South-east Asian startups explore early stock option cash-out to retain talent

Secondary sales, buybacks of employee stock option plans expected to gain traction as liquidity options for those who joined startups in early stages

Sharanya Pillai

Published Tue, Jun 8, 2021 · 05:50 AM

Startups

Singapore

SOUTH-EAST Asian startups are exploring ways to allow employees to partially cash out stock options earlier, even before a listing or trade sale, industry players told The Business Times.

This means that buybacks and secondary sales of Employee Stock Option Plans (ESOP) are likely to become more common, as the South-east Asian startup ecosystem matures and the pool of "soonicorns" - or private companies nearing a US$1 billion valuation - increases.

Kelvin Lee, chief executive of private investment platform Fundnel, sees growing interest among startups to help early employees with ESOP liquidity, especially after the vesting period, which is typically four years.

"While buy and sell interest has always been there, we observe that it has risen across the board in the past year. In 2020, we started having more conversations with forward-thinking regional names, who recognise that company-sponsored liquidity programmes are a secret weapon for talent attraction a…