Deal syndication platform LetsVenture has rolled out its employee stock ownership plans (Esops) management platform, MyStartupEquity, the first such concerted effort in the country’s ecosystem to digitise, manage and liquidate startup employee stock grants.
MyStartupEquity, an Esop management tool, allows startup founders to manage their equity grants to employees, allowing them to grant, exercise and ultimately liquidate the same.
The dashboard, which is currently in beta stage, is a plug-and-play model that will allow founders as well as employees to track their Esops in real time.
“The platform will bring efficiency and accountability to how companies manage their Esops lifecycle, right from granting them to facilitating regular liquidity for employees. Though thousands of employees have accepted Esops as a core part of their compensation, they are unclear about its true value,” said Ganesh Nayak, director of LetsVenture.
Liquidity events in India’s startup ecosystem have historically been far and few, with only a handful of companies, such as home-grown domestic online retail giant Flipkart and payments platform Citrus Pay providing rich returns to employees, after they were acquired by Walmart and Naspers-owned PayU, respectively.
More recently, employees in two B2B startups, industrial goods marketplace Moglix and fintech company Razorpay have earned significant cashouts, through secondary transactions, after investors in both these companies snapped up their vested stock options last year.
“The way the startup founders are aligning is that they will help employees to liquidate 5%-10% of their vested Esops every 6-12 months, which is a very balanced approach…It helps employees to actually value them as actual currency, rather than just something on paper, and prevents them from losing out on future financial benefits,” Nayak said.
LetsVenture, founded in 2013 by Shanti Mohan and Sanjay Jha, has emerged as one of India’s top early-stage deal making platforms, competing with the likes of AngelList and angel networks such as Indian Angel Network and Mumbai Angels, among others.
The marketplace, which has over 6,500 investors spread across 50-plus countries, has worked with almost 200 startups, helping them raise over Rs 600 crore in funding till date. It also runs a Sebi-registered angel fund.
MyStartupEquity, which has been built in-house at LetsVenture, is being used by about 10 startups so far.
Nayak declined to share names citing confidentiality, but said that LetsVenture will work with companies across lifecycles, ranging from unicorns valued over $1 billion to early-stage ventures.
“Equity is the most valuable asset of startups, and it’s in their interest to help employees fully appreciate the Esop with a transparent system and regular liquidity options. We have seen several unicorns and growth stage startups relate to these Esop-related issues in our first meeting and are signing up at a fast clip,” Jha, co-founder and product head at LetsVenture, said.
The platform will also help employees understand taxation related to sale of Esops, and exit procedures. For startups, MyStartupEquity will help founders from a compliance reporting standpoint, a significant chunk of which is still done manually.
“While we tend to complain a fair bit about the shallow liquidity in India’s private market, there is actually a lot of misinformation, with a lot of folks not connecting the pieces, and that’s where we see our goal,” Jha said.