ESOPDhan eyes Rs. 500-crore loan book to fund ESOP buys targets 25 times growth in loan book by 2025
Financial services firm, ESOPDhan, a startup founded by Shravan Shroff and Nitin Agarwal, early investors in Oyo Rooms, is aiming at a Rs 500-crore loan book by 2025, helping many more people buy stock options being offered by their employers.
So far, ESOPDhan has lent Rs 20 crore to 15 Bengaluru and Hyderabad-based employees of two US-based high-growth tech companies.
Many a time, employees are unable to subscribe to ESOPs soon after vesting because of a lack of funds or lack of clarity on the tax treatment of the same. ESOPDhan has been working to solve that problem for employees, and in the process also facilitating a healthy employer-employee relationship. Exercising their stock options early helps employees with lower taxes on the sale of stocks, an attractive proposition for them.
“Our experience with start-up teams over the years threw up many concerns of employees rewarded with ESOPs. These ranged from ‘How to get funds to subscribe for ESOPs and pay the exercise cost and perquisite tax’ to ‘How not to lose opportunities to create wealth’, and ‘How to get quick cash while retaining their stocks’,” says Shroff.
ESOPDhan, a non-banking finance company registered with the Reserve Bank of India, deploys proprietary tools for making funding decisions.
The business started with ESOPDhan funding 5 India employees of Harness (harness.io), a $3.70-billion valuation company whose platform helps companies accelerate their Cloud initiatives and roll out software developments faster.
The next set of 10 India employees that ESOPDhan funded belonged to Phenom, a US-based AI-powered HR-tech platform valued at $1.37 billion. Phenom enables identifying bright talent, helps candidates find the right job and optimizes the HR strategy, process, and spending.
“ESOPDhan aspires to be the funding partner of choice in the world of ESOPs by adding features like ‘No EMIs’ and ‘repayment upon liquidity events’,” Mr. Shroff added.
Industry estimates the value of vested ESOPs by employees of Indian Unicorns till date to be more than $10 billion. As the Indian startup ecosystem thrives, the value of vested ESOPs is expected to grow at a fast clip in the coming years.
ESOPDhan will work with identified late-stage high growth companies with a growing customer base. It has already tied up its fund requirement to scale it to Rs. 500 crore, Shroff said.
ESOPDhan, a newly set up company, lends to employees of high-growth companies to exercise vested ESOPs. The RBI-registered NBFC firm is targeting high growth companies and deploys proprietary tools for making funding decisions.
The firm has been set up by angel investing veterans and entrepreneurs, Shravan Shroff and Nitin Agarwal, and aims to be a responsible financial services partner.
Personal notable investments made by Shroff include Oyo Rooms, Get My Parking, FarEye Technologies, Vista Rooms, Uniphore, Exotel, Aarav Unmanned Systems (AUS), Zip Dial, Karza Technologies, Rubix Data Sciences and Earth Rhythm.
Noteworthy investments by Agarwal are Oyo Rooms, Exotel, FarEye Technologies, Wow! Momos, Aarav Unmanned Systems (AUS), Uniphore, Sugar Cosmetics, Vahdam Tea, Karza Technologies and Vista Rooms.
Together, the co-founders of ESOPDhan bring in a deep understanding of the start-up world, having built a stellar track record of incubating, mentoring, and investing in scores of start-ups, including some that have scaled Unicorn status.