Gupshup has particularly called out that a chunk of the $240 million it has raised recently led by Fidelity, Tiger Global among others will be used for ESOP buyback as well as buying out some of the existing investors. This round follows the $100 million round it did in April getting it to the coveted unicorn status. No further details on the buyback was shared.
Other News
Ola’s ESOP Expansion
In other news, Ola expands its ESOP pool to INR 3,000 CR ahead of its IPO plans, that is an addition of INR 400CR worth ESOPs.
Unacademy announces TSOPs
In another significant announcement, Unacdemy announces a massive $40 million ESOP pool allocation for the teachers on their platform and calling them as TSOPs — Teacher Stock Options. This is the first time an Indian startup has announced providing ESOPs for their gig workers.
Quite curiously this comes at a time when the Chinese Govt. is cracking down on its edtech industry in its attempt to keep forces of capitalism out of sectors such as education. While the two events might have absolutely no connection, the timing is interesting. Perhaps there is a lesson or two Indian edtechs can learn from the situation prevailing in China.
That’s all folks for July. Stay safe.
PS: If your startup needs help in structuring and setting up their ESOP plan and managing it through an automated system, do refer them/reach-out to us.
Connected with me: LinkedIn; Twitter (@PrabhuKeDarshan)
