ESOPDhan, a financial services company, is seeking structured loans to fuel development
ESOPDhan, a financial services provider, is aiming to obtain structured debt in the next weeks to finance its business strategy of lending to high-growth unicorn workers to exercise vested ESOPs.
Founders Shravan Shroff and Nitin Agarwal have thus far supported ESOPDhan via stock. Once its present capital is depleted, ESOPDhan intends to raise structured loans from investors and big family offices. It has granted Rs 20 crore to 15 workers of two US-based technology businesses situated in Bengaluru and Hyderabad. It aims to secure similar arrangements with 10-12 more firms during the following year.
The company claims that its business strategy is “cushioned” in the face of market volatility since it concentrates on unicorns and has exit deadlines of two years or more. “At present, our funding is primarily through infusion of equity as founders, and later on we will fund it from structured debt,” Agarwal told PTI.
Agarwal’s notable investments include Oyo Rooms, Exotel, FarEye Technologies, and Wow! Momos, Aarav Unmanned Systems (AUS), Uniphore, Sugar Cosmetics, Vahdam Tea, Karza Technologies, and Vista Rooms are among the companies represented. 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 are among Shroff’s own investments.
The two created ESOPDhan and invested Rs 30 crore in it, of which around Rs 20 crore was loaned. While the plan is to initially exhaust the existing money, the company will shortly turn to structured debt to generate more capital for its operations.
“We are not worried about the funding because we are sure we will be able to raise more funds as and when required… We will start raising structured debt in about four weeks,” Agarwal said but did not specify the exact quantum of debt.
Agarwal added that structured debt is the ideal method for the firm since payouts to lenders would be structured as and when ESOPs are liquidated. He stated that ESOPDhan’s goal is to have a Rs 500-crore loan book by 2025, allowing more individuals to purchase stock options given by their companies.
Employees may find it difficult to subscribe to ESOPs shortly after vesting since finances are insufficient to cover the vesting price and income tax. ESOPDhan has been attempting to tackle that problem for employees while also fostering a positive employer-employee connection. Employees who exercise their stock options early benefit from lower taxes on stock sales, which is an appealing prospect, he says.
According to the business, the vested ESOPs of Unicorns in India total to over USD 10 billion, indicating a significant unmet need.
“As far as demand is concerned, we are not worried,” he said.
With macroeconomic risks upsetting the market and startup environment, the business will maintain a laser-like focus and exclusively support ESOPs led by unicorns (with the USD 1 billion valuation and above). Focusing on unicorns guarantees ESOPDhan a “easy exit” via IPO route at some time in the future, on such financing.
ESOPDhan, a Reserve Bank of India-registered non-banking financing firm, uses unique technologies to make funding choices. The firm began with ESOPDhan funding 5 Harness workers in India, a USD 3.70 billion value startup whose platform enables enterprises accelerate their Cloud aspirations and deploy out software creations more quickly.
The following group of ten Indian employees supported by ESOPDhan belonged to Phenom, a US-based AI-powered HR-tech platform valued at USD 1.37 billion. Phenom facilitates the identification of top talent, assists applicants in finding the perfect employment, and optimises HR strategy, processes, and cost.
Concerning the present stock market volatility, Agarwal stated that ESOPDhan’s business plan calls for an exit after more than two years, providing the company adequate flexibility.
“Also we will not lend more than one third the value of shares and that is another cushion for any downside,” he explained.
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