SaaS platform Qapita buys ESOP Direct in all-cash deal
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Qapita, a software-as-a-service (SaaS) platform focused on equity and transaction management for the private market, said it has acquired Pune-based ESOP Direct in an all-cash deal. Financial details of the transaction were not disclosed.

Speaking in an interview with VCCircle, Ravi Ravulaparthi, chief executive and co-founder of Qapita, said the deal was funded through capital raised previously from investors.

Last October, Qapita raised $15 million in a Series A round led by East Ventures through its Growth Fund, and Vulcan Capital, with participation from NYCA and existing investors including MassMutual Ventures and Endiya Partners. The following month, it secured a strategic partnership with Citi as part of its Series A round.

Ravulaparthi said the entire executive team at ESOP Direct will be retained as part of the deal. ESOP Direct was founded by Harshu Ghate and Ravi Pandit in 2000. Pandit is also co-founder and chairman of KPIT Technologies, a software company focused on automotive companies.

ESOP Direct offers employee stock option plan (Esop) advisory and plan management services. The company claims to have designed over 1,000 Esop plans and it manages over 500 plans on its proprietary platform.

According to the latest available data from VCCEdge, the data and intelligence platform of VCCircle, ESOP Direct posted net sales of about Rs 17 crore in FY21 and a net profit of about Rs 3 crore. Ravulaparthi said ESOP Direct’s business grew 30% in FY22.

Qapita was founded by Ravulaparthi, Lakshman Gupta, and Vamsee Mohan in 2019. Its platform allows private firms manage their capitalization tables and Esops, which has become quite popular in the Indian startup ecosystem. Esops are more likely to be implemented by founders to retain and recruit talent, as well as to create a rewarding culture with a sense of ownership.

Ravulaparthi said also that Qapita is building a digital platform with a vision of enabling companies manage their equity ownership and stakeholders through their life cycles and creating digital rails for private market liquidity such as buybacks and secondary deals.
“This acquisition is one step towards realizing this vision and we expect to invest in both organic and inorganic growth in achieving this vision,” he said.

Elaborating on the opportunity in the market, Ravulaparthi noted that there are about 65,000 startups in India and 25,000 in Southeast Asia and around 20-25% of them have raised funding.

“The current value of all these startups is expected to be more than $500 billion. This is expected to be $1.0 -1.5 trillion in the next five years. About 20-25% of the private companies are held by early investors and employee shareholders. They will need liquidity ahead of public market listing,” he added.

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