Uncademy Rolls Back Changes To ESOP Exercise Window

The controversy arose as group CEO Gaurav Munjal last year publicly confirmed that Unacademy, once valued at $3.5 Bn in 2021, was on sale

Edtech unicorn Unacademy has reportedly rolled back its contentious plan to reduce the ESOP exercise window to just 30 days from 10 years earlier.

As per an internal email accessed by Economic Times, the edtech startup informed former employees that it was putting the amendments to the ESOP policy in abeyance.

“If required, the company will revisit the policy at an appropriate time and will continue to strive to find the best outcome for its employees while ensuring that it balances the interests of all its stakeholders,” the email reportedly read.

This comes a month after an ex-Unacademy employee took to social media platform X to slam the change in the ESOP exercise window. The former employee claimed that the unicorn’s move to reduce the window to 30 days from 10 years previously would force employees “to cough up a huge amount to pay taxes or forfeit… vested ESOPs”.

Amid the raging controversy, group CEO and cofounder Gaurav Munjal last month issued a clarification. He claimed that the decision was taken to ensure employees get shares in Unacademy or the merged entity as the edtech major explored M&A talks.

Munjal argued that investors with liquidation preference could legally wipe out all ESOP value in a low-valuation M&A deal. He further added that an early window was meant to convert vested options into common shares before such rights kick in.

The controversy arose as the CEO last year publicly confirmed that Unacademy, once valued at $3.5 Bn in 2021, was on sale.

Over the past year, the startup has reportedly explored acquisition talks with rivals like Allen, K-12 Techno Services and upGrad. Latest reports suggest that the troubled company could be sold for as little as INR 2,650 Cr ($300 Mn) to the Ronnie Screwvala-led unicorn.

Founded by Munjal, Hemesh Singh, Roman Saini and Sachin Gupta, Unacademy initially started off as a YouTube channel in 2010. It launched as an edtech platform in late 2015. Since then, it has grown rapidly, focussing on exam prep and expanding into various verticals.

The startup has raised more than $848 Mn to date and is backed by names such as Temasek, SoftBank, Nexus Venture Partners, Peak XV Partners, and General Atlantic.

The startup raised millions of dollars during the capital-fuelled pandemic era when schools were shut. However, cracks started to appear as learning centres began to reopen. Many of the acquisitions undertaken by the unicorn failed to materialise while competition from offline rivals continued to weigh on its operations.

The company also haemorrhaged cash building an offline vertical that failed to take off. Meanwhile, the company continued to post heavy losses while revenues stayed stagnant.

Amid the crisis, cofounders Roman Saini and Munjal also exited the startup last year. At the time, sources told Inc42 that Munjal was focussed on building language learning app Airlearn, while Saini had long back lost interest in taking Unacademy forward.