Indian startups have long asked employees to accept lower salaries for ESOPs. Stay, they say, and you could become wealthy. What they rarely explain is how many things must go right before those shares become money.

GoKwik's ESOP amendment shows the problem. Employees who join nine named companies, including Razorpay and Shiprocket, within two years of leaving risk losing even vested, unexercised options. The restriction reportedly applies to older grants too. Imagine spending four years earning equity, then discovering a job change could cost you that compensation.

Unacademy went further, proposing to cut former employees' exercise window from ten years to 30 days. It reversed the move after objections. Meanwhile, the company, once valued at $3.4 billion, was discussing a sale around $300 million. Its founder acknowledged that investor preferences could leave employees with nothing. A startup can be acquired while ordinary shareholders receive zero, because investors get paid first.

Even success offers little certainty. Around 1,000 former Flipkart employees sought liquidity in October, while a recent programme favoured current staff. PharmEasy's valuation fell from $5.6 billion to roughly $500 million, showing how quickly paper wealth can disappear.

Then comes the tax bill. An employee exercising 10,000 options at ₹20 each, when their taxable value is ₹500 apiece, could owe ₹2 lakh to exercise and roughly ₹14.4 lakh in tax at an illustrative 30% rate. That's ₹16.4 lakh upfront for shares they may be unable to sell. Limited tax relief exists, but not for everyone.

The trap often starts in the offer letter. A ₹35 lakh salary plus ₹20 lakh in annualised ESOPs looks better than ₹45 lakh cash. Four years later, the employee may have surrendered ₹40 lakh in salary for shares worth nothing.

It needn't work this way. Citrus Pay's 2016 sale put around ₹43 crore into employees' hands; an early office assistant reportedly received ₹50 lakh. Swiggy enabled over ₹1,000 crore in cumulative employee liquidity by July 2024. BrowserStack's 2026 buyback included former employees. Abroad, Stripe has also offered liquidity to former staff.

We’re not arguing that every ESOP should pay out. Startups fail, and employees accept that risk. Indian rules restrict harmful changes to ESOP terms, but enforcement is costly. Changing terms after vesting, imposing short deadlines and shutting former staff out of buybacks are different matters. India celebrates ESOP pools and paper crorepatis. We'd rather see companies disclose how many employees actually got paid.

Let’s go through what else is happening in Indian startup world - Grab your simmering cup of StartupChai.in and unwind with our hand-brewed memes.

Jensen Huang has reportedly stepped down as NVIDIA CEO following revelations about extramarital affairs.

CFO Colette Kress will serve as interim CEO while retaining her finance role.

The Chai Take: The leadership shake-up adds an unexpected blow to NVIDIA’s otherwise dominant AI growth story.

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OpenAI is bringing API inference residency to India, allowing eligible businesses to process supported GPT-6 Luna workloads locally.

The move could ease data localization concerns for regulated enterprises.

The Chai Take: Local inference removes a procurement objection for banks, governments and regulated enterprises, but it does not settle security or model-governance questions.

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Zupee laid off its remaining 80-100 employees and is close to shutting operations, weeks after announcing an AI pivot.

The gaming company has reportedly discontinued its core business, NeoAstro and Zupee Studio, while a proposed Vertical TV acquisition fell through.

The Chai Take: An AI pivot cannot substitute for a funded operating plan, customer proposition and accountable wind-down.

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NPCI has unveiled an MDR-funded scheme to push UPI adoption among small merchants, offering banks incentives for deploying QR codes and soundboxes.

The three-year scheme will draw from 5% of each participating UPI entity's MDR share once MDR is implemented.

The Chai Take: Recycling a portion of MDR into merchant infrastructure is a smarter incentive than subsidising transactions indefinitely.

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CCPA has fined Ola ₹10 Lakh and ordered it to stop advance tipping prompts that suggested tipping could improve ride chances.

The regulator termed the practice a misleading dark pattern and unfair trade practice.

The Chai Take: Platforms should not make customers bid against one another for basic service reliability.

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Ultraviolette has appointed former Royal Enfield marketer Abhijit Singh Brar as its new Head of Marketing.

He will lead brand strategy, launches and demand generation as the EV maker expands in India and overseas.

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Mangaluru-based Zupple Labs has become the first blockchain startup selected under DRDO's Technology Development Fund.

Over 30 months, it will build an indigenous framework for auditing the security of defence blockchain applications.

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