In a recent report by venture capital firm Index Ventures, it was revealed that seven European countries have amended their legislation to enhance employee ownership in startups, aiming to compete with the U.S. in terms of attracting talent and investment. However, some European countries have yet to make similar advancements. The report highlighted that while stock options have significantly contributed to the success of Silicon Valley, Europe has faced challenges due to bureaucratic hurdles and premature taxation on employees, among other constraints.
Mario Draghi, in a much-anticipated report released last month, emphasized that the European Union requires a coordinated industrial strategy, swift decision-making, and substantial investment to remain economically competitive with the U.S. and China. Furthermore, in 2019, over 500 startup CEOs and founders launched a campaign known as “Not Optional,” advocating for reforms to the rules governing employee ownership. This practice involves granting employees options to acquire ownership stakes in companies as they vie for talent against U.S. firms.
Germany, France, Portugal, and the UK are at the forefront of the European countries that have implemented changes on par with or exceeding those in the U.S., according to the Index Ventures report. In contrast, Finland, Switzerland, Norway, and Sweden received lower assessments. Martin Mignot, a partner at Index and an investor in fintech company Revolut, noted that when companies like Revolut go public, the ownership translates into significant financial gains for employees. As of the report, Revolut is valued at $45 billion. At the time of writing, the exchange rate was $1 to 0.9236 euros.
