Indian startups respond to Covid-19 with increase in ESOPs

admin / May 13, 2020 / Coronavirus, COVID 19, India, NewCrop, Startups

As the Covid-19 pandemic has caused economic instability for companies, many Indian startups have responded by increasing employee stock options. 

Companies increasing availability for their Employee Stock Ownership Programs (ESOPs) include Grofers, Paytm, Bounce, Zomato and Oyo. The stocks are mostly coming from those previously owned by founders, as reported by Economic Times. 

“Any company undertaking pay cuts, faces the risk of losing employees, and this (issuing additional stock) is one of the good levers to retain talent,” Harshil Mathur, chief executive at Razorpay said to ET. 

Last month, as the pandemic began coming to a head, many companies had to face lay-offs, mandatory and voluntary pay cuts. 

Ride-share startup Bounce faced pay cuts between 20% and 60%. Zomato has 2,700 employees who volunteered as part of the salary reduction program, receiving company stocks in exchange. 

“This will move along even more in the next 2-3 quarters, because this is an issue no one has an easy solution to,” WaterBridge Ventures’ Manish Kheterpal said to ET. “India is still a relatively young ecosystem — for startups and VCs — capital or cap table restructuring is not something we have seen much of here.”

Gurugram-based grocery delivery startup, Grofers, has added $25 mn worth of stock to that available to employees, with Paytm setting aside Rs 250 crore. 

(Picture courtesy: Google)

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