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This Ekwity guide will help European entrepreneurs and startup employees understand what employee ownership actually means and how to implement it.

Researched and Written by Founder   CEO of Ekwity, Florent Artaud  Book Design and Images by Designer, Sophie Louise Hurle...
CONTENTS  Contents  1. Introduction         5 - 12  2. Glossary         13 - 17  3. The Startup Ecosystem   18 - 28       ...
1. INTRODUCTION    EKWITY   EKWITY SAS SAS 2019 2019  1. INTRODUCTION THE EMPLOYEE EQUITY HANDBOOK 5
1. INTRODUCTION  What, Who, Why  What is this guide for  This Ekwity guide will help European  basic knowledge on how star...
1. INTRODUCTION  Who is this guide for  1.   This guide is dedicated to all the  The culture and mission of the company.  ...
1. INTRODUCTION  Why do you need this guide  Behind every great human achievement  making something real isn   t about  is...
1. INTRODUCTION  Preface  Nicolas Colin, Co-Founder   Director of The Family For the European startup community,  Thus the...
1. INTRODUCTION  those employees making fortunes  the  Fortunately, many are working on it.  growth of the company will be...
1. INTRODUCTION  Ekwity Manifesto Sharing created value with employees is the key to a virtuous and sustainable entreprene...
1. INTRODUCTION  generate long-term value. Once we Europeans understand that, we will be able to bring our startup ecosyst...
2. GLOSSARY    EKWITY SAS 2019  2. GLOSSARY THE EMPLOYEE EQUITY HANDBOOK 13
2. GLOSSARY  Your Startup Glossary Startup language can be complicated and intimidating. Here are the main terms that you ...
2. GLOSSARY  Share Capital of the company   Financial Stages   Employee Option Pool   Sum of the individual shares issued ...
2. GLOSSARY  FMV   FDE   ESOP   Cap table   Fair Market Value reflects the price agreed during a transfer of shares of the...
2. GLOSSARY  Pre-money Valuation   Post-money valuation   Company   s valuation before fundraising. This represents the am...
3. THE STARTUP ECOSYSTEM  3. THE STARTUP ECOSYSTEM    EKWITY SAS 2019  THE EMPLOYEE EQUITY HANDBOOK 18
3. THE STARTUP ECOSYSTEM  Basic Financial Knowledge Prior to further explaining how equity incentives work, we   d like to...
3. THE STARTUP ECOSYSTEM  The Value of a Share A company   s worth, or its total value, is called its market capitalizatio...
3. THE STARTUP ECOSYSTEM  Private Companies A private company is a firm held under private ownership. Private companies ma...
3. THE STARTUP ECOSYSTEM  Public Companies A public company is a company that has issued securities through an IPO and tra...
3. THE STARTUP ECOSYSTEM  Introduction to Funding Rounds The Financial Cycle For a company to develop from  funding, devel...
3. THE STARTUP ECOSYSTEM        Growth Stage  This refers to new        Exit Stage  Emerging companies  funding rounds nee...
THE FINANCIAL CYCLE From Pre-Seed to Exit 3. THE STARTUP ECOSYSTEM     10 - 100k  PRE-SEED     1,000,000     500k - 2M  SE...
3. THE STARTUP ECOSYSTEM  Startup Employee Compensation Salary vs. Capital Some people are attracted to the  employees as ...
3. THE STARTUP ECOSYSTEM        Here are the main differences between salary and equity   Liquid vs. Illiquid  For private...
3. THE STARTUP ECOSYSTEM  SALARY VS. CAPITAL The pros and cons of both   2019  Financing mechanisms such as BSPCE, stock o...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS    EKWITY SAS 2019  THE EMPLOYE...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  Tom   10 Major Points Equity incentives stand at the crossroads of HR, legal...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  2. What are the benefits  Equity incentives, like stock options, are a finan...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  3. Why are stock options the norm for equity incentives in startups  There a...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  4. Who is behind an employee ownership policy  How equity incentives are gra...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  5. Is it free  Yes and no. If you grant or receive free shares in France or ...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  6. Why should stock options be exercised  The main advantage with stock opti...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  7. What is The Vesting Schedule  Stock options are always granted subject to...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  Here is a visual illustrating the vesting schedule   THE VESTING SCHEDULE 2....
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  8. When should stock options be exercised  First question to ask     Are the...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS        IPO of the company  When the company goes public  an IPO . Usually you...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  9. How do I sell my shares  As an employee, once you   ve exercised your sto...
4. THE STOCK OPTIONS JOURNEY IN 10 QUESTIONS  10. How does all this work when it comes to taxes  As mentioned in question ...
THE STOCK OPTIONS JOURNEY Classic example of 2.08  vested option granted every month, over 4 years, with a 1 year cliff.  ...
5. CASE STUDIES    EKWITY SAS 2019  5. CASE STUDIES THE EMPLOYEE EQUITY HANDBOOK 43
5. CASE STUDIES  The Waterfall The Good, The Bad and The Ugly According to a report from CNBC, in  Today, the European sta...
5. CASE STUDIES  the company is bought or go public.  before the preferred stock liquidation  The principle here is last-i...
5. CASE STUDIES  The Good The Good refers to the hypothetical best case scenario where the company either exits through a ...
5. CASE STUDIES  The Bad The Bad refers to the hypothetical bad case scenario where the company hasn   t found the potenti...
5. CASE STUDIES  The Ugly The Ugly refers to the hypothetical worst case scenario, where the company is bought at a low va...
5. CASE STUDIES  You are the future  The startup ecosystem is far from being perfect but it offers tremendous opportunitie...
6. TAKEAWAYS    EKWITY SAS 2019  6. TAKEAWAYS THE EMPLOYEE EQUITY HANDBOOK 50
6. TAKEAWAYS  Essential Reading For you employees  Why is equity interesting  1. Mathias Pastor  The       Case for Joinin...
6. TAKEAWAYS  For you entrepreneurs  Concrete Overview 1. Rewarding Talent  A guide to stock options for European entrepre...
6. TAKEAWAYS  BSPCE Pocket Tax Scheme for France In France, in short, in 2019  BSPCE are startups    preferred employee sc...
6. TAKEAWAYS  OTHER CONSIDERATIONS Plan scope   Restrictions  Company main requirements       Scheme reserved to employees...
6. TAKEAWAYS  EMI Pocket Tax Scheme for the UK In the UK, in short, in 2019  EMI options are the preferred employee scheme...
6. TAKEAWAYS  Reporting   Bureaucracy  The grant of EMI options must be reported electronically to HMRC within 92 days of ...
6. TAKEAWAYS  Stock Options Pocket Tax Scheme for Germany In Germany, in short, in 2019  Stock options are used without an...
6. TAKEAWAYS  Tax income  Progressive income tax rate with 4 tranches, marginal rate applicable from   250,000 income. Mar...
6. TAKEAWAYS  Stock Options Pocket Tax Scheme for Belgium In Belgium, in short, in 2019  Stock options are used without an...
6. TAKEAWAYS  OTHER CONSIDERATIONS Plan scope   Restrictions  No specific tax scheme attached.  Strike Price  Local practi...
7. THANK YOU    EKWITY SAS 2019  7. THANK YOU  THE EMPLOYEE EQUITY HANDBOOK 61
7. THANK YOU  A big thank you to... We would like to give special thanks to everyone who gave quotes for this handbook and...
7. THANK YOU  Station F is a startup campus with a central hub building with dedicated services to the French tech ecosyst...
7. THANK YOU  Contact Researched and Written by Florent Artaud, CEO   Founder of Ekwity  Book Design and Images by Sophie ...
7. THANK YOU    EKWITY SAS 2019  THE EMPLOYEE EQUITY HANDBOOK 65