Simplilearn Completes First ESOP Buyback Program Worth INR 48.74 Cr

Edtech startup Simplilearn has completed its first Employee Stock Option Plan (ESOP) buyback worth INR 48.74 Cr (~$6.4 Mn). The buyback was undertaken as part of private equity firm Blackstone’s $250 Mn investment in Simplilearn.

Beginning its life as a blog in 2009, Simplilearn is a digital upskilling platform for college students and early career professionals to managers, executives, small businesses, and big corporations. 

Simplilearn’s programs span across digital skills like AI, data analytics, cloud computing and digital marketing, and are co-created with universities like MIT and Caltech and leading industry partners like IBM, Microsoft Azure, and Facebook. At present, it offers more than 400 certification courses in various fields ranging from IT services to cybersecurity and digital marketing. 

The startup had offered active employees the option to liquidate up to 25% of their vested ESOPs as part of this buyback. As of now, 65% of active employees with ESOPs liquidated their options as part of this buyback. However, the company also issued new ESOPs for its employees. 

“Having launched our ESOPs plan in 2012, this was an ideal time to offer liquidity on the same. For many of our employees, this was their first opportunity in their professional lives to own or liquidate ESOPs. We are happy to be able to remunerate our employees for their contribution with the buyback. This also provides a great chance to create wealth, given that we also issued new, additional ESOPs for the future.” said Krishna Kumar, cofounder and CEO of Simplilearn.

ESOP As An Employee Retention Strategy

The overall attrition rate in the global tech industry is 13.2% as well-funded companies and startups are competing with each other to hire the best talent. Turnover at edtech companies is slightly better at 11.6%, compared to other sectors like gaming, where the attrition rate is almost 15.5%.

But the edtech industry has a much higher key-personnel voluntary turnover than academic institutions. A 2019 study by Walden university estimates voluntary academic staff turnover to be 3.7% at universities. 

Startups are increasingly turning to ESOPs and ESOP buyback programs to stem the tide of attrition and to attract the talent they wouldn’t have been able to afford otherwise. For example, last week, Flipkart-owned PhonePe initiated an INR 135 Cr ESOP buyback program for employees. Also, social commerce unicorn Meesho announced its ‘MeeSOP’ program to facilitate stock ownership for all employees, irrespective of seniority recently.