Investors delayed management ESOPs for 3 years, talks went on till 10 days before IPO: Yashish Dahiya

Yashish Dahiya

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Policybazaar founder Yashish Dahiya said that the company's management had started conversations with private investors for share-based payments three years before its initial public offering in 2021, but the talks kept on going till 10 days before the public market debut.

This led to Policybazaar taking a hit of Rs 1,000 crore on its profitability in the first year of listing, which made public market investors unhappy, Dahiya said while speaking at the Moneycontrol Startup Conclave on July 7.

New age companies like Policybazaar, Paytm, Zomato and Delhivery have been criticised in the last couple of years for alloting large amounts of share-based payments to founders and senior management just before they hit the bourses. These employees stock options (ESOPs) have weighed on the profitability of the listed tech companies and seen to be one of their biggest expenses.

"About three years before IPO we had a conversation with private investors about certain objectives of the business and certain amount of equity for the management (if those objectives were achieved)," Dahiya said.

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"I think the private investors could have been more prompt in implementing those changes. This transaction existed when the company was worth less than a billion dollars," he added.

The Policybazaar founder also talked about the corporate governance lapses that have clouded the startup ecosystem in the recent past.

According to him, neither founders nor investors can absolve themselves of the responsibility for such issues.

"Investors have asked me to not meet the investment committee because information I provide might spoil the deal. And these are very reputed investors," he said.

Dahiya also talked about how he made important hiring decisions. He said that it was important to hire people who were selfless, otherwise things could get difficult when they needed to take decisions that would put the team before the individuals themselves.