Startups spend $1.7 billion for ESOP buybacks in last five years. (Representational Image)
Chennai: The Indian startup ecosystem has witnessed an exponential rise in employee stock ownership plan (ESOP) buybacks since 2020.
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.
( Source : Deccan Chronicle )
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