Urban Company's valuation rises to $2.8 billion in 4th ESOP sale programme

Home services marketplace Urban Company’s valuation has jumped 33 per cent in the past six months to $2.8 billion, thanks to its recently concluded fourth and largest employee stock ownership plan (ESOP) sale programme of $7.3 million (Rs 55 crore).

The ESOPs sold in this transaction have largely been purchased by existing institutional investors of the company. The company’s valuation was $2.1 billion for the Series F round in June.

“Since 2017, we have facilitated approximately Rs 100 crore worth of ESOP secondaries,” said Raghav Chandra, co-founder, Urban Company. “In our experience, such liquidation opportunities strengthen the faith our team members have in ESOPs as a wealth creation instrument.”

Over the past seven years, Urban Company has issued ESOPs to 940 current and former employees and 550 of them have vested ESOPs and have been eligible to participate in this secondary sale programme. They could sell up to 100 per cent of their vested ESOPs as part of this programme.

While 100 per cent of the vested ESOPs were eligible for sale, only 4.4 per cent held by current employees and 10 per cent by former employees were liquidated. The firm said this indicates that employees (current and former) believe in the future success of the company.

“We have focused on creating an employee-friendly ESOP programme, with features such as an exercise price of Rs 1, a linear vesting schedule and an unlimited hold period to exercise the ESOPs after an employee leaves the company,” said Chandra.

Urban Company’s first ESOP sale occurred in June 2017, followed by the second in December 2018 and the third in August 2020.