Home services marketplace Urban Company has open sourced a ESOP (employee stock ownership plan) policy framework for the startup ecosystem in collaboration with MyStartupEquity, a cap table and ESOP management tool by LetsVenture.
The announcement comes a week after Gurugram-based Urban Company expanded its ESOP for future issuance.
The open-source ESOP framework, which is available for free and can be accessed by any company, is a legally vetted document. Startups and companies can modify the document to build their own ESOP policies. The framework also comes with easy-t0-use templates for grant and exercise letters, the company said in a statement.
With ESOP implementation generally being a tedious process, Urban Company and MyStartupEquity aim to provide a guide through this open source framework to help startups as well as private companies better structure terms and conditions and roll out ESOPs with the ingrained intention of sharing ownership with employees that eventually leads to wealth creation, the statement added.
“Urban Company has created substantial value for its employees through ESOPs, conducting three secondary sales in less than six years for existing employees worth nearly $8 million. We believe a robust, employee-friendly ESOP programme is one of the pivotal pillars in attracting and retaining talent and building team morale. We now want to extend this framework to budding entrepreneurs and lend a helping hand in their entrepreneurial journey,” Abhiraj Bhal, co-founder of Urban Company, said.
Urban Company’s last ESOP secondary sale was held in August 2020, which saw participation from more than 180 eligible employees. Each ESOP was valued at Rs 1,10,000. Under the latest programme too, employees have the option of liquidating their vested ESOPs via employee-friendly terms. These include an exercise price of Rs 1, accelerated vesting, a flat four-year vesting schedule (25% each year) and an infinite hold period to exercise the ESOPs after the employee exits the company.
“Talent is the most important growth driver for a startup. Therefore, it’s not only important to attract top talent but also to retain and reward them. We have seen ESOPs play a very important role here. We are happy to collaborate with Urban Company in developing this ESOP framework, which helps startups in India adopt not only an employee friendly policy but also addresses the interests from the company’s side as well,” Sanjay Jha, co-founder and product lead of MyStartupEquity, said.