Jan 2022: The ESOP Momentum Continues with Liquidity Programs from Ninjacart, Porter, BSC among others
After an eventful year (do read our 2021 roundup if you haven’t already), 2022 is off to a flying start in the world of ESOPs. While the public markets are correcting, there seems to be no impact in terms of startup raising funds yet. January clocked an impressive $3.5 billion in capital raised by startups in India maintaining the momentum from the previous year.
In terms of ESOPs update 7 companies announced ESOP liquidity programs in January namely Trell, Ninjacart, Grip Invest, HomeLane, Rooter, Bombay Shaving Company and Porter. Let’s dive straight in. But before that a short hangover of the year that was:
I found this extremely useful infographic from the good folks at Entrackr which in a nutshell summarises the incredible year that was.
The notable thing about the buyback events was also the fact that startups across the spectrum participated in generating wealth for their employees — i.e. from bootstrapped & profitable companies to Series A funded to growth stage as well as Decacorns!
Jan 2022 RoundUp: $30 million worth ESOP Liquidity Programs
Let’s do a quick summary of some of the key liquidity programs announced by startups in January.
Ninjacart announces a INR 100CR Buyback Program
Agritech startup Ninjacart, which recently received a $145 million funding from Flipkart and Walmart group announced a INR 100CR ($13.33 million) ESOP Buyback program for its current and former employees. This is the second buyback program from Ninjacart. That’s close to about 10% of the funding amount used to buyback employee options.
Porter announces its maiden $5 million ESOP Liquidation program
Logistics startup Porter announced its first ESOP liquidity program worth $5 million to benefit its current and former employees. As per the press report, about 80% of the program will benefit the senior management while 20% will benefit the rest. This program is announced on back of the $100 million round announced late last year.
Bombay Shaving Company announces a Liquidity Program worth INR 45 CR
D2C grooming company Bombay Shaving Company, which recently announced a INR 160CR fundraise, also announced a liquidity program for ESOP holders and early investors worth INR 45CR ($6 million).
HomeLane concludes its ESOP Buyback program worth INR 27CR
HomeLane concluded its second ESOP program in January worth INR 27CR ($3.6m).
- Interestingly former employees were allowed to surrender 100% of their vested options
- While active employees were eligible to participate with 50% of their vested ESOPs.
Also it’s good to note that amongst the current employees, only 50% of the eligible options were bought back overall indicating the employees faith in the future prospects of the company.
Trell announces its first ESOP Liquidity program worth INR 12CR
Lifestyle video commerce platform Trell announced its first ESOP buyback program worth INR 12CR ($1.68m). This is post their Series B announcement of $45 million last year. Their employee base has grown to 700 members now.
Undisclosed ESOP Buybacks from Grip Invest and Rooter
Apart from the above, January also saw buyback programs with undisclosed amounts from Fintech platform Grip Invest and Game streaming platform Rooter.
Series A funded Grip Invest announces ESOP Buyback Program within record 18 months: Grip Invest is an early stage fintech startup that focuses on alternative investments. It recently raised its Series A funding of about $3 million. It’s fascinating to see very early stage startups too giving opportunities for employees to unlock value. The company also announced that only a few eligible employees cashed-out from this opportunity indicating the team’s belief in the long term prospects of the company
Lastly game streaming company Rooter announced a $25 million funding round led by Lightbox, March Gaming among others. The round also facilitated a secondary sale of both a few shareholders as well as a few employees with ESOPs.
Other News
Cred expands its ESOP Pool to $500 million, ranks in top 7 companies with large ESOP Pools
In other news, Fintech platform Cred, which recently raised $250 million at $4 billion valuation enhanced its ESOP pool to 12.5% of the fully diluted shareholding which is about $500 million. This is an increase of $143 million from its previous 10% pool.
A 12.5% pool for a Series E company is quite generous and on the higher end of the ESOP pool spectrum
WayCool announces an ESOP Pool worth $250CR to benefit 1.5k Employees
Agri Supply Chain Startup WayCool which recently announced a $117 million Series D round announced creation of a INR 250CR pool to provide ESOPs to all its 1,500 employees. It expects to become a unicorn by 2025.
Time for some not-so-pleasant Fables
Other than news, I also picked up some twitter chatter on some of the unpleasant #FablesOfESOP, which perhaps are not highlighted as much as the positive stories. I am glad many operators are coming out and calling out some of their bad experiences dealing with ESOPs which offer good learning for the ones joining startups or are receiving ESOPs for the first time. Here are a few excerpts I picked up
Here’s Deepak Abbot of IndiaGold, who is an evangelist of employee friendly ESOP programs calling out bad behavior by founders such as:
- Not communicating value/percentage of ESOPs correctly
- Not disclosing the pool size as well as policy documents etc.
Lack of transparency and poor communication signal the wrong intent from the founder and would do more harm than good in terms of retaining good people. Also remember bad experiences spread fast in this hyperconnected world.
Similarly Ritesh Banglani from Stellaris VP tweeted a set of absurd conditions from one of the companies negotiating a CXO position which included:
- Uncertain vesting schedule
- Overaching board discretion
- Automatic lapse of vested options on termination or on joining a competitor
- Forced sale of options or shares on departure at price determined by board
- Restricted liquidity options etc.
Vindhya, a product operator from Pexels recounts her experience where —
- She got the ESOP grant letter after 1 year of joining which effectively meant she had to do a 2 year cliff as legally the cliff starts from the grant date for 12 months.
- Secondly the company classified anyone departing as a bad leaver and took away event the vested options. And hence the whole understanding that vested options are what is earned by the employee is defeated.
I am sure there are many more such unpleasant experiences that you might have faced. Do let us know. Also in case you are looking to negotiate ESOPs in your next job — here’s a quick checklist of 8 questions you need to ask the founder/HR.
That’s all for this edition. Take care as we wade through this third wave.
Connect with me: srikanth@qapitacorp.com; LinkedIn; Twitter
