Index Ventures has designed this handbook to help European founders make critical decisions. Who do you offer stock options to? How many? When? How do you adapt your policy as you grow, and as you move into different geographies? How can you ensure employees understand the scheme?
Why this matters
- Silicon Valley’s secret sauce? Employee ownership. It helped early startups build world-class teams, even when cash was tight.
- In Europe, the playbook was missing, fragmented markets, complex regulations, and cultural differences meant few founders knew how much equity to offer or how to structure plans effectively.
Enter "Rewarding Talent", Index Ventures’ open-source handbook, Quick Guide, and OptionPlan tool aimed at changing that.
What’s inside the playbook
- Blueprints, not theories: Ready-to-use allocation models, case studies from founders (think Farfetch, Elastic), and investor insights to guide who gets stock options, when, and how much
- OptionPlan app: A tool that helps you calculate equity allocations for your entire team using real benchmarks, backed by data from over 20,000 grants across 1,650+ startups.
- Quick Guide – 21 tips: A distilled, practical checklist to jump straight into building your plan.
The data (what the research uncovered)
Index Ventures pulled a massive dataset from their European and US portfolios to back their advice:
- Analyzed cap tables from 73 European startups
- Over 4,000 individual option grants across 200+ companies
- Interviews with founders and execs from seed to IPO stage
- Survey data from 53 European startups (~11,000 employees)
- A legal and tax review across multiple countries, courtesy of top law firms
Key findings every founder should know
- Equity gaps: Late-stage European employees hold about 10% vs. 20% in the US.
- Inconsistent allocations: European option grants vary wildly (4–20%), unlike more consistent U.S. benchmarks.
- Executive bias: In Europe, two-thirds of stock goes to executives, reverse that in the U.S. where it's more balanced.
- Low expectations: Many European hires don’t expect stock, though this is changing fast.
- Tax & policy traps: High strike prices, heavy taxes, and poor exit terms hurt employees everywhere except Estonia, France, and the UK.
- Deep-tech demands more: Startups building software, AI, or engineering-heavy solutions tend to grant more options.
- Cash alone doesn’t cut it: Salaries are rising, but options remain critical to compete with big tech.
Your Move: How to Reward Talent Like a Pro
- Use real benchmarks
Leverage models in the handbook or OptionPlan instead of guesswork. - Share the upside broadly
Even small grants matter, early employees should feel ownership. As Dominic Jacquesson says: “We are very much advocates of giving something to everyone.” - Customize for your region
Apply the legal and tax guidance, especially if you’re hiring across countries. - Stay policy-aware
Be active in movements like Not Optional, aiming to make option plans standard and fairer across Europe, supporters include over 500 startup leaders.
If you’re building a startup in Europe, sharing equity isn't just fair, it’s strategic. It attracts great people, locks in loyalty, and helps your company scale toward greatness.
Actionable next steps:
- Dive into the Rewarding Talent handbook for the deep stuff.
- Load up OptionPlan to tailor your team’s equity mix.
Keep the conversation going, share your approach, help shape policy, and learn from others.
Explore the full topic on https://www.indexventures.com/rewarding-talent/
