Startups bought back ESOPs worth over $400 million last year

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BENGALURU: Over $400 million worth of ESOPs were bought back by Indian startups in 2021, according to a report on startups by Nasscom and consultancy firm Zinnov. Over 10,000 employees benefited from these buybacks. The ESOP pool has expanded to $900 million with Sebi’s revised policies, the report said.
Sebi changed regulations last year to allow ESOPs to be given even to employees on contracts, and those on probation prior to confirmation. Many new age firms have been buying back employee stock options to reward them.
ESOPs have emerged as a talent retention tool and have been integral to the compensation strategy of startups. Data showed that there are 50 startups with sizeable ESOP buybacks including BrowserStack ($50 million), Swiggy ($40 million), UpGrad ($29. 5 million), Zerodha ($27 million), Udaan ($23 million), and ShareChat ($19 million).
Flipkart last year bought back ESOPs worth Rs 600 crore ($80. 5 million), creating many dollar millionaires.
IPOs have also turned into major liquidation events.

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