Home services marketplace, Urban Company (formerly known as UrbanClap), has concluded its fourth and largest employee stock options (ESOP) sale programme worth $7.3 million (or roughly Rs 55 crore), valuing the startup at $2.8 billion--up from the $2.1 billion valuation it was ascribed during a funding round this June.
The ESOPs sold by the company as a part of the current programme were purchased by existing institutional investors, the company said on Sunday.
While 100% of the vested ESOPs were eligible for sale, only 4.4% of the vested ESOPs held by current employees, and almost 10% of the vested ESOPs held by ex-employees, were liquidated through the current ESOP sale.
Urban Company has issued ESOPs to 940 current and ex-employees over the last seven years. Close to 550 of these 940 individuals have vested ESOPs, and were eligible to participate in the current secondary sale programme, the company said.
According to the company, the value of vested ESOPs held by current employees at present stands at roughly Rs 380 crore, with the vested options held by former employees valued at Rs 390 crore.
“This is our fourth and largest ESOP secondary sale we have facilitated till date. Since 2017, we have facilitated approximately Rs 100 crore worth of ESOP secondaries. In our experience, such liquidation opportunities strengthen the faith team members have in ESOPs as a wealth creation instrument,” said Raghav Chandra, co-founder, Urban Company.
Urban Company’s first ESOP sale occurred in June 2017, followed by the second ESOP sale in December 2018 and the third sale taking place in August 2020.
“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,” added Chandra.
The secondary sale comes just months after Urban Company raised $255 million, led by Prosus Ventures, Dragoneer and Wellington Management earlier in June this year. The round valued the startup at $2.1 billion and also saw participation from existing investors Vy Capital, Tiger Global and Steadview.
The fundraise also included a secondary sale of approximately $67 million by angel and early investors.
Post the funding, the company was exploring plans to ramp up its services in international geographies, with a focus to enter the Saudi Arabia and South-East Asian markets.
According to co-founder and chief executive, Abhiraj Singh Bhal, the company was also looking to turn profitable on earnings before interest, taxes, depreciation and amortization (Ebitda) level by the second half of next year, and targeting a public listing by 2023.
Bhal added he expects international forays to contribute to roughly a quarter of the company’s overall revenues by 2023. Currently, the company’s India operations account for up to 90% of its revenues.
In FY20, Urban Co.’s consolidated loss widened to ₹155.17 crore from ₹78.48 crore in FY19. Revenue doubled from ₹132.04 crore in FY19 to ₹263.07 crore in FY20, according to regulatory filings filed by the company.