A new analysis by the Not Optional campaign has shown that over the last 5 years more than €5 billion has changed hands from founders and investors to employees of European startups.
As startups continue to operate in a challenging macro environment, this increase in employee ownership reflects a growing recognition of the importance of rewarding talent by both entrepreneurs and investors.
The improvement also comes after Ireland, the Netherlands and Spain introduced reforms to national share option schemes from 1 January 2023, with further improvements planned in the UK, Austria and Belgium later this year.
Founders and policymakers recognise the crucial role of talent and continue to embrace stock options as a way to strengthen European start-ups and drive innovation.
The campaign, led by Index Ventures and backed by more than 700 CEOs, is pushing policymakers to reform outdated rules and regulations that limit employee ownership.
When it launched in 2017, European employee ownership at late-stage startups averaged 12%, compared to 20% in the United States — where employee ownership has long been recognised as a vital tool to attract the best talent. The new analysis finds that this has now risen to 16% in Europe.
With 124 new VC-backed unicorns in Europe in 2021 and 2022, this represents an additional €5 billion of value that is now in the hands of employees. As more startups mature, this number will multiply many times over, drawing in more talent to Europe’s innovation ecosystem.
Following the publication of the New European Innovation Agenda in July last year, the Commission is now expected to establish the European Stock Options Working Group led by Commissioner Mariya Gabriel, and the Directorate-General for Research and Innovation.