France announces major changes to stock options and visas for start-ups

20 Jan 2020

Image: © daliu/

The French government has met requests from groups lobbying for policy changes that will help European tech start-ups to grow and compete with businesses in the US and China.

Today (20 January), French president Emmanuel Macron is set to announce some changes to stock options that may have a big impact on the start-up ecosystem in France.

The announcement is being made ahead of the World Economic Forum, which takes place in Davos this week. The changes could see France level the playing field with the likes of Silicon Valley, as European start-ups continue to face a constrained talent pipeline.

According to the Not Optional campaign for start-ups, France has now climbed several positions in a league table ranking the most supportive European countries for start-ups based on how favourable their stock option policies are.

What is changing?

Today the French president will announce the expansion of France’s stock option scheme, entitled BPSCE, to foreign businesses with employees based in France. This means that staff working in France for an Ireland-headquartered start-up, for example, can now receive stock options even though they are not based in the country where the start-up is incorporated.

Additionally, the price of BPSCE stock options won’t be based on the company’s VC-determined valuation. If an employee joins a company after a VC investment round, they can get stock options based on a lower valuation, increasing the chance of higher returns.

France’s minister of state for digital affairs, Cédric O, said: “France has a clear ambition to be a world-leading country in technology. To achieve it, our tech ecosystem needs to be deeply international.

“That’s why we have adopted these key measures for foreign talents and start-ups. Now we would like this national incentive to become a pan-European one.”

On top of making changes to stock options, France is introducing a new incentive to encourage foreign companies to open offices in the country. It is removing a restriction on the French Tech Visa, which was introduced last year, that requires an eligible employer to be headquartered in France. The move is expected to enable greater access to global talent.

Lobbying from Index Ventures

Over the last year, VC firm Index Ventures, which founded Not Optional, has been lobbying European policymakers to improve stock options across the continent.

Martin Mignot, partner at Index Ventures, commented: “The French government listened, engaged and acted swiftly, and on behalf of the start-up community, we’d like to thank them.

“Whilst today’s policy change will be welcome news to French start-ups wanting to attract the best talent for start-ups expanding into France, there is still more to be done to level the playing field across Europe.

“Stock options policies were singled out as a major barrier to European tech growth at last year’s World Economic Forum, so it is encouraging to see the progress that has been made in the last year. Creating a supportive environment for employee ownership will have a material impact on the ability of start-ups to grow and create tech giants on par with those emerging from the US and China.”

What do start-up founders think?

A number of European start-up founders have reacted positively to the news. Jean-Charles Samuelian, CEO and co-founder of French start-up Alan, said: “Alan has grown in the past four years thanks to the favourable tech environment created in France under president Macron’s leadership.

“We can only welcome the government’s recent announcements on visas and stock options, which we believe will go a long way in helping French start-ups attract the talent urgently needed to scale our businesses.”

BlaBlaCar founder Frédéric Mazzella, who is also co-president of start-up organisation France Digitale, said: “This reform is the result of many years of engagement led by France Digitale and supported by French entrepreneurs and Not Optional.

“It sends out a positive signal to all start-ups and scale-ups. We hope EU leaders will seize this opportunity to adopt a harmonised and unified European regime based on the new French model. In the context of Brexit, Europe must become more attractive to international talents.”

German CEO and co-founder of GetYourGuide, Johannes Reck, added: “Driven by abundant capital, German entrepreneurs are succeeding but their employees currently cannot share in the success.

“Real stock options policy reform is the key to change, and to attracting world-class talent that will drive our digital economy into the future. France is the case in point, and the time for change in Germany and Europe is now.”

The existing scheme in Ireland

In Ireland, the Key Employee Engagement Programme (KEEP) was launched in 2018 to encourage employee share ownership.

Liz McCarthy, executive director of Irish lobby group for start-ups Scale Ireland, said: “The introduction of the KEEP share option scheme in 2018 represented a step in the right direction but take-up has been minimal due to a range of restrictions.

“Budget 2020 addressed some of these limitations, but the scheme is still not attractive or competitive, particularly in comparison with those in the UK or France. Key issues continue to include: part-time senior advisors and non-execs are not eligible, low restrictions on the value of grants to an individual, and the overall cap of just €3m on the value of grants by a company.”

While Scale Ireland commended Budget 2020, calling it a “positive Budget for start-ups and scale-ups”, the group wants to continue its work in changing the policy surrounding how Ireland’s entrepreneurs and innovation-driven enterprises are supported.

One of the group’s key requests is that the Irish Government improves capital gains tax to incentivise entrepreneurs to reinvest their expertise and capital in the next generation of start-ups.

Kelly Earley was a journalist with Silicon Republic