Women participation, ESOP offerings go up in the Indian startup ecosystem: Report

The participation of women in the Indian funded startup ecosystem stands at 22%, largely mirroring trends in the West, a report by leading venture debt firm Trifecta Capital has revealed, although it is a shade lower than that of the United States, perceived as the Mecca for new economy ventures globally.
Diversity in the startup workforce in Asia’s third-largest economy tends to improve as an increasing number of companies go on to raise growth-stage financing, according to the report, which was released on Thursday.

“We believe this study provides valuable insights on best practices in attracting, rewarding and retaining talent. They (startups) now have a tool for benchmarking their human capital practices with their peers in a meaningful and actionable manner,” said Rahul Khanna, managing partner, Trifecta Capital.

US-based startups also report lower women participation - 26% - than the broader economy. Larger Indian companies do better on this front.


“The absence of concrete steps to remedy the situation can lead to exclusion of a key category of talent for startups. This demands the attention and focus of senior leaders across the ecosystem,” said Aakash Goel, partner, Trifecta Capital.

The Human Capital in the New Economy - Benchmarks and Best Practices 2019 report surveyed 45 companies, representing an estimated 50,000 employees, across functions and sectors including BigBasket, Quikr, Razorpay and Practo, and across funding rounds.

The paucity of technology talent in the country has, however, resulted in startups recruiting senior engineering talent from other startups, leading to increased competition and significant wage hikes.

The report found that 80% of startups prefer this way of recruitment due to a familiarity with the startup culture and domain experience.

Additionally, a 20% increment is seen as the bare expectation of candidates, particularly among engineering talent, given the limited pool available to companies. On the flip side, sales and operations talent rarely command the same premium when changing jobs, with 58% of sales talent and 67% of operations talent changing jobs for a less than 20% increment.


Startups have also begun utilising sophisticated compensation mechanisms – a combination of variable pay along with employee stock options (ESOPs) is now common practice. According to the Trifecta report, India’s B2B startups have taken the lead, with 70% of respondents allocating an ESOP pool larger than 7.5%, compared to about 40% of all startups.

Sector-wise, vertical e-commerce and fintech have emerged as the best pay masters to senior employees, with about 38% earning more than Rs 75 lakh on an annual basis. However, none of the B2B and enterprise ventures surveyed by Trifecta reported compensation of more than Rs 75 lakh to its senior employees, showcasing the severe competition for talent in the consumer internet space compared to B2B and enterprise software segments.