Fables of ESOP: UpGrad and Flipkart announce large ESOP Buybacks

So it was just another week that went by in our startup ecosystem — marked by large funding round announcements, healthy M&A activity, funds being announced/closed, twitter chatter on how to hire and retain good engineering talent and last but not the least — ESOP Buybacks!

This week was no different with UpGrad and Flipkart announcing large ESOP buyback pool cumulative about INR 800CR of wealth creation for employees.

While both were large buybacks in absolute sense, they were unique in their own ways. Let’s analyse.

UpGrad announces its first ESOP Liquidity Event for Key Employees

UpGrad which was a bootstrapped company till about a couple of months back, not only raised a large investment, but also announced its first ESOP liquidity program for its early employees. Notably this is not a buyback by the company but a secondary sales of shares from ‘early and long-term team members’ as part of the recent investment round.

Liquidation Event Summary

• Liquidity Pool: INR 220CR ($29.5 million)
• No. of Employees Participated: 37 (only!) for an overall employee size of 2,500+
• Average Cash per Employee: About $0.8 million
• % of last Investment Round Size: ~25%

That’s a massive opportunity for the early team members of the upgrad. Also the pool size (~25% of investment size) is higher than average (~10%) compared to the last investment round raised in April. However, looks like the 600+ employees who were earlier granted ESOPs in January weren’t able to participate, perhaps they haven’t yet vested any ESOPs. Hopefully more to come in the future years.

Flipkart Monsoon Scheme : As usual Met Dept. got the quantum wrong!

In the June edition, we did mention about the massive ESOP Buyback scheme that Flipkart is expected to announce. While, press got the news right, it did go a tad generous on the quantum of the buyback. So Flipkart announced a massive INR 600CR buyback that is expected to benefit about 6000 employees.

Buyback Details

• Buyback Pool: INR 600CR ($86 million)
• Eligible Employees: 6,000
• Eligible Options: 10% of the vested ESOPs
• Average Cash per Employee: INR 10 Lakh
• % of last Investment Round Size: ~2.4%

While the relative quantum to investment round is pretty small (2.4% of the $3.5 billion investment), the buyback applies to about 40% of the employee base! Looks like it’s an early Diwali celebrations for Flipkart employees.

That’s all on this short mid-month round up. We’ll continue to get the latest news about ESOPs on FablesOfESOP.

Meanwhile if you are an employee in a startup and don’t have clarity on your ESOPs — do nudge your HR and Founders to give us a shout — www.qapitacorp.com