GoKwik amends ESOP plan to bar employees from joining nine competitors
GoKwik, a digital commerce startup backed by Peak XV Partners and Z47 Partners, has added a non-compete clause to its 2021 ESOP plan, barring employees from joining nine competitors or risking the forfeiture of their vested and unvested stock options. The move, communicated in August 2026, has drawn criticism from current and former employees, as well as legal experts, who question its enforceability and impact on job mobility.
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Non-compete clause targets nine competitors
Digital commerce startup GoKwik has amended its 2021 ESOP plan to include a non-compete clause that names nine direct competitors, barring employees from joining them. The clause applies to both current staff and former employees who hold vested stock options.
Vested options at risk of forfeiture
The amendment allows GoKwik to revoke unvested and vested-but-unexercised employee stock options if an employee is found to have breached the non-compete restriction. The restriction remains in effect for two years after an employee’s departure. Passive investments in publicly traded securities are exempt.
Who is affected by the restriction
The named competitors include Razorpay, Shiprocket, CRED, Cashfree Payments, BiteSpeed, Snapmint, WebEngage, Shopflo, and Pine Labs. Employees are prohibited from accepting employment, advising, or investing in these companies during the restriction period.
According to Inc42, the clause applies retroactively to all ESOP grants, regardless of when they were issued. This means employees who joined these competitors after August 2026 could face forfeiture of options granted before the amendment.
Timing and employee reactions
GoKwik communicated the change to employees in August 2026, coinciding with senior-level exits, including a vice president, a senior director of product management, and a head of product. The startup had also laid off around 120 employees earlier in the year.
The timing has raised concerns among employees, who fear the clause could limit career opportunities in the ecommerce and fintech sectors. Some have reportedly paused job searches or negotiations with listed competitors due to the risk of losing their stock options.
Legal and governance concerns
Legal experts question the enforceability of the clause, particularly its retroactive application to existing ESOP grants. Siddharth Manchanda, a partner at JSA Advocates & Solicitors, told Inc42 that changing ESOP terms to the disadvantage of employees after grants have been issued could be legally questionable.
The enforceability of non-compete restrictions in India remains unsettled, and courts have historically been skeptical of clauses that restrict post-employment mobility. While ESOP forfeiture for competition is rare, its legality has not been tested in Indian courts.
Context on GoKwik’s business and financials
GoKwik was founded in 2020 and has raised $68 million from investors, including Peak XV Partners, Z47 Partners, RTP Global, and Think Investments. The startup reported consolidated operating revenue of ₹146.2 Cr for FY25, with total revenue reaching approximately ₹163 Cr, though its CEO later claimed the figure was closer to ₹250 Cr in an interview.
The company stated it turned EBITDA positive in October 2026, a milestone it highlighted in a press release. However, it did not address concerns about the ESOP clause in its public communications.
Key takeaways
- GoKwik’s non-compete clause marks a rare—possibly unprecedented—move in India’s startup ecosystem, tying ESOP forfeiture to post-employment mobility across nine named competitors. Founders and operators should note that such restrictions could deter talent, harm morale, and trigger legal challenges.
- The clause’s retroactive application to existing ESOP grants sets a contentious precedent, especially if other startups facing funding slowdowns or layoffs consider similar measures to retain talent or control costs.
- For employees, the risk of losing vested-but-unexercised options may delay job moves or push them toward litigation, complicating hiring for competitors like Razorpay, Shiprocket, or CRED.
- Investors in GoKwik (Peak XV Partners, Z47 Partners, RTP Global, Think Investments) may face questions about governance and employee relations, particularly as the company positions itself for IPO or M&A in a market where ESOP liquidity is already a pain point.
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About the author
Editor, Lazyfounder
Tarun Mottlia edits LazyFounders, covering Indian startups, funding rounds, AI and product launches. Every story on the site is AI-assisted and checked against its cited sources before publication.
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