How startups attract top talent

Employee stock options drive growth, the startup that gave 15% of its equity to employees, and more...

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Employee stock options drive growth

Companies that offer stock options to employees perform better financially, have higher long term-growth, and rank higher as great workplaces.

Why do stock options work so well?

This Week’s Trends

  • Advantage of employee stock options

  • The startup that turned its employees into millionaires

  • New VC fund from Cyprus and more


    Read Time 3 minutes

The Startup Trend
 Why companies give stock options

Companies offering Employee Stock Purchase Plans (ESPPs) in the early stages are likely to have higher revenue growth than those that don’t, according to a Deloitte research study that analyzed 500 companies.

> By the 10-year mark, companies with an ESPP demonstrated 101% revenue growth, compared to just 61% for companies without the option.

> Companies with an ESPP also outperformed those without in terms of total shareholder return (TSR), EBITDA, and earnings per share (EPS).

💡 The same report found companies with ESPPs won twice as many “best places to work” awards, contributing to more positive employee sentiment.

Startup Feature
How Monzo Turned Their Employees into Millionaires

Monzo, the UK-based digital bank founded in 2015, made headlines with a secondary share sale that valued the startup at nearly $6 billion last year. Less discussed, but equally impactful, was how this sale turned dozens of its employees into millionaires. Its decision to offer equity stakes to employees aligned their interests with the startup’s success, creating a motivated team that helped drive its growth.

“We wanted Monzo to be more than just a workplace. Giving employees equity meant everyone had a stake in our success.”

Tom Blomfield, Co-founder of Monzo

Building a Culture of Ownership

Monzo was founded by Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon, and Gary Dolman to create a mobile-first bank focused on customer experience. At its launch, Monzo faced competition from established players like Klarna and Revolut, both backed with significant funding and a rapidly expanding user base.

Unable to compete with the salaries offered by its rivals, Monzo’s founders had to take a different approach. As an early-stage startup with limited resources, they chose to offer a reported 15% of the startup’s equity pool to early employees, giving up their own shares to attract top talent and incentivize long-term commitment.

“Giving up equity allowed us to attract people who believed in what we were building, even when we couldn’t compete on salaries.”

Tom Blomfield, Co-founder of Monzo

As a result, early hires received share options tied to multi-year vesting schedules. This ensured employees had a financial stake in Monzo’s success and a strong incentive to remain through the challenges of building a startup. The promise of ownership was a compelling pitch to talent seeking more than just a paycheck.

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Turning Equity Into Millions

In October 2024, Monzo’s early decision to offer equity paid off significantly for its team. During a secondary share sale, employees had the opportunity to sell up to 40 percent of their vested shares to outside investors. The transaction, supported by major backers like GIC and StepStone Group, valued Monzo at $5.9 billion and turned 15 current and former employees into millionaires.

“When a team builds an incredible product, they should share in its success. It should not be limited to only its founders.”

Tom Blomfield, Co-founder of Monzo

The share sale rewarded early hires who had taken a risk on Monzo during its uncertain early years. Monzo’s use of equity highlights how startups can compete for talent against better-funded rivals. By creating a culture of shared success it rewarded its employees while the startup surpassed 10 million customers and achieved its first annual profit this year.

With rumors of a potential IPO, Monzo employees with equity could stand to gain much more. For early team members, the public offering would be a major payoff.

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Headline News
This Week In Startups ✍️

Founders

> 33East, a Cyprus-based venture capital firm has launched its inaugural fund with a first close of €26 million.

> Project Eaden, a Foodtech startup raises €15 million to launch ultra-realistic plant-based ham in Europe.

> Tapline, a German fintech serving SaaS and subscription-based clients, has raised a €20 million pre-Series A.

Investors & VCs

> Jean De La Rochebrochard, a prominent French investor, joins US-based VC Cassius after leaving early-stage VC Newwave.

> Fuel Ventures, has just secured £20 million from two Chinese LPs; Shijingshan Modern Innovation Industry Fund and Zhongguancun Development Group.

> The number of active VCs in Europe has dropped by 30% in the last two years as LPs grow impatient for returns.

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Cheers,

Odin Lund & Hari Mohandas

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