Swiggy re-orders Buyback, pioneers ‘BYOD’ as June sees Liquidity dip
June continued to see a dip in the number of companies offering ESOP Liquidity programs as the focus of the startups has been to re-strategise and extend runways as they seek to wade through the funding winter. This has also led to layoffs in several dozen startups impacting 10,000+ jobs. Given the need to conserve cash, companies preferred to conserve their primary funding pool. A few startups have also opted for the secondary sale route to offer liquidity to its core team, founders and employees.
ESOP Liquidity Roundup
June saw ESOP Liquidity announcements by 3 companies: Swiggy, Money View and Headout.
Swiggy repeats its order. Offers liquidity worth $23 million to employees
The online food delivery decacorn, Swiggy, announced its ESOP liquidity program up to $23Mn. Swiggy was one of the first startups to announce a ‘Structured Liquidity Program’ stating the intent to execute employee liquidity programs every year.
Further, the company also announced its “Build Your Own Dollar (BYOD)” program which offers ESOPs to all permanent employees of Swiggy which were only offered to employees above a certain grade and/or based on performance.
Money View redirects profits to Employee Buyback
Money View, a Bengaluru-based fintech, has witnessed booming profits over the past 18 months and therefore has recently decided to reward its employees through a buyback program. All employees who have completed one year with the company are eligible and can sell up to 20% of their vested shares. The company also plans to announce another buyback next year in June 2023,
Headout announces an ESOP Buyback program benefitting all employees
Headout, a travel experiences app, which raised $42 Mn in February 2022 in a Series B round led by Glade Brook Capital, announced its first ESOP buyback program this June for all its current and former, about 104 employees.
Other Updates
ESOP Pool Expansions to attract talent despite Funding Winter
Several companies in June have announced to expand their ESOP pools to attract and retain talent as startups look to conserve cash and offer long term rewards through ESOPs. These include:
- Healthians expanded their ESOP pool recently to $8 million
- Social Commerce Unicorn DealShare announced an ESOP Pool top up to make it worth $60 million
- NoBroker too added additional units to its ESOP Pool which now stands at $48 million.
MPL amends their ESOPs to make it employee friendly
MPL who recently announced a 10% reduction of their employees, has also announced changes to their compensation structure and ESOP plans. With regard to ESOPs, MPL has made it more employee friendly aligning to prevailing standards. Key changes include:
- Monthly vesting post 12 month cliff period.
- Post Separation Exercise Period has been extended from 30 days to 10 years (this will enable employees to carry forward vested options after quitting thus avoiding upfront taxes)
- Also the amendments include immediate vesting of options in case of separation involving demise or disability.
To sum-up, notwithstanding the funding winter and lay-offs by a few startups, the larger value-creation opportunity for startups is still out there and it is the best teams with solid execution capability that will come out as victors. ESOPs offer a credible instrument for founders to attract the best team while optimising for cashflow in these situations.
Also given the tightening of primary fund flow, as founders and CFOs, one can consider secondary opportunities to provide liqudity to your stakeholders. 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.
Are you a founder looking to setup your first ESOP Plan: Here are a few practical pointers to help you.
Are you an employee considering joining a startup: Here is a checklist of ESOP related questions you must ask.
Stay tuned to Fables Of ESOP.
Connect with me: srikanth@qapitacorp.com; LinkedIn; Twitter
