Bengaluru-based deal-making platform LetsVenture has introduced a new MyStartupEquity tool to allow startup founders and employees to manage employee stock ownership plans (ESOPs).
The tool is currently being used by 10 undisclosed startups. LetsVenture aims to expand the platform even further for the use of startups ranging from early stages to unicorns.
Sanjay Jha, cofounder and product head at LetsVenture, in a press statement, said, “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”
With this tool, startups founders can easily manage, grant, exercise and liquidate the employee’s stocks. It will also help employees understand taxation related to ESOPs and exit procedures.
Moreover, MyStartupEquity will guide them from a compliance reporting standpoint, which is majorly 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.
Ganesh Nayak, director of LetsVenture, advised startups to help employees liquidate 5-10% of their ESOPs every 6-12 months. Calling it a balanced approach, he said it will help employees value the ESOPs in terms of actual currency.
Instead of seeing ESOPs just as a piece of paper and prevent them from losing out on financial benefits in the future. Moreover, Nayak also believes that this will bring in more efficiency and accountability in the way a company manages their ESOPs and push more employees to opt for it.
“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 signing up at a fast clip,” Jha added.
Back in June 2019, LetsVenture announced a campaign to standardise the framework for startup ESOPs to attract talent from top global companies.
“We are opening up a discussion on what the ESOP and liquidity policies are that can actually become meaningful for startup employees. Adoption of best practices by unicorns, and ‘soonicorns’ will ensure that the next wave of talent actually ends up joining Indian startups,” Nayak had said, in a previous statement.