As part of our effort to understand liquidity from different perspectives, we spoke to prominent names in the VC and investor communities. This session had Karthik B Reddy, Managing Partner and Founder, Blume Ventures, in conversation with Rulezero’s Founder, Srinivas Katta.
The discussion covered several aspects of ESOP liquidity. One of the topics was “Should ex-employees be treated on the same basis as current employees for ESOPs?”
Karthik Reddy remarked “If the options of different categories of employees are treated differently, then clarity must be given to all and the ESOP policy must be transparent on this”.
Another question discussed was “Is liquidity supported before an M&A or IPO?”
Karthik Reddy shared “It is acceptable as it validates a growth milestone and allows for employee compensation through conversion of equity to a large bonus payout. Internal investors may also request liquidation through ROFR and founding members may be allowed liquidity through secondaries.”
The videos mainly cover:
- Liquidity as a reward for the hard work that employees put in
- Liquidation programmes that can be offered to employees
- Structure around third-party liquidity
- Building an effective ESOP policy
- Market conditions’ role in determining liquidity