Securities crowdfunding platform SeedBlink is touting its ESOP, or Employee Share Ownership Plans, tool as generating “spectacular effects.” According to the company, over 2500 firms in Europe are using the tool.
Radu Georgescu, chairman of the Board of SeedBlink, says ESOPs provide an opportunity for employees to benefit from substantially higher incomes while changing the mindset of employees and the company, as interests are more aligned.
Georgescu said in a distributed note that people are motivated in their workplace by their salary but equity participation can offer substantial financial potential.
“Employee Share Ownership Plans contribute holistically to employee well-being and company prosperity. Employees participating in ESOPs may benefit from dividends or profit sharing when the company goes public or is sold.This reward system shifts employees’ focus from personal skill enhancement to overall company success. ESOPs motivate employees to extend beyond their roles, such as a programmer who might recommend a suitable candidate or attract new clients,” stated Georgescu.
He noted that ESOPs started in the US in 1956 and were popularized by Microsoft in the 1980s. This model helped many early employees become multimillionaires.
Georgescu added that ESOPs are well-understood in Europe but challenges remain.
“There is often a gap between the idea of implementing an ESOP plan and actually executing it. I’ve met hundreds of entrepreneurs and companies who say, “Yes, we want to implement an ESOP. How do we start?”. They start by hiring or contracting a lawyer, who asks questions that entrepreneurs can’t answer. Lawyers can offer solutions related to logistics and legal issues, but the business implications often remain a question mark. Implementing an ESOP doesn’t take long if you have answers to questions, but it does require some quiet time to ponder the implications of the answers provided.”
Georgescu said that large European companies are seeing a decline in ESOPs while smaller firms are seeing growth, with the UK leading the pace. According to a survey conducted in 2023 by the European Federation of Employee Share Ownership, about 90% of large companies in Ireland, the Czech Republic, and the UK have ESOPs, while adoption is lower in countries like Romania (30%) or almost nonexistent in countries such as Serbia, Latvia, and Bulgaria.
SeedBlink’s ESOPs service launched last year. Startups commonly use equity as a form of remuneration for early employees. While many early-stage companies will fail, if you have a successful company that can scale, early shareholders can benefit from the prosperity and wealth generated.
SeedBlink reported in January that in the past four years since its inception, It has raised €342 million for private firms—€67 million via its “community of investors.” SeedBlink allows smaller investors to participate alongside larger investors in early-stage private firms.
