Feedback Friday: Stock Options in Icelandic startups

A couple of weeks ago I sent out a Northstack Memo titled “Do startups in Iceland offer stock options?” discussing whether companies used them or not, and if not, why. I got a lot of feedback on that post, some of which is published below. If you have any thoughts, comments or questions, shoot me a message.

• Jenný: I sit on five startup boards. One has no share option plan, two initiated a share option plan to employees during the past two years and two implemented a share option plan which I handed to them. My feeling is that this is in pretty good shape in our portfolio. The first point on founders losing stake can easily be addressed with founder vs common class of stocks.
• Founder: We offer options at my company and have used the new laws to do it in a flexible and nice way. We think it’s a necessary as a way to give a sense of ownership, and not only for the earliest employees, but also for the ones that will come later. I don’t think Icelandic startup employees think much of the value of their options, which is reasonable because most startups fail, or never become valuable enough for the options to gain massive value. It might be that Silicon Valley employees deem the options too valuable, but there’s probably some middle ground there that is correct.
• Sigurður: We are focused on this. We want a minimum option pool of 10-20%, depending on the company. I think all VC’s emphasize this. We want the company to have options available to make recruiting easier and make the team better. A startup should pay lower salaries and give out options.
• Helga: We don’t have options, but we have a bonus plan instead. In general, Icelandic employees don’t value options that highly. They mostly look at what they get paid every month, and don’t focus on the long-term possible upside; which is understandable, because there are very few instances of upsides affecting employees.
• Haukur: I am a founder and CEO and I will definitely offer stock options when it comes to hiring, which I hope I can do Q2 this year. Especially in the early stages, I believe wholeheartedly that it will benefit the company morale and increase productivity. It was one of the things we specially discussed when noting up partnership agreements between the founders.
• Investor: I’m not sure whether the company’s I’ve invested in offer stock options, but it seems common for early employees to get equity. It’ll be interesting to see whether the new law will make stock options more common. I think your speculations are largely correct.

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