Munich startups in particular sometimes find it difficult to compete with the high salaries of local corporations, both domestic and international. Employee share ownership offers a way to attract employees with attractive conditions: Employees receive a share of the company's growth and can benefit from the company's successful future development. This is how startups in Silicon Valley also attract highly sought-after specialists.
In addition to the 44 percent of startups that already use employee share ownership, 46 percent can imagine granting shares to employees. Only 8 percent rule this out. Digital Association surveyed 200 tech startups.
"With the amendment to the Fund Location Act, the federal government attempted to close the international gap in employee participation at the end of the legislative period. However, the new regulation falls far short and ignores the reality of most startups,"
criticizes Bitkom President Achim Berg.
“This starts with unresolved valuation problems of the investments and ends with the fact that the particularly frequently used virtual investments were ignored by the legislature.”
Only a few startups involve all employees
The virtual participation schemes mentioned by Berg are used by 36 percent of the startups surveyed. The payout of this form of participation is tied to the fulfillment of certain conditions, such as an IPO. Only 7 percent of startups already use share options, and just 3 percent use actual shares. At the same time, every second startup would like to see politicians create better conditions for virtual participation by employees in the next legislative period.
In three out of ten startups that already use this tool, only executives benefit from the participation. In 53 percent of the companies surveyed, executives and selected other employees receive participation. Only 17 percent of startups that use employee participation offer it to all employees.
Berg demands that the legal regulations must be further simplified in the next legislative period so that German startups can keep up in the competition for the best teams.
