Foodtech unicorn Swiggy has announced an organization-wide ESOP liquidity program for the stock option holders among its worker base. The novelty of the program is in providing a transparent liquidity plan with defined timelines from vesting to liquidation.
According to Girish Menon, head of the human assets at the Bengaluru based company, the company has invited all of its ESOP holding workers to participate in its “committed liquidity occasions” which will take place in July 2022 and July 2023. He didn’t specify the basis on which cashouts will happen in case of overabundance demand.
The new liquidity program is probably going to be valued at up to $35-40 million (Rs 260-295 crore). In any case, this figure will increase in line with the company’s valuation.
Apart from the ESOP liquidation, the company has also claimed to have announced increments, promotions, and a minimum of 100% of variable pay for Q1 of FY22 for all representatives.
The announcement comes closely following Swiggy’s $1.25 billion fundraise led by SoftBank Vision Fund 2 and its existing backer Prosus. The company was valued at around $5.6 billion during its last financing round in July this year. At that time, Swigyy’s ESOP pool was valued around $445 million (Rs 3,300 crore) and accounted for a nearly 8.4% share of the association’s equity.
Meanwhile, Swiggy is also gearing up for a new funding round that will look to reach decacorn status or $10 billion valuation. According to Entrackr’s sources, it is in talks with existing and new investors to raise up to $800 million in a potential transaction. Readers may be aware that its key competitor Zomato which was recorded sometime back on the homegrown bourses, has a market cap that has ranged between $13 to $14 billion for some time now.
The transition to offer planned, seemingly guaranteed liquidity occasions is a colossal positive for workers at a startup of Swiggy’s size and scale. According to several startup founders, holding ESOPs in Swiggy is equivalent to cash because of the liquidation certainty.
In the course of recent years, ESOP buybacks across funded and large startups have gotten which is an indication of the biological system having grown up. During the first six months of 2021, representatives in startups had made more than $100 million through buybacks and secondaries.
According to Fintrackr’s data, this is almost 2X more than what representatives made in the whole 2020 through ESOPs liquidation occasions.
Such liquidation opportunities will instill faith in ESOPs in many startups that have scaled up enough. Many promising companies in their early development stage will actually want to utilize ESOPs as a genuine tool to attract and reward talent.
