November Roundup: Teachmint, Licious pioneer ‘anytime liquidity’ as Vedantu, PhonePe, Simplilearn announce Buybacks
It was an eventful November in the world of ESOPs marked by a couple of very unique programs announced by Teachmint and Licious. We also had a good share of startups announcing buyback programs to usher in the holiday season. We also cover MeeSOPs and a few other updates. Let’s dive straight into the roundup!
Teachmint and Licious announce ‘anytime liquidity’ schemes
It was not very long back that ESOPs weren’t taken very seriously in the Indian startup ecosystem and in a matter of 12 months, we seemed to have pivoted a 180 degrees for the better. i.e.
No Liquidity ⇒ Occasional Liquidity ⇒ Periodic Liquidity ⇒ Guaranteed Liquidity
And now to top it all, we now have ‘Anytime Liquidity’ programs.
While Teachmint was the first to announce it’s ‘Continuous Liquidity Program’ for vested options, Licious soon followed suit with its own unique program. As per this Teachmint’s program, employees with vested options can decide to sell their options at any point in time.
Teachmint which awards ESOPs to all its 154 employees, decided to pioneer this unique program to de-link liquidity to funding rounds, secondary buybacks etc. and ensure financial freedom for their employees at the time of their choosing once they have earned (vested) those options.
Additionally the buyback by the company will happen at the same price as the last financing round without any discount — again advantage employees here!
Newly minted as a Unicorn, Licious too announced a one-of-its-kind, everyday vesting, everyday liquidity program for about 1,000 of its employees with ESOPs.
Come next year, Licious employees will vest their ESOPs daily and also be able to sell it back to the company at any point of their choosing, once a year. This will enable them to time their value-unlocking coinciding with their cashflow needs.
Both startups have had incredible growth journeys and have raised massive rounds of capital enabling them the luxury of offering such schemes.
These moves also found arguments from the other direction who found these programs defeating the purpose of ESOPs as an instrument of wealth creation as employees would treat them as glamourised bonuses, as one might just cash-out and move-on to the next gig. Do find some healthy banter on this thread initiated by Deepak Abbot from India Gold.
Well irrespective of who’s side you are on, employees definitely seem to have the last laugh during these times :)
November Buyback Round-Up: $40+ million in Employee Wealth Unlocked!
November saw a decent share of buyback activity with about 6 companies announcing buyback programs to the tune of $42 million.
Vedantu announces its maiden INR 20CR Buyback plan
Recently turned unicorn Vedantu announced a $3 million buyback on back of its $100 million funding round. As per the buyback program, active employees and key management people with vested options will participate in the buyback program. Founders are not participating in the program.
PhonePe announces a buyback program worth INR 135CR
PhonePe is all geared up to execute a massive INR 135CR buyback program that would benefit about 75% of their overall employees who are due to vest their options in December. PhonePe has given out ESOPs to all its 2,200 employees. Key management people will be able to liquidate 10% of their vested pool while other employees can offer 25% of their vested options.
Cred tops up its buyback program, to execute INR 100CR worth buyback in 2021
Cred makes its third buyback announcement all in the span of one year! While it started the year with its $1.2 million maiden buyback program, it soon topped it up with a $5 million buyback program in April linked to its second large fundraise of $215 million. The latest announcement in November tops up the overall number to INR 100CR in 2021 which implies an addition of about $7 million in buyback pool this year. Cred employees indeed have had an incredible ride this year!
Simplilearn completes its maiden buyback program worth INR 49CR
Blackstone backed Simplilearn completes its first buyback program amounting to $6.5 million. As per details shared, active employees could liquidate 25% of their vested options. About 33% of ESOP holders have become crorepatis owing to this buyback program.
Innoviti completes its $5 million Diwali buyback
Innoviti completed a $5 million buyback of vested ESOPs impacting 30% of their employees. Eligible employees could liquidate upto 40% of their vested options. Employees realized a 30X value appreciation on their options from the strike price.
Bootstrapped startup iZooto executes a $1.35 million buyback program
To sum up the buyback roundup, it’s heartening to note a bootstrapped, profitable value SaaS startup iZooto executed its first buyback program worth $1.35 million. iZooto covers 72% of employees as part of its ESOP program about 40% of the employees were eligible to participate in the buyback program which yielded a whopping 40x returns to the ESOP holders. The company also announced a dividend of INR 275 per share before Diwali.
It’s wonderful to note profitable businesses generating wealth for its shareholders.
Meesho announces MeeSOPs — it’s annual ESOPs for all program
Going forward all Meesho employees have an option to participate in their newly created ESOP scheme — MeeSOPs. Employees can convert upto 25% of their CTC into ESOPs with a minimum value of INR 50k.
The key aspect of MeeSOPs is that one can vest 100% of their options at the end of the 12 month cliff empowering them to participate in Meesho’s periodic liquidity programs. Thus, subject to the company doing well, the wealth multiplication opportunity in a limited period of time is fantastic!
In Other News
- Upgrad increases its ESOP pool by 28% to INR 427 CR
- Oyo’s DRHP reveals their ESOP pool to be worth $1 Billion covering more than 80% employees
I will leave with you this wonderful post by Nithin Kamath, CEO of Zerodha where he explains his philosophy around setting up the ESOP scheme at Zerodha and how they view it as a low volatility retirement fund for their employees. Valued at a humble 15 times PAT, Zerodha in a way symbolises an approach that might not be the most sexy among the lot, but perhaps the most sustainable?
I look forward to your thoughts and comments.
Connect with me: srikanth@qapitacorp.com; LinkedIn; Twitter
