Europe’s startups have traditionally lagged back Silicon Valley in awarding valuable stock options to staff but some of the Continent’s largest firms are now starting to close the gap, according to analysis from Index Ventures.
The London and San Francisco-based venture capital found that European startups at Series D are now handing 15-17% of equity to employees but that still lags behind growth stage Silicon Valley companies that typically issue 20-23% of equity to recruit and retain executives and developers.
The level of equity now issued by some of Europe’s largest startups has over the last five year leapt from around a fixed level of around 10%, according to the analysis of 350 startups.
The new, more generous stock options policy comes after fund raising by European startups has nearly tripled to $100 billion billion in 2021 alone, and amid fierce competition from local rivals, corporates, and American tech giants for the best talent. The Index Ventures research unsurprisingly found that the biggest increases in stock options grants had been to developers, engineers, and executives within European startups.
“Funding used to be the major bottleneck to company growth in Europe,” says Dominic Jacquesson, VP of insight and talent at Index Ventures. “Today instead, it’s the best talent - the developers, the salespeople, the communication strategists - that are the hardest to come by, and the most fiercely fought for. They’re asking for, and getting access to, the greater returns available on capital.”
The landscape of how governments and tax agencies treat stock options across Europe is fragmented. At least six European Union countries have options policies that could be more generous than the U.S. but workers in countries like Germany face a tax bill from the moment that the stock options are granted. France, Latvia, and Lithuania have in recent years pushed through reforms to make tax codes more generous to startup employees while several countries like the United Kingdom are also reviewing tax policies.
European founders still face a struggle hiring, and retaining talent, despite these changes because of the competition from American startups, and tech giants like Google, Facebook and Amazon, that have larger options pools and higher average valuations. “A fresh approach to employee ownership is crucial. Until then, too much of Europe’s top talent will simply flow into the European arms of U.S. firms, relocate, or stick to lower risk corporate jobs,” says Jacquesson.
Generous stock options at American startups over decades have created a waterfall of wealth and capital that has been credited with helping develop Silicon Valley. Early employees from prime IPOs have often enjoyed a seven figure windfalls from the listing, while many of the largest tech firms now routinely make large grants of restricted stock units to bring on board the best engineering talent. That capital once vested has often flown back into the tech ecosystem with early employees from firms like Google and Facebook often becoming angel investors, or self funding their own startups.
"close" - Google News
December 02, 2021 at 01:46PM
https://ift.tt/3lsyFaj
European Startups Start To Close The Gap With Silicon Valley On Staff Equity - Forbes
"close" - Google News
https://ift.tt/2QTYm3D
https://ift.tt/3d2SYUY
Bagikan Berita Ini
0 Response to "European Startups Start To Close The Gap With Silicon Valley On Staff Equity - Forbes"
Post a Comment