Start-ups abuzz with ESOP buybacks as funding spree continues

The start-up ecosystem is again abuzz with ESOP buybacks as companies look to provide liquidation boost to the employees. On Monday, various start-ups announced ESOP buybacks, with employees being able to vest their shares at a much higher value. Industry watchers argue that ESOP buybacks and allotments will continue to be a major focus of the new-age tech companies, especially with the government recently capping the tax rates for long-term capital gains(LTCG) at 15 per cent, which includes within its ambit ESOPs too.

As the funding spree in the ecosystem continues, companies have not only been able to pass on the benefits to the employees through buybacks, but ESOPs have also become a way for new-age start-ups to attract and retain top talent.

One of the latest start-up to join the ESOP bandwagon is The Maths Company, a global data and engineering firm. According to the firm, the value of the total buyback program this year stands at Rs 93.2 crores where over 20 per cent of the existing workforce currently holds ESOPs. As a part of the program, there are no restrictions in employees offering up to 100 per cent of their vested options with the value having increased manifold in the past two years.

Similarly, B2B e-commerce platform Bizongo came up with its announcement that it is completing its first-ever ESOP monetisation programme, worth $3.7 million. While the pool size was set at $4.8-million for 102 eligible former and current employees, only 70 per cent of employees opted to liquidate ESOPs.

 The ESOP buyback comes on the heels of the platform’s recent entry into the soonicorn club and a fundraise of $110 million in Series D round led by Tiger Global Management, among others. The company has also achieved an 8X growth in the past one year through strong partnerships with more than 15 financial institutions, and its Supply Chain Financing (SCF) vertical has processed over Rs 1200 crore in working capital lines to MSME vendors.

Integrated woundcare company, Axio Biosolutions today announced that it has completed its ESOP buyback program of half a million dollars for its current and past employees. This buyback is on back of its recent Series B2 fund raise of $6 million last year.

 Under this liquidation, eligible past and current employees have been able to liquidate their vested ESOPs for a combined value of $0.5 million. Employees, irrespective of their job profile or tenure, have been provided ESOP liquidation opportunity as the company looks to acknowledge the contribution of all members of Axio in its growth journey. From housekeeping staff to scientists to sales team Axio's ESOP plan covers almost 40% of the entire team. This is Axio’s second buyback program. In the past, Axio had bought back shares of early investors worth $1 million, as per an official statement.