Unacademy cuts Esop window for former staff

Test prep startup Unacademy has amended its employee stock option plan, significantly shortening the exercise window for former employees.Earlier, employees who left the company had up to 10 years to purchase the stock options they had earned during their tenure. Under the revised policy, they must now do so within 30 days of leaving the company.In an email to former employees, Unacademy said its board has approved a one-time 30-day window from the effective date of the amended plan, allowing exited employees to purchase all the stock options they had earned.“As per applicable tax laws in India, any exercise of your vested options, will trigger an immediate tax liability on you,” it said. The company said the valuation used for exercising ESOPs is based on its latest assessment conducted by a merchant banker, which values Unacademy at about Rs 2,650 crore, or nearly $230 million.Earlier cofounder Gaurav Munjal said that the company’s valuation might have dropped sharply, falling below $500 million from $3.5 billion in 2021. Unacademy had raised $440 million in 2021 in a funding round led by Singapore’s Temasek Holdings, which valued the startup at $3.4 billion.The Bengaluru-based company however noted that its valuation for the purpose of exercising vested options is lower than the total amount invested by its investor, there is no assurance that any liquidation event would generate enough proceeds to entitle any payout for equity shareholders, including employees who exercise their options.“The preference shareholders of the company have superior rights to equity shareholders of the company,” it added. Queries sent to Munjal did not elicit any response. The development comes as Unacademy explores a potential sale. Last year, the company held acquisition talks with Kota-based Allen Career Institute, which valued Unacademy at about $800 million. The deal talks eventually failed over differences in valuation. More recently, Upgrad was also in talks with Unacademy’s investors and founders for an acquisition, valuing the SoftBank-backed startup at around $300-320 million, nearly 90% below its last private valuation.In the test-prep segment, it competes with the likes of Byju’s-owned Aakash Institute and WestBridge Capital-backed PhysicsWallah.