Indian startup employee liquidity programs are showing signs of a rebound. Data compiled by Entrackr reports that ESOP buybacks in the first quarter of 2026 already surpassed the full-year figures for both 2024 and 2025, with seven startups collectively buying back ESOPs worth nearly $220 million in Q1 2026—versus just over $75 million in 2025. The shift matters for how startups structure equity compensation, how employees convert vested options into cash, and how liquidity planning changes as companies move toward public markets.
From 2021–2022 peak to mid-cycle slowdown
Entrackr frames the recent pattern as a cycle. It describes 2021 to 2022 as a period when ESOP buybacks, liquidity, and payout programs were “common,” a phase it links to “strong venture capital inflows” that many observers associate with a “golden phase” for Indian startups. According to the same compilation, momentum later slowed: 2023 saw fewer buybacks (in terms of number), and 2024 and 2025 saw declines further in terms of total value.
The numbers Entrackr provides show how steep that drop was. Total ESOP-related value stood at around $190 million in 2024, compared with $802 million in 2023, $440 million in 2021, and $200 million in 2022. This matters technologically and operationally because ESOP buybacks are one of the mechanisms startups use to manage the “equity-to-cash” pathway without changing core product teams or hiring plans; when the buyback pipeline dries up, employees may have fewer options to monetize equity during periods of slower fundraising or valuation pressure.
Entrackr says the cumulative effect since the start of 2020 is now approximately $2 billion—specifically $1,977 million—in ESOP buybacks by Indian startups. While this figure is aggregated across multiple companies and years, it signals that equity liquidity has become a persistent operational pattern rather than a one-off event tied only to early funding booms.
Q1 2026: buybacks accelerate, with BrowserStack and Innovaccer leading
Entrackr’s Q1 2026 snapshot highlights the scale of the rebound. It reports that seven startups have collectively bought back ESOPs worth nearly $220 million in the quarter. For comparison, Entrackr notes that buyback and payout activity remained “subdued” in 2025 at just over $75 million.
Within that Q1 2026 activity, Entrackr identifies Mumbai-based BrowserStack as leading ESOP liquidity events with a $125 million share buyback programme aimed at employees and early investors. The program is described as enabling nearly 500 employees to sell their shares, with roughly half of the total amount reserved for employees and the remaining portion allocated to early backers such as Accel. For technology companies—especially those whose employee compensation relies heavily on equity—these details illustrate how liquidity programs can be designed to target specific stakeholder groups and manage cash allocation across cohorts.
Entrackr also reports that healthtech firm Innovaccer has completed a $75 million ESOP buyback offering liquidity to current and former employees holding vested stock options. It adds that media reports indicate holders of restricted stock units also benefited, though “the exact number remains undisclosed.” Even without the employee-count detail, the inclusion of both vested stock options and RSUs suggests that equity instruments with different vesting and ownership structures are being folded into liquidity planning.
Company-by-company signals: from Flipkart’s $700M to CoinDCX’s $12M
Entrackr’s historical comparison includes a notable data point from 2023: Flipkart contributed $700 million to the total through ESOP liquidity provided as compensation for the decline in value following the PhonePe spin-off. It then reports that other startups together accounted for $102 million in buybacks that year. The implication here is that ESOP liquidity can be triggered not only by routine valuation and recruiting strategies, but also by corporate events that alter equity value, requiring a structured compensation mechanism.
In the current cycle, Entrackr reports more modest activity from CoinDCX, which repurchased ESOPs worth $12 million. It also notes that Unacademy rolled out a Rs 50 crore ($5.5 million) ESOP buyback programme to provide liquidity to its workforce. Entrackr includes specific expectations from founder Gaurav Munjal: eight employees are expected to earn over Rs 1 crore each, 17 employees will receive more than Rs 50 lakh, and 38 employees are likely to make upwards of Rs 10 lakh. The same section also ties the timing to the edtech sector’s fundraising challenges, stating that the SoftBank-backed firm was eventually acquired by upGrad.
Entrackr lists additional startups that participated in ESOP buybacks in 2026, including Emversity, Atlys, Cashfree, and Kratikal. While the source does not provide buyback amounts for each of these companies in the excerpt, their inclusion indicates that the practice is spreading across multiple verticals—software testing, healthtech, fintech, cybersecurity, and education—rather than being confined to a single segment.
Regulatory backdrop: buyback routes and taxation remain stable
On the policy side, Entrackr says there have been no major new rules specifically for ESOP buybacks, though “some regulatory changes could influence how companies structure such programmes.” It points to the Securities and Exchange Board of India (SEBI), which phased out the open-market route for share buybacks from 2025 for listed firms, while also proposing reintroduction under a revised framework. Entrackr suggests that this shift could affect liquidity options as startups move closer to public listings, because the mechanics of share repurchase can determine how and when liquidity becomes available.
Entrackr also states that provisions under the Companies Act, 2013 remain unchanged, and that buybacks continue to be a key mechanism for employee liquidity. It further reports that the Union Budget 2026 did not introduce changes to ESOP taxation, keeping the existing framework intact. For technology companies operating at the intersection of compensation systems and compliance, stable taxation reduces the need for frequent plan redesigns—though changes in buyback execution routes could still require operational updates.
Finally, Entrackr addresses a common critique: that buybacks may serve a limited purpose because there are “far too few” to make an impact, with “headline grabbers” distorting perception. It also argues for a use case: buybacks can support employee loyalty via “delayed gratification,” and because buybacks have “virtually been counted as part of CTC” in some contexts, founders may prioritize them. While Entrackr frames these points as an argument, the underlying operational takeaway is that ESOP buybacks can be embedded into compensation accounting and retention strategy, not just treated as ad hoc liquidity.
Looking ahead, Entrackr suggests that buybacks could become more prominent “going ahead” in a way similar to expectations around IPOs, while noting “uncertain market conditions.” This could mean teams may continue to plan for internal liquidity events even when external exits are delayed—an approach that, if sustained, may shape how equity compensation is managed across Indian startups.
Why this matters for tech teams and equity compensation
For technology-focused startups, ESOP buybacks sit at a practical intersection: engineering and product hiring depend on compensation packages, while employee retention depends on how equity translates into cash when markets shift. Entrackr’s data indicates that liquidity events are not uniform year to year, but Q1 2026’s rebound—nearly $220 million in buybacks—suggests that some companies are again prioritizing structured ways for employees and early investors to sell shares.
Even with the source’s emphasis on aggregated totals and selected company examples, the broad pattern is clear: the ecosystem’s liquidity tooling is responding to both market conditions and regulatory execution pathways. Observers may watch whether the Q1 2026 acceleration persists beyond the first quarter and how SEBI’s evolving buyback framework for listed firms could influence planning as companies approach public-market timelines.
Source: Entrackr : Latest Posts