Swiggy Unveils Second Tranche of ESOP Liquidity Program Worth $50 Million
Swiggy, a prominent player in the food technology industry, has commenced the second phase of its ESOP (Employee Stock Ownership Plan) liquidity program, which is valued at $50 million. The Bengaluru-based company had previously unveiled a two-year ESOP liquidity program for the years 2022 and 2023.
The program is designed to allow Swiggy’s employees to monetize their vested stock options, allowing them to benefit from the company’s growth and success. By providing this liquidity program, Swiggy aims to reward and retain its workforce while fostering a sense of ownership and commitment among its employees.
This initiative reflects Swiggy’s efforts to acknowledge and appreciate the contributions of its employees and align their interests with the company’s long-term objectives. As the rollout continues, eligible employees will have the chance to participate in the liquidity program and potentially realize the value of their vested ESOPs.
The ESOP liquidity program initiated by Swiggy involved its first tranche in June of the previous year, allowing employees to receive liquidity of up to $23 million against their vested ESOPs. This program is designed to enable employees to realize the value of their stock options, providing them with an opportunity to benefit from the company’s growth and success.
Furthermore, the current ESOP liquidity program marks Swiggy’s fourth liquidity event since 2018. These liquidity events demonstrate the company’s ongoing commitment to rewarding and retaining its employees, acknowledging their contributions to the company’s success, and fostering a sense of ownership among its workforce.
By offering liquidity opportunities through ESOPs, Swiggy not only incentivizes its employees but also strengthens their alignment with the company’s long-term goals, driving a shared sense of purpose and dedication within the organization.
The ongoing ESOP liquidity program by Swiggy will also include eligible employees from Dineout, the company it acquired last year. Swiggy had acquired Dineout, which was backed by Times Internet, as part of its expansion into the table booking segment. The acquisition allowed Swiggy to further diversify its services and broaden its presence in the food-tech industry.
With the integration of Dineout into its operations, Swiggy was able to strengthen its position in the quick-commerce (Q-commerce) market through the addition of Instamart. Q-commerce refers to the quick delivery of essential items and groceries to customers, and Instamart’s inclusion bolstered Swiggy’s offerings in this sector.
By including eligible Dineout employees in the ESOP liquidity program, Swiggy demonstrates its commitment to creating a unified and inclusive team, fostering a sense of collaboration and alignment among employees from both organizations. The liquidity program’s extension to Dineout employees further reinforces Swiggy’s dedication to rewarding and engaging its workforce following the acquisition.
Swiggy’s initiation of the ESOP liquidity program is noteworthy, as it is one of the few companies this year that has been able to exercise such a program despite challenging macroeconomic conditions. The company joins a handful of startups and companies that have continued to provide liquidity options to their employees through ESOP buybacks.
Data compiled by Fintrackr reveals that since 2020, more than 80 startups have conducted ESOP buybacks amounting to a total of $1.45 billion. However, it is essential to note that the amount and frequency of ESOP buybacks have fluctuated over the years. In 2021, 25 startups announced ESOP buyback schemes worth approximately $200 million, which marked a considerable decrease compared to the $440 million recorded in 2019. In 2020, the value of ESOP buybacks stood at $50 million.
Despite the varying trends in ESOP buybacks, Swiggy’s current liquidity program demonstrates its commitment to rewarding its employees and providing them with opportunities to benefit from the company’s growth. ESOP liquidity programs play a crucial role in motivating and retaining talent within startups and technology companies, as they offer employees a chance to realize the value of their vested stock options, thereby aligning their interests with the company’s long-term success.
The recent announcement by Flipkart, a company owned by Walmart, about a $700 million ESOP payout for its employees is significant news for the startup ecosystem, which has been facing challenges amid funding constraints and mass layoffs. The ESOP payout comes as a part of compensation for the loss of value that employees experienced due to the spin-off of PhonePe, a digital payments platform that was previously a part of Flipkart.
Before these developments, the total value of ESOP buybacks in the startup ecosystem was relatively modest, standing at around $50 million until the first half of 2023. However, the consecutive ESOP buyback and payout events by Swiggy and Flipkart are likely to restore confidence among startups and employees.
By providing liquidity through ESOP buybacks, startups and companies like Swiggy and Flipkart are demonstrating their commitment to rewarding and retaining their workforce, even in challenging economic conditions. Such initiatives can play a crucial role in boosting employee morale and enhancing the overall perception of the startup ecosystem, especially during times of funding uncertainty and industry-wide layoffs.
These back-to-back ESOP events are likely to create a positive impact, reaffirming the belief in the long-term growth potential of the startups involved and fostering a sense of stability and confidence within the industry. It shows that despite the challenges, companies are actively taking steps to reward their employees and align their interests with the company’s success, ultimately strengthening the startup ecosystem.
