Ledgy CEO: Three things I learned from Ledgy's State of Equity and Ownership Report 2022

When Ben, Timo and I founded Ledgy, one of our ambitions – on top of building great software – was to create a community that helped people make better decisions about equity and share ownership.

That's why I am so excited to announce our State of Equity and Ownership Report 2022 this week. 🚀

The startup ecosystem has seen so much progress in Europe and around the world over recent years. But there is still not enough data and insight around one key pillar of any scaling company: share ownership. So we surveyed 1,000 employees, executives and founders to uncover what people really think about share options. What is the real impact of equity for employees? Do tech companies really raise bigger rounds compared to other industries? And how much equity should employees expect to be allocated in different markets?

I took away so many valuable things from the data we gathered. But what stood out most? Here are my top three lessons for founders, employees and investors to keep in mind as we get going in 2022.

1. Many founders don't understand how powerful share ownership is for employees

As a company, Ledgy thinks about equity and ownership every hour of every day. We need to understand the motivations and drivers that make equity attractive for teams. I was interested that a third of founders (33%) reported that offering employees share options makes no difference or not much difference to their motivation.

I wasn't surprised to see that employees didn't share this view. Almost three quarters (72.3%) of the employees we surveyed that did have share options in their company said that their options made at least some difference to their motivation.

There is a big disconnect here which is potentially damaging to productivity, retention and morale – a huge concern in a tight labour market.

2. Some teams are still being left out of fundraising processes

Small numbers sometimes mean a lot. We learned in our survey that 7% of founders raising money in the last 12 months spent no time at all discussing employee share ownership, with investors or any other stakeholders. Now, 7% seems like a small number, but making sure employees are included in these discussions is so important. Even 1% is too high.

That's why in our report we call on investors to hold these late adopters to account, by actively raising the issue of equity and employee ownership if companies themselves do not. This is because the economics of offering employees share options are clear – more engagement and motivation, and better retention over the long term too. It's got to be #EquityEveryTime 🤓

3. Europe has its challenges on employee equity, but there are bright spots

We also looked at the amount of equity teams were allocated in different countries. We are often told that Europe is less generous than the United States when it comes to the stakes companies offer employees, and to some extent our findings support this. In all, more than a third of companies in Europe offer less than 10% of total equity to employees, and European companies are three times more likely to give employees 5 percent or less of total equity when compared with their peers in the United States and Israel.

However, certain examples suggest that more European markets are catching up with best practices. 97% of Dutch companies 🇳🇱 brought up employee equity when fundraising, for instance, which is hugely encouraging! And in France 🇫🇷, a quarter of companies offered employees 15% of all equity or higher – roughly level with the US.

I am proud to share the State of Equity and Ownership Report 2022 with the world! Learn more and download the full report here. And if you are interested in helping us push the startup ecosystem forward, check out our open roles here!