Startups spend $1.7 billion for ESOP buybacks in last five years

Over 100 startups have implemented ESOP buyback, liquidity, and payout programs worth around $1.7 billion in the past five years, according to data compiled by TheKredible.

In 2020, only 11 startups participated, totalling a modest $50 million. However, the trend accelerated rapidly, with 40 startups completing buybacks worth $440 million in 2021. This was followed by 26 startups with $200 million in buybacks in 2022. The upward trend continued in 2023, with 14 startups generating an impressive $802 million through buybacks or liquidity events.

In 2024 till October first week, 17 startups have contributed $188 million towards ESOP buyback.

Flipkart, Razorpay, Swiggy, Whatfix, and BrowserStack are the top five startups, while e-commerce, fintech, SaaS, edtech, and logistics were major contributors. In 2023, Flipkart accounted for $700 million in ESOP liquidity. Around 28 unicorns have joined this trend.

In 2024, IPO-bound foodtech firm Swiggy bought back ESOPs worth $65 million. It was closely followed by SaaS company Whatfix, which recently announced $58 million in ESOP liquidity for employees and investors. Urban Company and Meesho ranked next, with $24.4 million and $24 million.

However, recent budget proposals may impact ESOPs, as the Union Budget suggests treating share buybacks as dividend income starting October 1.