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Hello everyone, I am Bhavya from Bhavya Sharma and Associates where we manage multiple startups and organisations for their startup finance, CS and legal services. We handle quite big startups and I am here to answer all your doubts around startups,

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Bhavya Sharma

Our Expert Due Dilig...ย โ€ขย 7m

Under the Companies Act, 2013, a private company in India can offer the following types of equity to employees: 1. Employee Stock Option Plan (ESOP) - ESOPs are issued under a scheme approved by shareholders through a special resolution. - Employees can exercise their option after a specified vesting period. - The vesting period cannot be less than one year. - ESOPs are a common tool to retain employees and link their interest with the companyโ€™s growth. 2. Sweat Equity Shares - Sweat equity is issued at a discount or for consideration other than cash. - Private companies can issue sweat equity up to 15% of the existing paid-up equity share capital in a year or โ‚น5 crores, whichever is higher. These are the few most important pointers. Rest, it is a detailed topic which can be implemented according to size, stage of the company.

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Anonymous
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I am planning to create a large esops pool for my startup of around 20% and give my co-founder (tech) around 35% equity over a three-year vesting period. In this case, if I raised capital at 10% dilution in a pre-seed or seed round, I may end up with

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Anonymous
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90% valuation cut basically means the founder equity and ESOPs must have been wiped off ๐Ÿคฏ

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Anonymous
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So basically a bunch of employees received Rs. 65 Cr distributed amongst them ๐Ÿ˜ณ๐Ÿ”ฅ Wealth can only be created by shares/esops!

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Anonymous

Here is a picture explaining different private equity strategies! Hope it helps!

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