Funding is an essential part of a startup’s life. Whether to finance the launch of a project or the expansion of a business, many startups turn to fundraising: this process involves increasing the company’s capital through contributions from investors.
During funding rounds, it is common to set aside a pool of BSPCE , which can be allocated to certain employees, executives, or managers. The goal is to align their interests with the company’s performance while allowing them to maximize their returns upon exit.
When raising capital, how can you incorporate the allocation of BSPCE into the roadshow? How can you use it as a selling point to convince investors? Here are the key points to know.
Attracting and retaining talent is a critical challenge for innovative startups. To achieve this, many turn to employee stock ownership programs. Among the most commonly used mechanisms are stock option plans for company founders (BSPCE).
BSPCE are governed by specific rules set forth, in particular, in Article 163 bis G of the Tax Code. In practice, these warrants grant the right to subscribe to shares at a predetermined price. Once the shares are subscribed, the beneficiaries become shareholders and acquire the rights attached to that status (voting and/or financial rights, depending on the class of shares).
For employees and executives, the benefit lies in the potential to realize a capital gain upon the sale of the shares if the company’s value increases. For the company, issuing BSPCE warrants allows it to reward and motivate employees at a cost often perceived as more sustainable than an immediate bonus, while aligning interests over the long term. It is also possible to utilize other employee stock ownership plans.
Investors pay close attention to the team behind a company seeking funding. A strong, loyal, and committed team is a key factor for success, even more so than the quality of the product or service and the relevance of the market.
When granting BSPCE options, the goal is to build employee loyalty and incentivize high performance. In fact, recipients can only expect to realize a gain upon the sale of their shares if the company increases in value. It is therefore in their best interest to be fully invested in the company’s growth.
💡 The granting of these warrants is often contingent on a minimum length of service with the company, and sometimes on performance targets (a common practice, to be evaluated on a case-by-case basis).
Issuing BSPCE options thus aligns the interests of founders, employees, and investors toward a single goal: increasing the company’s value.
BSPCEs also enable the issuing companyto attract new talent. Investors generally look at the startup’s recruitment strategy and its ability to attract high-potential candidates to support its growth.
Finally, implementing a BSPCE grant plan can be less costly for the company than certain immediate compensation mechanisms, particularly because there is not necessarily a cash outlay at the time of grant (the main impact is potential dilution over time, and the administrative and legal burden).
The roadshow is a crucial step in the fundraising process. It’s an opportunity for the startup to present its project to potential investors. The goal is to convince investors to join the entrepreneurial venture using a clear pitch deck and to build a relationship of trust.
💡Here’s an article listing the essential information for building a compelling pitch deck.
Keep in mind that investors are looking for profitability. With this in mind, the BSPCE allocation plan can be a useful argument for supporting valuation prospects, provided it is presented in a simple, transparent, and quantified manner (dilution).
To do this, founders should highlight the following points during their pitch:
At Equify, we support you throughout the BSPCE grant process (organizing the grant plan, drafting legal documentation, exercising options, and subscribing to the underlying shares, etc.).
We also make it easy for you to execute your fundraising: organizing and sharing your corporate documentation as part of the due diligence process, signing your documentation (shareholder agreements, subscription forms, etc.), and updating your corporate records.
In a fundraising round, BSPCEs are not just an “HR tool”: when presented effectively, a BSPCE pool signals alignment and serves as a lever for executing a growth strategy (recruitment, retention, performance).
Next step:
To take things a step further, you can also refer to the official documentation and seek assistance with the operational implementation.
1. Article 163 bis G of the Tax Code
3. BSPCE Reform