People familiar with the process told ET that the boards of almost a half-dozen startup founders whose businesses are set to go public in 2021 are wooing them with extra stakes and other milestone-linked benefits to guarantee they keep “skin in the game.” According to them, the expanding tendency is intended at “rewarding” founders at companies whose investors often possess much more shares than entrepreneurs.
According to the red herring prospectus, Policybazaar parent PB Fintech issued fresh options up to 10,657,500 to founder Yashish Dahiya, while cofounder Alok Bansal earned 4,567,500 new options. Compared to SoftBank, which owns more than 15% of the company, Dahiya and Bansal hold 4.27 percent and 1.45 percent, respectively.
PharmEasy’s five founders were issued 9,987 stock options under its employee stock ownership plan (ESOP) before the company filed its draft initial public offering (IPO) documents, according to ET.
According to regulatory records and its draft IPO paper, the board of directors of IPO-bound logistics company Delivery has approved the issue of additional stock options to its founders and senior executives three times this year, the most recent being in September. These rewards are frequently dependent on performance and time, with varying vesting periods, but they increase their stake in the firm.
“Long-term Esops have been provided to the firm’s founders in exchange for continuing to run the company for the next six to seven years. “In certain cases, founders have also spent their own money to demonstrate their trust in the business at pre-IPO round pricing,” explained one of the founders who went public this year, explaining why the board had given fresh stock options and awarded new stock awards.