Startups may get a standard framework to design esops
LetsVenture, a platform for angel investing, is looking to build a standardised framework for startups to issue Employee Stock Ownership Plans (Esops), in a bid to attract and retain top-talent from global technology companies.
The angel investment firm says a framework for Esops will benefit startups that are looking to attract top talent from global technology firms, by giving their employees better transparency into stock options and access to liquidate their shares during certain events. “We are opening up a discussion on what are the Esop and liquidity policies that can actually become meaningful for startup employees. Adoption of best practices by unicorns, and ‘soonicorns’ will ensure that the next waves of talent actually end up joining Indian startups,” said Ganesh Nayak, Director of LetsVenture.
Currently, startups in India do not follow any standard metrics while offering Esops to employees. This has dampened their ability to create wealth for employees, apart from just startup founders, sector experts say. “There is a distinct lack of liquidity for employees who have invested 5-8+ years of their career in Indian startups. A solution which allows them the benefit of a private sale to get liquidity in a transparent manner within the law is a big necessity today,” Mohandas Pai, a former board member at Infosys and startup investor, said.
LetsVenture is launching a campaign to identify best practices that can be adopted by startups. The firm says it will make the learning open-source for any entrepreneur or startup to implement.
It has made a similar effort to define a standardised term sheet for young startups that are raising funding, which it had open-sourced around two years ago.
The firm is hoping that the design it builds could, when regulations are ready, pave the way for a marketplace to enable secondary transactions in Indian startups.
Shanti Mohan, founder of Lets-Venture, says the current exercise is to figure out a design that will enable such an eventuality.
Source: ET Tech