Months After Announcing TSOPs, Unacademy Announces Third ESOPs Buyback Worth $10.5 Mn

Bengaluru-based edtech platform Unacademy on Saturday (September 04) announced its largest ESOPs (employee stock ownership plan) buyback programme worth $10.5 Mn for employees and teachers.

Cofounder Roman Saini took to Twitter, stating that this is the company’s third ESOP buyback programme. Unacademy had conducted its first ESOP buyout in September 2019 and later in October 2020. During its first buyback, the pool was valued at roughly INR 2-3 Cr and the second buyback was worth INR 25-30 Cr.

While the first ESOP buyback allowed eligible employees to sell up to 30% of their vested ESOPs, the second buyback allowed employees to sell anywhere between 25% to a full 100% of their ESOPs to the company.

Announcing the largest to-date buyback of Unacademy, Saini thanked the team members and educators for believing in the “vision of democratising education”.

In July 2021, Gaurav Munjal, cofounder, Unacademy, also announced a $40 Mn Teacher Stock Options Plan for all eligible educators on the platform. The company’s partner educators would be eligible for teachers stock options (TSOPs) after the completion of 3-5 years with the startup.

“The stocks (TSOPs) will continue to compound as the valuation of the company grows. You can expect the stock to grow multiple folds and by the time we do an IPO, the value of your stock would’ve grown a lot,” Munjal had said in a July video to employees.

Founded by Munjal, Saini, Hemesh Singh, and Sachin Gupta in 2016, Unacademy was launched as an educational YouTube channel in 2011. Last month Unacademy closed a Series H round of $440 Mn at a valuation of $3.44 Bn.

Unacademy, at present, has over 50,000 registered educators and more than 62 Mn learners. The startup offers learnings in 14 languages across 5,000 cities. The startup in FY20 recorded INR 86 Cr revenue with significant expenses of INR 386.7 Cr resulting in a total loss of INR 300 Cr.

In the past year, several Indian startups including PhonePe, ShareChat, Zerodha, Razorpay, Moglix, BharatPe, and Paytm announced ESOP buybacks. The buybacks assume more significance when they happen in a year where many Indian startups have witnessed a financial crunch amid the Covid-19 pandemic.

For companies that are not listed, ESOPs for their employees are useless. Hence, a partial exit is simulated for the employees when the company buys back ESOPs from its workforce at the prevailing stock price of the company.

Further, ESOPs allow employees at the startup to become a bigger part of the success of the company. Founders and investors share the wealth that the company creates with employees through ESOPs.

ESOP scheme also improves pay packages, thus ensuring a higher employee retention rate.

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