Unacademy To Accelerate ESOP Vesting Period In Place Of Cash Appraisals

Edtech startup Unacademy has decided to accelerate the vesting period of employee stock ownership plan (ESOP) by one year to make up for its decision to not give cash appraisals this year as part of its bid to cut costs and achieve profitability.

In a Slack message, seen by Inc42, Unacademy Group CEO and cofounder Gaurav Munjal said that to compensate for the “hard” work of the employees the startup has decided to “accelerate everyone’s vesting by one year”.

For options that are getting vested before August 31, 2024, vesting will be done on an immediate basis, he added. 

However, Munjal mentioned that this is only applicable for employees who are currently part of Unacademy Group and are not on notice period. Unacademy Group includes employees working in Unacademy, Graphy, NextLevel, and Cohesive. 

ESOP vesting acceleration will not be applicable for founders, and senior management of companies that the startup has acquired over the years. 

Earlier in February, Munjal said the startup would be skipping cash appraisals this year. Instead, the company said it would offer stock options to employees based on their performance.

“… we have decided to not do any cash appraisals this year. Instead we will reward stock options to everyone based on their performance,” Munjal said in an internal message to employees. 

Skipping cash appraisal is among the several steps the startup has taken in recent times to cut its high cash burn amid the funding winter. 

Unacademy has been under a lot of scrutiny over the last year or so for laying off employees amid mounting losses. In FY22, the startup’s loss soared 85% to INR 2,848 Cr from INR 1,537 Cr in FY21. 

The startup saw its revenue from operations increase by 80% to INR 719 Cr in FY22 as compared to INR 398 Cr in FY21. 

However, Munjal, in April this year, said that the company will “almost generate” a profit during the month (April 2023) at group level. He added that the startup had over INR 2,100 Cr in the bank.

Unacademy was valued at $3.4 Bn during its last funding round in 2021. It has raised over $800 Mn in multiple rounds till date and is backed by marquee investors such as Sequoia Capital, SoftBank, Temasek, Steadview Capital, among others. However, it has not raised any capital since August 2021.

The edtech industry has been in the headlines since last year for all the wrong reasons. The sector, which was flying high on the back of investor capital and COVID-19 pandemic, fell on its knees with the onset of the funding winter. Following this, many edtech platforms shut their operations, while a large number of employees were fired by loss-making startups. All major edtech platforms such as BYJU’S, Unacademy, Vedantu, and LEAD School have laid off employees over the last year or so to extend their cash runaway. 

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