ESOPs turn into real bank balance for thousands of startup employees despite a taxation regime that is seen as adverse to availing of share-based compensation

A board at the office of D2C startup Bombay Shaving Company declares its current share price: Rs 30,000 apiece. It is designed to look like a barometer that tops at Rs 1.5 lakh per share — that is the goal for 2025.

“We are now at double the price where our last round was at… The board is for our ESOPs (employee stock option plan). Employees come in, see the board, do the math… know what’s in it for them. Wealth creation is important across the board,” says Shantanu Deshpande, founder and chief executive officer of the startup, which boasts of consumer majors Reckitt and Colgate-Palmolive on its cap table.

Until a few years ago, ESOPs were not as attractive a proposition for startup employees, unless it was a blue-blooded company you were talking about, like Flipkart. Startup employees were not quite sure if the options would turn into a real shareholding and then into money.

But a string of successful initial public offerings (IPOs) such as Zomato, Paytm, Delhivery and frequent ESOP liquidity events by much smaller startups has changed the narrative.

ESOP cashouts have led to $1.46 billion of wealth in the hands of startup employees since the beginning of 2021, according to data from Qapita.

Source: https://shorturl.at/kqDQU