The best sign of the maturity of a start-up ecosystem is the number of people it inspires to branch out from working at start-ups to founding their own. While the likes of Paypal and Yahoo have spawned America’s entrepreneurial culture, Flipkart, Paytm and others have been the earliest among India’s ‘Start-up Mafias’ and with increasing public listings of start-ups, more are joining this list.
With the IPO of consumer tech major Swiggy around the corner, a report by PrivateCircle Research shows there are 46 start-ups that are part of the ‘Swiggy mafia’ with a collective valuation of ₹6,277 crore. This could be even higher since PrivateCircle was not able to ascertain valuation of 22 of them. Teachmint, VRO Hospitality and Stable Money are among the top-valued startups founded by Swiggy’s former employees.
Further, 34 of them have created over 4,506 jobs. The number could be higher since the number of staff could not be ascertained by PrivateCircle in case of 12 companies. Start-ups Skillovilla, Teachmint, VRO Hospitality and Avsar alone account for 3,781 of these jobs.
Employee wealth creation
With IPOs or buyback of employee stock options (ESOPs), typically, being a trigger for employees to start their own ventures, the maximum number of new ventures from the Swiggy stable emerged between 2020 and 2023, which coincides with Swiggy’s ESOP buyback events. About 35 ventures were incorporated between 2020 and 2023.
“Swiggy has been a massive wealth creator for its employees through multiple ESOP buyback events like the $9-million buyback in 2020 and $50 million in 2023. Such events provide employees with the financial freedom to take risks and pursue entrepreneurial ambitions,” Dr Murali Loganathan, Director of PrivateCircle Research, told businessline. The post-Covid economic recovery and 2021 funding frenzy in the start-up ecosystem could also be a motivation, he added.
Former employees of Swiggy seem most optimistic about the digital economy with majority of them quitting Swiggy to start companies operating in the software and IT/ITeS sector. This is followed by media and entertainment businesses, and education and related ventures. Swiggy’s former chief technology officer Dale Vaz is a prominent one among them to have quit and started wealth-tech firm Aaritya Technologies.
PrivateCircle’s analysis of founder backgrounds reveals that 22 out of the 119 founders hail from the IITs and 10 from the IIMs reinforcing the trend that elite and successful educational institutions are also breeding grounds for start-up founders.
Rohit Srivastava, Senior Partner, LONGHOUSE Consulting, said that leadership exits to start own ventures is more common post-buybacks than after public listings, when executives actually stay and steer company growth. Post ESOP buybacks, enterprising employees, who have also spent a long time in the company, typically take the leap to start their own ventures, he added.
However, Swiggy remains among the smaller ‘Start-up mafias’ in India.
PrivateCircle’s analysis on other ‘Start-up Mafias’ shows Paytm has spawned start-ups worth over ₹10,000 crore valuation (as of March 2024) and Zomato has given rise to start-ups worth over ₹8,800 crore (May 2024). Flipkart is the leader with start-ups from its stable touching roughly ₹1,87,500-crore-worth valuation as of February 2024.