ESOP value obliterated

When you play with fire, you get burnt. That's the story of 2020-2022. You're right that a lot of esops issued in this period are probably underwater.

However, the real issue with esops in India in ethics. Too many cases of founders taking advantage of employees by giving verbal commits and not following through, issuing esops and then not keeping the employees in the loop, taking most of the secondaries for themselves rather than distributing it with employees and Angel investors. The list goes on and on.

This has always been the case in India and save for maybe 5% of Indian cos who actually do this the right way, it has continued to happen and the pragmatist in me believes that this will continue to happen.

Are companies still investing in esop/equity management tools now?

The list here would include

• cos that have gone bust or in the process of soing so
• which have fund raising issues
• ones with down rounds
• the ones that have been acquired/thrasioed and founders got a good deal
• the few that listed, but emoloyees could not sell (but paid tax at IPO price) and price is down massively now

Employees have faced issues ranging from complete ESOP writeoff to getting secondary at a very low valuation compared to last round to in some weird cases having to borrow to pay the tax and seeing the value of the ESOPs fall drastically post listing. Most of the these are hidden from media. These should definitely be bought out.

Also majority series B+ founders take the lion share of ESOPs - and this is reported by the gullible traditional media as the company indulging in some great social service/spreading the moolah. Another issue worth calling out.

Businesss reporting on startups has to move from useless metrics spent Rs 1.x to make Rs 1 to some of these real issues. Founder employee dynamics is something that should definitely get more coverage.

Paper money goes to 0 🤣