Exclusive: East Ventures-backed Qapita buys Indian ESOP management firm

Qapita, a Singapore-based equity management startup, has acquired India-based ESOP Direct in a full cash transaction. The financial details of the deal, however, were not disclosed.

ESOP Direct’s brand and leadership team will be retained after the acquisition, Ravi Ravulaparthi, CEO and co-founder of Qapita, told Tech in Asia.

The combined entity will also manage more than US$12 billion in employee stock option plans (ESOPs), Qapita added. Its customer base in India and Southeast Asia will grow to more than 1,200 customers.

Qapita co-founders (from left) Vamsee Mohan, Ravi Ravulaparthi, and Lakshman Gupta / Photo credit: Qapita

Founded in September 2019 by Ravulaparthi, Vamsee Mohan, and Lakshman Gupta, the startup helps companies manage capitalization tables and ESOPs through QapMap, its SaaS offering.

ESOP Direct was established in 1999 to provide solutions for equity compensation in the Indian market. It currently manages over 500 plans on its platform, My ESOPs.

As ESOP Direct’s clients are mostly listed businesses, the acquisition gives Qapita the capability to manage companies’ capitalization tables and ESOPs from early-stage startups to post-IPO firms.

With this acquisition, Qapita’s headcount will go up from 100 to over 220. More than 100 of its employees are part of the product and engineering team. In addition to its Southeast Asian operations in Singapore and Jakarta, the company will also have a presence in Indian cities including Bangalore, Hyderabad, New Delhi, Mumbai, Pune, and Chennai.

In November 2021, Qapita raised an undisclosed round of funding from Citibank. A month before that, the startup secured US$15 million in series A funding led by East Ventures and Vulcan Capital.

Qapita expects that in the next five years, the value of the private securities market in Southeast Asia will hit US$1 trillion to US$1.5 trillion, with 200 to 250 joining the unicorn club.

See also: Should crypto startups ditch ESOPs?

According to the company,  about 20% to 25% of shares in private companies are held by early investors and employee shareholders, and they will need liquidity ahead of a public listing. Qapita estimates that more than US$250 billion in equity will require liquidity solutions in the coming years.

Globally, financial infrastructure is being built for the private markets. This include platforms such as Forge Global, Nasdaq Private Markets, Carta, Zanbato, ADDX, Global Shares, and Shareworks.