Good Capital: Indian Technology Review #30
From being dismissed as a valid source of compensation to becoming the most critical component for startups to hire and retain talent, ESOPs have come a long way in India. We’re excited about how they lay the foundation for a promising and self-sustaining ecosystem in India.
In this issue, I shall tell you about the flywheel being created by ESOPs along with some related statistics.
A Natural Progression
Starting up is an inevitable progression for most senior employees. As problem solvers, they often encounter roadblocks while helping grow their businesses - these are opportunities they want to solve for. Liquidity from ESOPs provides them with a financial cushion. They use that capital to experiment with solutions and build their teams while starting up.
Several founders and operators have become angel investors. They bring invaluable experience and provide relevant insights to founders. This plays a pivotal role in increasing the probability of success for emerging startups.
That’s how the startup ecosystem keeps getting stronger and stronger.
Talking Numbers
Over 36 Indian startups announced ESOP buyback programs worth around $440MN - more than an 8x increase over the previous year.
This liquidity is just a fraction of the mammoth ESOP pools that Indian startups have created and continuously contributed to. This can be expected to pay rich dividends in years to come.
Employees choosing to hold on to their stock options is equally important to the buybacks - this is evidence of their belief in what they’re building.
The wider the distribution of this equity, the greater the wealth creation and the impact.
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Warm regards,
Rohan Malhotra
PS - Find our previous editions here
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