It is customary for startups to pay a part of their employee cost in the form of ESOPs, especially during their early years. This helps them to conserve cash and also to allow employees to own a piece of what they’re building. But have you ever wondered how much are startups spending on ESOPs to employees?
We ran analytics on the Indian Unicorns and arrived at a median of 18%. This means that out of their total annual employee benefit expenses, the Unicorn startups spent 18% in the form of ESOPs to employees.
Companies like DealShare, Apna and Purplle were found to be spending 17% to 20% of their employee benefit expenses in the form of ESOPs. Whereas, companies like LEAD School, LeadSquared and Nykaa spent only 1-2% on ESOPs. Interestingly, some companies which had sufficient liquidity, like Mamaearth and Zepto, chose to settle their ESOPs in cash, instead of issuing fresh stock options.
This article is a part of the January'24 edition of our Startup Newsletter. Here's the complete publication:
