Employee Ownership in European Startups

STOCKHOLM (Reuters) – Seven European countries have enacted laws to boost employee ownership in startups in an effort to compete with the U.S. for talent and investment, according to a report by venture capital firm Index Ventures.

Challenges in Europe

While stock options have been pivotal to Silicon Valley’s success, Europe faces challenges such as bureaucracy and early taxation on employees, among other restrictions.

Need for a Coordinated Approach

Mario Draghi emphasized in a recent report that the European Union requires a coordinated industrial policy, swift decision-making, and substantial investment to keep up economically with the U.S. and China.

Movement for Change

In 2019, over 500 startup CEOs and founders launched a campaign called "Not Optional" to revise rules governing employee ownership, allowing staff to acquire ownership stakes in the companies they work for as they vie for talent against U.S. firms.

Leading Countries

Germany, France, Portugal, and the UK are leading the way in making adjustments that meet or exceed U.S. standards, while Finland, Switzerland, Norway, and Sweden received lower ratings in the Index report.

Impact on Employees

As companies like Revolut and others go public, employee ownership can convert to real financial benefits, noted Martin Mignot, a partner at Index and an investor in fintech company Revolut, which is valued at $45 billion.

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