Abhinav Sankar .

Urban Company has announced an employee stock option (ESOP) sale plan worth $5 million with the purchaser being its existing investor Vy Capital.😯😯

Under this program, the eligible employees will be given the option to liquidate their vested ESOPs with each worth over 1 lac.

What do you think about this strategy, should every company opt for plans like these?

What are the pros and cons of such plans?

Originally Posted Here

Jeet Parekh

The company has opted for such plan since it got interest in secondary market to purchase. Otherwise it is difficult.

Abhinav Sankar

What are the benefits though for such plans?

Jeet Parekh

1. Remove people from cap table

2. Helps employee make money

3. Attrative to future employees

4. Existing investor strengthens the position in cap table.

5. Preparing for an exit

Abhinav Sankar

Woah! Interesting! Do these plans comes like once in a while or employees can sell them whenever they want?

Jeet Parekh

they can sell once vesting period is over, ideally this way employees get best price against ESOPs.

Other such events are to sell in secondary markets whcih are grey in nature. Other event can be acquisition or buy back from founder or series fund raise.

Series fund raise usually is combination of Primary and secondary in case lead investor is new.

Surender T Natarajan

Fundamentally, the investor is looking to improve his/her position in the cap table as he is confident about the startup !!!

Ankit Bohare

Esops are amazing,

In my previous company(Appirio)

We all had Esops, when Wipro bought the company, they bought all the shares,

And each one of us got a really good sum of money.

There were few individuals who were in the organisation from a long time, who can be considered loyal employees, they earned somewhere around 25 lac to 1 crore.

So yes Esops serve huge value at the time of stake sell or getting acquired! It’s Just difficult to explain the long term vision to employees.

Sandeep Balaji

Always a positive. And a big source of liquidity for.employees. Rewards long service and for the investor its a chance to hold more since he/she is bullish.

The secondary markets are developed/mature in the 🇺🇸 and employees of Series B and above start could secondary Transaction. In India its becoming more common. Offcourse India has been a secondary exit market a long time. So funds will buy out funds or collection of angels, etc.

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