ESOP Buybacks: Current Trends and Insights

ESOP buybacks have become increasingly important, particularly during the 2021 to 2022 period, which was considered a peak era for Indian startups due to significant venture capital investments. However, this trend began to wane in 2023, as the volume of buybacks decreased, continuing to decline in both 2024 and 2025 concerning total value. The year 2026 has started positively, with ESOP buybacks in the first quarter already exceeding the total annual figures from 2024 and 2025.

Data gathered by Startup Superb indicates that seven startups collectively purchased ESOPs worth nearly $220 million in the first quarter of 2026. In stark contrast, the buyback, liquidity, and payout activities in 2025 just crossed the $75 million mark. The overall value for 2024 stood at approximately $190 million, significantly lower than the $802 million from 2023, $440 million in 2021, and $200 million in 2022.

Key Contributions to ESOP Liquidity

In 2023, Flipkart played a major role by contributing $700 million for ESOP liquidity as compensation due to the reduced valuation after the PhonePe spin-off, while other startups accounted for a combined total of $102 million in buybacks. Since 2020, the total ESOP buybacks by Indian startups have reached around $2 billion ($1,977 million).

Leading ESOP Buyback Programmes in 2026

In the current year, BrowserStack, a software testing platform based in Mumbai, has been at the forefront of ESOP liquidity events, launching a $125 million share buyback programme targeting employees and early investors. The initiative enables nearly 500 employees to sell their shares, allocating around half of the total funds to them, with the remainder going to early backers such as Accel.

Healthtech company Innovaccer has also executed a $75 million ESOP buyback, providing liquidity to both current and former staff who hold vested stock options. Reports suggest that several holders of restricted stock units also benefited, although the specific numbers remain undisclosed. Meanwhile, crypto exchange CoinDCX repurchased ESOPs worth $12 million, while educational technology firm Unacademy initiated a Rs 50 crore ($5.5 million) ESOP buyback programme to support its workforce. Founder Gaurav Munjal mentioned that eight employees are projected to earn over Rs 1 crore each, with others receiving substantial amounts as well.

Further Developments in the ESOP Buyback Landscape

Other startups engaging in ESOP buybacks in 2026 include Emversity, a platform focused on higher education and employability, visa processing startup Atlys, fintech entity Cashfree, and cybersecurity company Kratikal. Despite the absence of significant new regulations targeting ESOP buybacks, certain regulatory changes may influence how these programmes are organised.

For instance, the Securities and Exchange Board of India has phased out the open-market method for share buybacks for listed companies since 2025, although a revised framework for its reintroduction has been proposed. This change could have implications for liquidity options as startups approach public listings. Notably, the provisions under the Companies Act, 2013 remain unchanged, and buybacks continue to play a pivotal role in employee liquidity. Furthermore, the Union Budget 2026 has not introduced any alterations to ESOP taxation, maintaining the existing framework.

The Value of ESOP Buybacks for Startups

While some critics argue that buybacks serve a limited purpose, claiming that their frequency is too low to create a significant impact, buybacks do hold valuable advantages. Many startups view deferred gratification as a strategy to foster employee loyalty, which helps prevent the extreme case of employees leaving after hitting a financial windfall. Additionally, buybacks have often been counted as part of the cost to company (CTC) in various instances, leading founders to give these initiatives priority.

Much like successful IPOs, it is reasonable to expect that buybacks will increasingly feature in the future despite prevailing market uncertainties. For employees, the risk-reward dynamic appears most favourable with a buyback now, particularly since upfront methods like sign-on bonuses are no longer the preferred options for many companies.