Every second startup thinks about employee engagement

08/27/2021 – Currently only a small number of employees are involved in the startup. Virtual investments, in which start-ups want better conditions than politicians, are especially popular.

by Frauke Schobelt

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 of start-ups can imagine this in the future – as an alternative to high fixed salaries, which many startups often cannot afford. Only 8 percent rule it out for themselves. This was the result of a survey conducted among over 200 tech startups on behalf of the Digital Society Bitcom
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“With the amendment of the Fund’s Location Act at the end of the legislative period, the federal government has tried to make up for the international shortfall on employee engagement. However, the new regulation is too short and ignores the reality of most startups.”Bitkom chief Achim Berg says. “It begins with the unwarranted evaluation problems of posts and ends with the fact that frequently used hypothetical posts have been ignored by the legislature.”

Virtual shares are the most popular among German startups; 36% use it. 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) wants the policy to create better conditions for virtual participation by employees in the upcoming legislative period.

In very few startups that have employees involved in the company, all employees benefit from the offer. 3 out of 10 (30 percent) have only CEOs involved in the startup, and about half (53 percent) have executives and other select employees. Only 17 percent of startups that rely on employee engagement are truly involved in the startup.