It’s raining moolah for startup employees. They are earning by encashing ESOPs plans. In the past one year, more than 30 employees in Rivigo Services, a surface transport and logistics startup, turned crorepatis after encashing their stock options, and made about Rs 71 crore.
These employees belonged to senior as well as middle management executives levels. And the shares were picked up by existing as well as new investors.
Rivigo Services cofounder Gazal Kalra said that the secondary transactions, the last of which took place in July, were not at a discount to the valuation commanded by the Gurgaon-headquartered company in its primary funding rounds.
In January, during the last funding round, the company was valued around $1 billion. The round was led by its existing backers, marquee private equity firm Warburg Pincus and sector agnostic investment firm SAIF Partners.
Showing generosity, Rivigo hasn’t put any cap on vesting of ESOPs and thus, allowed a number of executives to sell all their stock at one go.
Since last year, there has been a surge in ESOPs buyback by startups. So far, this year has witnessed secondary share purchases worth $710 million across 7 consumer Internet companies and one enterprise startup.
Paytm, Ola, Lenskart, Zomato, BigBasket, Pine Labs and Flipkart had offered a partial exit to their investors, founders as well as employees.
In one of the largest secondary share purchase by Temasek this year, investors, as well as employees of Ola liquidated shares worth $230 million. Discovery Capital along with others had bought $47.2 million of ESOPs in Paytm at a valuation of $10 billion.
The secondary purchase had turned some 300 hundred former and existing Paytm employees into millionaires.
There are over 2,000 employees, who own ESOPs across Flipkart, Myntra and Jabong are in process to sell $500 million worth ESOPs. Among them, about 200-250 employees of Flipkart, 150 of Myntra and additional 50 of Jabong are diluting their holdings.
Since exit via IPO is harder to come by, secondary share purchase are a confidence booster for employees. The liquidation will ultimately help more early stage startups as many beneficiaries would like to turn angel investors.
The development was first reported by ET.