Why Are Indian Startups On an ESOP Buyback Spree
Entrepreneur magazine|May 2021
Benefits of liquidity events like ESOP buybacks are not limited to employees, there is value for companies too
Shipra Singh

Among the many things that kept the Indian startup ecosystem in headlines in the last one year is ESOP buybacks. Startups across sectors are on a ESOP or employee stock ownership program buyback spree at a time when the Covid-19 pandemic has disrupted bottom lines for some startups while led to unprecedented growth for others. While ESOPs found their way into compensation packages offered by new-age tech startups several years ago, opportunities for employees to realise their actual value started mushrooming only recently with companies giving them a chance to liquidate their holdings through buyback events. The trend was kicked off by e-commerce giant Flipkart in 2018 when the company announced a 100 per cent buyback of vested ESOPs. Since then, close to 23 startups have facilitated buyback programs, with some having carried multiple rounds. Of these, maximum buybacks have happened in the last one year since the Covid-19 pandemic outbreak (see: The Indian Startups ESOP Splurge). Was the timing intentional? Entrepreneur India spoke to startups to find out.

SIGNIFICANCE OF ESOPS FOR COMPANIES

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