Startups often cannot keep up with the high fixed salaries of established companies or medium-sized companies. Instead, they have the option to offer their employees a stake in the fast-growing company.
However, so far, not even every second startup (44 per cent) has relied on employee participation – also because Germany’s legal and tax framework has not yet been somewhat attractive. However, 46 percent can imagine future employee participation. Only 8 percent rule it out for themselves. This was the result of a survey conducted among more than 200 tech startups on behalf of the Bitkom Digital Association. With the amendment of the Fund Location Act at the end of the legislative period, the federal government attempted to make up for the international shortfall in the issue of employee participation. However, the new regulations are too short and ignore the reality of most startups,” says Bitkom President Achim Berg. “It starts with the unjustified evaluation problems of posts and ends with the fact that frequently used virtual posts have been ignored by the legislature.”
In fact, virtual investments are the most popular among German startups, with 36% using them. These are “mock” situations under the Law of Obligations, where the payment is linked to the occurrence of certain conditions such as an IPO. Only 7 percent of startups rely on stock options, and only 3 percent on real stocks. At the same time, every second startup (50 percent) of politicians would like to create better conditions for virtual participation by employees in the upcoming legislative period. Berg: “With the aim of employee engagement, the fund location law can only be a first step. In the upcoming legislative period, more must be added so that startups in Germany can compete for the best teams.”
Very few startups with employees involved in the company take advantage of all employees. Only 3 out of 10 (30 percent) are CEOs involved in the startup, and about half (53 percent) are executives and other select employees. Only 17 percent of startups that rely on employee engagement are all employees truly involved in the startup.
Methodological note: The information is based on a survey conducted by Bitkom Research on behalf of Bitkom. 201 tech startups in Germany were surveyed online. The questions were: “Will your employees participate in your startup?” Who is involved in your startup? and “Which of the following is the most important topic for you in the upcoming legislative period in relation to your project?”
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