Millionaire dreams and the hard reality of startup Esops

A few may strike it big, but most employees lose out to taxes, liquidity gap and market swings

- Shipra Singh

When Navneet Gupta left his employer in 2020, he walked out with more than experience—a life-changing Esop payout.

As an early employee, his stock options grew in tandem with the company’s rise, driven by a mobility boom and acquisitions in the cab-hailing segment.

But this was Gupta’s third Esop liquidity event. The first two barely moved the needle. In the third case, the timing aligned. “I would say I got lucky. During that period, the large cab-hailing companies were acquiring smaller companies, and my company was one of them,” he recalled. “The payout helped me buy my first house in Hyderabad without a loan and start my venture, ServiceGTD.”

It also taught Gupta a lesson many discover too late: Employee stock option plans or Esops can be transformative, but only with the right timing and clarity.

Recent IPOs like Groww, Lenskart, and Urban Company have brought Esops back into focus. Stories of employees becoming millionaires circulate widely, but beneath them lies a quieter reality: far more employees never see the payout they expect.

Abhishek Goel, a product management leader in Bengaluru, has lived that harder reality. He has held Esops of one firm that went public and a large pool of such stock options at another.

“Returns from the IPO were almost zero due to high exercise costs. Grants at the second company are life-changing, but I've left the company. Most employees leaving before an IPO miss out due to short exercise windows and post-IPO lock-ins.”

“In the US, Dubai or Europe, stock option terms are usually clearer and more employee-friendly,” he said.

Fine print of Esops