Test preparation platform Unacademy has revised its ESOP policy for exited employees, allowing them to exercise their vested stock options within 30 days of exit, a significant change from the earlier policy that permitted a much longer exercise window.
According to an official communication sent to former employees, the company’s board has approved a one-time 30-day exercise window from the effective date of the revised plan. Ex-employees can exercise all vested options earned during their tenure, subject to applicable taxation.
However, the company cautioned that exercising ESOPs would trigger immediate tax liability under Indian tax laws, even though the shares may not result in any eventual financial payout.
Unacademy Valuation Cut to ₹2,650 Crore
Unacademy clarified that the valuation being used for ESOP exercise has been determined based on its latest merchant banker assessment, pegging the company’s value at approximately ₹2,650 crore (around $230 million).
This marks a steep decline from the company’s peak valuation of about $3.5 billion in 2021, when it raised $440 million in a funding round led by Temasek Holdings.
The company further stated that the current valuation is lower than the total capital invested by its investors, and warned that there is no assurance of sufficient proceeds for equity shareholders in any future liquidation event.
Preference Shareholders Take Priority
In its communication, Unacademy emphasised that preference shareholders have superior rights over equity shareholders, including employees holding shares via ESOPs.
This means that in the event of a merger, acquisition, or liquidation, investors with liquidation preference would be paid first, potentially leaving equity shareholders with little or no returns.
Munjal Addresses ESOP Concerns
Earlier, Unacademy co-founder and CEO Gaurav Munjal had publicly acknowledged that the company’s valuation may have dropped to below $500 million, reflecting broader challenges in the edtech sector.
In a detailed statement, Munjal said Unacademy is currently in merger and acquisition discussions at a valuation close to ₹2,650 crore, structured as an all-stock deal with no cash component.
Given that Unacademy has raised over $800 million in total funding, Munjal explained that enforcing liquidation preference at such a valuation could render employee ESOPs effectively worthless.
Follow Startupbydoc for daily startup insights, funding news, IPO analysis, and business breakdowns.