ESOP: An Incentive Tool For Startup Founders

Introduction

Since the last few years, India has witnessed an immense wave of entrepreneurship by virtue of which numerous startup founders have gained recognition and fame which led them to be the front runners of their own ventures. However, most of these startups are bootstrapped and therefore, attracting and retaining good talent is a huge challenge. In such situations, Employee Stock Option Plan ("ESOPs"), acts as a great catalyst through which such entities can hire and keep resources engaged with the vision of the company. To briefly understand what ESOPs are, these are a form of employee benefit plan intended for employees to gain ownership in the company over a period. As the startup grows and the investors step in, the founders who initially chose to work without salaries, start feeling the crunch and require additional support to supplement the amount of time and effort they are investing to grow the business. At times, the situation is such that post