2024 was a tough year for Indian startups as it witnessed massive layoffs. Several startups were shut down or simply had to downsize their operations due fund crisis. Hundreds of employees faced uncertainty as pink slips became a common sight across the tech ecosystem for the third year in a row.
However, there was a silver lining amid such challenges and it was Employee Stock Ownership Plans (ESOPs).
ESOPs are not new in the startup playbook. The fact is simply this that it grew significantly in 2024. Startup giants like Meesho, Urban Company, Capillary Technologies and OfBusiness stepped up with major ESOP buyback programmes. A data reveals that more than 3,000 employees earned at least INR 1,450 Cr ESOP buyback schemes.
The year also witnessed some standout stories and the Swiggy IPO is one of those. It turned 500 employees into crorepatis overnight.
The numbers reveal a mixed picture, but it is true that more startups participated in ESOP buybacks in 2024. But the overall wealth generation through the scheme dropped significantly compared to that of 2023. Last year’s buybacks total was $850 Mn and a large chunk came from the $700 Mn programme of Flipkart. The total this year was just $170.7 Mn.
However, the decline does not reveal the full picture. The rising number of startups embracing ESOP buybacks reveals a growing commitment to share wealth with employees.
We are now heading into 2025 and ESOPs could continue to play a key role in shaping the Indian startup ecosystem. Layoffs may not disappear entirely and stock options offer hope.
ESOPs for now have shown that they are not just a strategy for wealth creation but also a tool to rebuild the confidence of India’s tech workforce.
