Posted on Sep 20, 2022, 7:00 amUpdated September 20, 2022 at 8:07 am
During a family vacation, Pierre (the name has been changed) checks your phone. Suddenly, what he had been imagining for days happened. A transfer of… 350,000 euros. “It’s a Shock”, he remembers. He repeatedly checks the bank’s application to make sure he’s not dreaming. “My banker called me right away to ask me if it was normal, so what did I intend to do with it. »
This amount he received thanks to the so-called warrants for business-creating shares (BSPCE) distributed by his employer. The BSPCEs, quesaco? The concept is nebulous to many. In short, it is the most common capital incentive tool used by start-ups.
Involve the employee in the company’s growth
When an employee joins a young person, he can offer him, in addition to his salary, the BSPCE. These allow shares in the company to be purchased at a later date, but at the price on the day of allocation. The interest? That the employee buys shares at their “friendly price” and resells them with a capital gain. In turn, the company expects the employee now financially involved to be more motivated.
Not sure you have it all? Imagine that an employee joins a start-up that grants him 200 BSPCE at 50 euros each. To keep that employee in the company, the employee establishes a “vesting” period: a schedule according to which his BSPCE will be distributed to him over time. Let’s start with four years – which is customary today. During this period, the company raises funds and the action ends up being worth 400 euros. Interesting for the employee: his BSPCE goes from a value of 10,000 euros (200 BSPCE x 50 euros) when he joined the company to 80,000 euros.
But to pocket the capital gain, he must first “exercise” these BSPCEs, that is, buy them to turn them into shares. And therefore pay 10,000 euros, to be able to resell them later.
“In the right place at the right time”
For companies with strong growth potential, this system has several advantages: attracting candidates in a context of talent war, retaining employees and motivating them. The latter feel like shareholders in the start-up and, of course, want to contribute to its growth.
For now, this system remains complex for many employees to understand. Pierre, the first, had no idea that his BSPCEs would one day turn into cash. When he learned that the software publisher where he had worked for ten years was going to be sold and that he was going to receive the proceeds of his BSPCE, he did the math. “I spent the night digging through my papers, trying to find out how many vouchers I had, what their value was… With my calculations, I arrived at 350,000 euros in profit, but it seemed surreal”reports the one who at the time was a product manager.
Of this amount, Pierre had to pay 30% taxes, or 105,000 euros. Of the remaining 245,000 euros, he invested two-thirds in participating properties. The other third was spent on gifts, vacations and the purchase of a motorcycle.
Pierre, who is still at the same company, knows he was lucky. “I was in the right place at the right time”, he sums up. Because cases like his don’t run through the streets.
Difficulty selling shares
If on paper the BSPCE can make you dream, in reality, reaping the benefits is more complicated than it seems. First, because not all startups have a success story. Some go bankrupt, others just don’t take off. Consequence: BSPCEs are worth nothing, or very little. “Hence the interest of not accepting a reduced salary on the grounds that you are being distributed BSPCE to compensate, underlines Marianne Tordeux Bitker, director of public relations at the startup association France Digitale. These vouchers are not a salary supplement or an alternative to remuneration because you never know what they will turn into. »
And if the company is successful, seeing the BSPCE color is not easy. Unless it is repurchased or open, in which case the employee can directly receive the capital gain from his warrants, the employee must exercise his BSPCE, ie buy his shares. “This presupposes, at a given moment, having sufficient liquidity, which is not always the case. »
Another difficulty: the resale of shares. Some start-ups refuse to let employees resell them when they see fit. “This is perfectly understood: they want to control their capitalization table. In this case, the employee or former employee sells, when the start-up decides, to the shareholder chosen by him., explains Marianne Tordeux Bitker. And it can take years. Which dissuades some from exercising their BSPCE.
Other companies accept that their employees or ex-employees dispose of their stock whenever they wish in a secondary market. In that case, they themselves must find a buyer. It is to facilitate resale that Lucas Mesquita co-founded Caption in 2020, a marketplace in which start-up shareholders put their securities for sale, which can be purchased by individuals. “Our goal: to allow employees to sell their shares whenever they want, for whatever price they want. »
to change life
Louis (the name has been changed), formerly of a legaltech he joined in 2018, has sold some of his own on this platform. When he was an employee, he annually renegotiated his salary and additional BSPCE. “I knew that the BSPCE could be worth gold because the project was extremely ambitious, indicates the one who was then financial director. I gave it my all at work, sometimes working day and night a few days before a deadline, and I also wanted to make a substantial profit if I took off. »
Your vouchers increase in value. So much so that he thinks that if he converts them, he will be able to launch an entrepreneurial project. He left the company after nearly three years and spent €35,700 to convert his BSPCE into shares. He has since sold almost half of it, pocketing €250,000. An amount that, even reduced by 47.2% by taxes (30% of income tax, to which 17.2% of social security contributions are added when the beneficiary remains in the company for less than three years), remains chubby.
“Without that, with kids and my mortgage to pay, I certainly wouldn’t have taken the risk of starting a business, he explains. When you have that much money coming down at once, you gain peace of mind. » And he still has a good cushion, as he still has half of his shares to sell.
However, Louis did not change his lifestyle. While he hopes his company will allow him to be paid, he pays himself the same monthly salary as before.
As for him, it’s thanks to the BSPCE “that there were generations of entrepreneurs, former employees who became investors, business angels…” says Marianne Tordeux Bitker of France Digitale. She thinks, for example, of what is called “the BlaBla Mafia”, those employees of the tricolor scale who managed to undertake mainly thanks to the consequences of their actions.
Founded in 2006, BlaBlaCar distributes BSPCE when it starts recruiting, around 2011. “We gave a lot because it wasn’t worth much at the time”rewinds Nicolas Brusson, co-founder and CEO of BlaBlaCar.
Over the years, the box has grown. “For the first ones who joined us, the BSPCEs turned into considerable sums”, explains the businessman. How many did the lucky ones pocket? He gets in touch and prefers to give an overview: “$15 million worth of shares have already been resold by 86 employees or former employees. »
Today, BlaBlaCar no longer distributes BSPCE to its new recruits. Because ? Because this profit sharing ratio is reserved for unlisted companies or companies whose market capitalization is less than 150 million euros, and which were born less than fifteen years ago – which is not the case with the scale-up, founded in 2006.
Now, all employees who join the company have free shares – more or less depending on their position and seniority. “This is the preferential capital incentive scheme for companies that can no longer grant BSPCE, because it is the least expensive and least complicated, namely in tax terms”, notes Marianne Tordeux Bitker. The benefit for employees: they don’t have to pay a dime to own and resell them. And Nicolas Brusson to summarize: “It always allows them, like the BSPCEs, to have a little piece of the house. »