This week was a big and memorable one for the Indian startup ecosystem. Urban Company’s historic listing at a 57% premium IPO success is proof of what I’ve felt strongly about ESOPs becoming major wealth creators in the last decade.
When one of our senior team members, a former Urban Company employee, flew down to Mumbai to attend the listing ceremony, I could see something in his eyes. The same look I’ve seen in dozens of professionals over the past year: the quiet confidence that comes from understanding how ESOPs really work.
This wasn’t just about Urban Company going public. It was about hundreds of employees who believed in a vision when it was just an idea, now watching their ESOPs convert into generational wealth. From home services platform to ₹25,000+ crore public company—and every employee who stayed the course got to participate in that journey.
That’s the shift I want to explore today. We are witnessing ESOPs emerge as a powerful wealth creation vehicle for India’s professional class. For a growing segment of high-performing talent, ownership is becoming as important as, if not more important than, salary or bonuses.
In this edition, we cover:
- The mindset shift: Why professionals are prioritising equity over salary
- The monetisation journey: From buybacks to IPO windfalls
- Wealth creation at scale: How Swiggy, Zomato, and Flipkart minted crorepatis
- Behavioural shifts: How liquidity is changing careers, consumption, and investing
- The risks: Vesting cliffs, tax traps, and single-stock exposure
- A practical framework: How to evaluate ESOPs with clarity
- The macro runway: Why India’s markets will keep fuelling this trend
Let’s begin.
The mindset shift
Two years ago, when someone asked about their “total compensation,” the conversation focused on fixed pay, bonuses, and perquisites and insurance benefits. Today, that same conversation starts with equity.
I’m seeing this shift across every interaction with high-performing professionals. Professionals are no longer negotiating only over cash. They want clarity on equity: the size of the grant, the vesting terms, and the path to liquidity.
This is a fundamental recalibration of how wealth is built in white-collar India.
Wealth creation at scale
As equity becomes central to compensation, the wealth it generates is starting to tell its own story.
Our analysis shows that ESOPs today represent a ₹14.2 lakh crore opportunity — equal to 22% of India’s mutual fund industry and 2.5x the PMS industry’s AUM.
But the biggest surprise is where this wealth sits. You might expect startups to dominate, but it is actually the Nifty 100 companies that hold the lion’s share at ₹8.27 lakh crore of ESOP value, far higher than the ₹5.29 lakh crore held by late-stage startups.
This flips a common perception. We tend to associate ESOPs with startups but it is actually India’s established institutions, such as banks, IT majors, and consumer giants, that have built the deepest reservoirs of employee wealth.
HDFC Bank alone created ₹5,282 crore in ESOP liquidity in 2024, more than double the combined buybacks of all Series B+ startups. When a 30-year-old bank outpaces the startups in wealth distribution, you know something fundamental has shifted.
For a 30-year-old bank to outpace the poster children of the new economy is a reminder that ownership is not the preserve of founders or startup employees. It is spreading across the corporate landscape.
Public companies may account for the larger share of ESOP wealth, but the stories that tend to travel come from startups. Their liquidity events are more visible, often concentrated in a single moment, an IPO or a large buyback, and that makes them easier to notice. Over time, these episodes have come to shape how most people think about equity-led wealth creation.
Over the last five years, ₹5.3 lakh crore has been raised through IPOs, with FY25 setting a record at ₹2.11 lakh crore. A growing share of this pipeline comes from digital-first, tech-enabled firms with large ESOP pools.
Swiggy’s 2024 IPO alone unlocked $1 billion for over 5,000 employees, 500 of whom crossed the ₹1 crore mark. Zomato, Nykaa, Policybazaar, and Paytm together added another $3.3 billion. These listings turned operators, engineers, and product teams into salaried crorepatis.
But IPOs are only one part of the story. Buybacks, too, have become a powerful parallel channel of wealth distribution. In 2023, startups returned a record ₹7,098 crore to employees, with repeat buybacks becoming a cultural marker of maturity.
Flipkart exemplifies this playbook. With six buybacks since 2017 worth over $1.5 billion, it has not only created liquidity but also seeded a startup ecosystem of its own. The so-called “Flipkart Mafia” has spawned over 40 companies, employing tens of thousands and creating wealth far beyond its original pool.
At Dezerv, we experienced this dynamic first-hand when we conducted an ESOP buyback in 2024. For us, it was about giving our colleagues the option to unlock liquidity from the value they had helped create. Participation was limited, which told me something important that for many on the team, the chance to stay invested in the long-term vision mattered more than the comfort of near-term liquidity.
That conviction is rare. The ESOP journey tests patience. The biggest gains often come at the very end, yet most people give up in the middle — a phase I call the “zone of frustration.”
The zone of frustration: Where most dreams die
Here’s the uncomfortable truth about ESOPs that most people don’t understand: ESOPs are designed to reward patience, yet most holders surrender just before the value begins to accelerate.
The “zone of frustration,” a.k.a that 5-7 year period where you’re holding paper wealth that feels increasingly abstract while watching your peers at traditional companies collect predictable bonuses.
Our analysis shows a clear pattern. Take two professionals: one optimising for salary, another for equity. For the first seven years, the salary-focused professional builds wealth steadily. The equity-focused professional? Their wealth curve stays relatively flat.
Then everything changes. In years eight and nine, equity begins compounding. By year ten, the equity-optimised professional has created twice as much wealth, despite earning 40% less cash over the decade.
And here’s where the biggest myth needs to be busted: ESOP wealth is not reserved only for early joiners. Some of the largest payouts in India have gone to employees who joined much later but stayed through the grind. Ownership rewards persistence, not just timing.
But most people never see year ten. They exit in the zone of frustration, trading long-term wealth for short-term certainty.
The pattern is so consistent that one can predict who will succeed with ESOPs: those who understand that the journey isn’t linear. The ones who survive the zone of frustration are the ones who truly win.
But staying the course is not enough on its own. Equity brings its own set of complexities. The fine print matters, and without clarity, even meaningful grants can turn into a source of confusion or disappointment.
Behind the windfall: risks and realities
The stories of Byju’s, Dunzo or Snapdeal remind us that paper wealth can vanish faster than it is created. ESOPs promise upside, but unless employees understand the fine print, they can also carry hidden risks—tax obligations, vesting cliffs, lock-ins, or the impact of a collapsing valuation.
Our survey across corporate India, with responses from around 1,000 employees, shows this gap starkly. Even among professionals sitting on meaningful ESOP value, confidence levels about understanding their own equity are surprisingly low. A majority admitted they did not fully grasp details such as vesting schedules, tax obligations, or exit timelines — blind spots that can directly affect eventual wealth creation.
The numbers tell the story. Many employees holding more than ₹1 crore in ESOPs described themselves as only “somewhat confident” about how their wealth works, while those with smaller grants displayed even greater uncertainty. The chart highlights how confidence declines as ESOP value shrinks- those with under ₹10 lakh in options are the least sure of what they own.
The cultural cost of sudden wealth
The implications of sudden wealth are not limited to individuals. For companies in high-growth or post-IPO phases, a shift in employee financial status can reshape culture, incentives, and execution.
In 2024, NVIDIA overtook Microsoft to become the world’s most valuable company. Once known for powering video games, it is now the backbone of AI, cloud, and advanced computing. The scale of wealth created along the way is staggering: an estimated 76% of employees are millionaires, with a third reportedly worth more than $20 million. Few companies in history have distributed value this widely, this fast.
But success has brought new challenges. Many of the engineers who built NVIDIA’s AI dominance are choosing to retire early, pursue passion projects, or simply step away. At a time when competition in AI infrastructure is accelerating, this talent drain risks blunting the ambition that fuelled its rise. It is a paradox of prosperity—where the very rewards of growth can erode the hunger to sustain it.
Closer home, Zomato faced a similar moment after its blockbuster IPO. CEO Deepinder Goyal admitted that “complacency kicked in” among newly minted ESOP millionaires. To counter slowing execution, Zomato had to restructure teams and re-anchor them to long-term goals.
The risks worth acknowledging
This isn’t a risk-free transformation. ESOP wealth can disappear as quickly as it’s created. We’ve documented cases where employees lost everything due to valuation crashes, startup failures, or poor policy terms.
Concentration risk is real. Many professionals end up with 50-80% of their net worth tied to a single company’s performance. That’s a bet that can pay off spectacularly or fail catastrophically.
The path isn’t linear. Markets cycle. Valuations correct. Companies fail. The zone of frustration can extend longer than expected, testing your patience and financial resilience.
But for those who understand the mechanics, manage the risks, and maintain long-term perspective, ESOPs represent the most significant wealth creation opportunity of our generation.
How to think about ESOPs: A framework for employees
For all their potential, ESOPs remain one of the most misunderstood components of modern compensation. Too often, they are either overestimated—viewed as a lottery ticket—or underestimated and left on the table.
Equity needs to be evaluated with the same rigour you would apply to any investment. That means understanding the business you are betting on, the path to liquidity, and the personal implications of holding concentrated equity over time.
Here is a simple framework to assess the value and viability of the ESOPs you are being offered:
1. Stage of the company
Timing matters. Whether the company is in early growth, mid-stage scale, or IPO-bound, the risk-reward profile of your equity shifts dramatically. Understanding where the business stands is key to knowing what you are really signing up for.
2. Role-based leverage
How critical is your role to value creation? Founders and CXOs often hold meaningful stakes, but for operators and mid-level talent, the upside depends heavily on how equity is structured. Evaluate whether your input can realistically influence the outcome.
3. Transparency of terms
Does the company share a clear, detailed breakdown of your ESOP plan—covering vesting, dilution, exit options, and taxation? Transparent communication reflects a mature ownership culture and builds long-term trust.
4. Strategic fit in your portfolio
ESOPs are a concentrated, high-risk, high-reward exposure. Before you commit, assess whether this aligns with your financial goals, timelines, and existing obligations.
Future-ready: India’s capital markets and the rise of equity-led wealth
The last five years have been foundational. But from where I sit, it feels like we are just getting started. India’s capital markets are becoming deeper, broader, and more receptive to innovation-led businesses.
This momentum is underpinned by macro fundamentals that are hard to ignore:
- 6–7% GDP growth projected over the medium term
- A $1 trillion digital economy by the end of the decade
- Over 120 unicorns and counting
- A vibrant VC ecosystem fuelling the next cohort of IPO candidates
- Regulatory tailwinds—from faster listing approvals to better ESOP tax frameworks
As more startups mature and go public, and as secondary markets evolve, we will see equity become a dominant source of wealth across India’s knowledge economy.
The equity era is here. And if India plays to its strengths i.e. entrepreneurship, scale, capital efficiency, we could see tens of thousands more professionals cross that threshold where salary becomes secondary, and wealth is shaped by skin in the game.
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