Swiggy launches ESOP liquidity program worth $23 Mn

Foodtech major Swiggy has initiated its employee stock ownership option or ESOP liquidity program worth $23 million. In October 2021, Swiggy announced its $35-40 million ESOP liquidity program for 2022 and 2023.

According to Swiggy, employees will have the option to receive liquidity of up to $23 million against their ESOPs. The Bengaluru-based company has announced the next round of ESOP liquidity to be held in July 2023.

The foodtech decacorn has also rolled out a new program, Build Your Own Dollar (BYOD) wherein Swiggy employees can choose to invest in Swiggy ESOPs.

Swiggy has been quite busy in 2022 so far. The company had raised $700 million at $10 billion valuation in January, led a $180 million round in bike taxi platform Rapido in April and during the same month, it invested in Urban Piper along with Zomato and launched an accelerator program for its driver partners. Last month, it also acquired Times Internet-backed table reservation platform Dineout for an undisclosed amount.

Over the past couple of years, Indian startups have seen a surge in ESOP buyback and liquidity programs. As per Fintrackr’s data, more than 20 startups across stages have announced ESOP buyback, sale and liquidity worth around $200 million in the first six months of 2022 or H1 2022. Last year, the total buyback was worth around $440 million.

Apart from buyback, a clutch of growth and late-stage startups also expanded their ESOP pool in 2022. The list includes brokerage-free real estate platform NoBroker, DealShare, Money View, Purplle, LEAP, Wiz Freight, Ather Energy, Ninjacart, Ecom Express, Pine Labs and VeGrow among others.

Interestingly, these buyback programs, coming at a time when listed peers of Swiggy in this instance like Zomato have seen tremendous value erosion do raise the question about the valuation metrics being applied for buybacks. It no longer seems like the metrics would necessarily mirror or be close to the fair market valuation by public markets possibly.

Last month, Deepinder Goyal, founder and chief executive officer of Zomato, said that he will donate all proceeds of his recently vested ESOP worth Rs 700 crore to Zomato Future Foundation.