Razorpay & Tekion offer $100m+ liquidity to 1000+ employees; Zomato pioneers ‘ESOPs for Good’

Much like the thunderstorms, May saw a couple of large ESOP liquidity events announced by RazorPay and Tekion. Many startups also expanded their ESOP pools to create enough headroom to attract future talent. The highlight of May was also Deepinder Goyal’s announcement of donating his recently vested ESOPs worth $90 million to Zomato Future Foundation.

Let’s Dive in!

Zomato Pioneers ‘ESOPs for Good’ with a $90 million donation from the Founder

After Unacademy’s T-SOP program to benefit their teacher partners and Urban Company’s P-SOPs to benefit their delivery partners, Zomato’s Deepinder Goyal has recently decided to donate his recently vested ESOPs worth $90 million to Zomato Future Foundation. The Foundation is a non-profit to benefit the children of Delivery Partners by sponsoring their education. This is indeed a noble initiative and might trigger other founders too to follow suit and pay-it-forward. We hope ‘ESOPs for Good’ becomes a trend and finances high leverage and impactful initiatives like this.

Also, on a lighter note, with the added blessings of tens of thousands of delivery partners, we hope that Zomato stock price reverses its negative momentum. :)

ESOP Liquidity Roundup

After this heartwarming news, let’s do a quick roundup for Buyback news:

Razorpay announces its biggest ESOP buyback worth $75Mn

Known for announcing regular liquidity programs, Razorpay announced its fourth and the largest ESOP buyback program worth $75 Mn, with around 650 former and current employees participating. Unlike most liquidity events, this campaign was structured as a secondary sale transaction. Lightspeed Venture Partners and Moore Strategic Partners will be financing this secondary transaction and thereafter join the company’s captable.

Tekion creates 250 Crorepatis with $40 million Buyback Program

Automative startup Tekion announced a massive INR 300 CR ESOP Buyback program benefiting about 400 Tekion employees with over 250 becoming crorepatis. As part of the program, employees had an option to sell 25% of their vested options at the same price as offered to founders and investors. Tekion announced a massive $250 million round at $3.5 billion valuation last year

Other than RazorPay and Tekion, travel and expense management SaaS platform — ITILITE also announced an undisclosed ESOP Buyback program in May.

ESOP Pool Expansions

Apart from the buyback events, a bunch of startups also expanded their ESOP pool in May

Oxyzo creates an ESOP pool worth $49Mn: After raising the country’s biggest Series A round of $200Mn, Oxyzo is a new member of the Unicorn Club. Oxyzo is now creating an ESOP pool worth almost $49 Mn for its employees in and outside India.

Ather Energy increases its ESOP pool to $29.6Mn: Ather Energy, the scooter manufacturer, has increased its ESOP pool size to currently being worth $29.6Mn. This change was announced shortly after the company achieved its highest-ever monthly sales. The board also mentioned that it has plans to go public soon.

Ninjacart expands its ESOP pool to $22 million: This news came after its buyback announced earlier in Jan.

A Few Observations in Conclusion

As we conclude this month’s edition, here are a few observations with regard to how ESOP liquidity will pan out for the remainder of the year:

• The Graduation from Primary to Secondary Liquidity: As funding sizes of Series B+ rounds get tighter, there might be a graduation from primary led liquidity to secondary sale programs as boards will prefer to conserve cash and extend runways instead of provisioning liquidity programs. Hence expect a lot of activity in the secondaries market.
• The Shift from Quantity to Quality: Perhaps the 2021 pattern of ‘Get an ESOP Buyback Program Free with every Series B+ round’ will get rationalized. Companies that have robust business models and monetization roadmaps might be able to attract investor interest to finance ESOP buybacks
• From Stock Picking to Job Picking: Growth operators in startups will have to pick the right rocketships to create value for themselves.
• New Funding Sources: With the emergence of startups as a mainstream asset class, most family offices, HNIs and wealth outfits will seek to invest in startups through these secondary opportunities.
• This Too Shall Pass: Fundamentally nothing has changed! The massive problems are out there to be solved and India as an ecosystem is well poised to serve the global scale needs. CleanTech and Web3 are new orbital shifting opportunities that are emerging. No better time to be long on Indian startups! :)

If you are a founder looking to offer liquidity to your employees and shareholders, reachout to Qapita Marketplace. We offer bespoke and structured liquidity solutions to companies.

Stay tuned to Fables Of ESOP.

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