ANZ startups lead globally in employee equity ownership

ANZ startups are showing a higher rate of employee equity ownership compared to both regional and global counterparts, according to new data released by Carta in its Startup Equity & Workforce Report.

The report reveals that in 2024, 51.8% of startup employees in Australia and New Zealand exercised their stock options, a figure significantly higher than the US rate of 32.2%.

The exercise rate in Australia and New Zealand also surpassed that seen in East and Southeast Asia, which stands at 22.8%, and is more than triple the rate of 14.5% seen in the Middle East and South Asia.

Australian and New Zealand startups have set aside a median of 12.6% of total equity for employee stock option pools (ESOPs), exceeding both the Asia-Pacific median of 10% and figures seen in other global regions. This trend indicates a strong local commitment to broad-based employee ownership, particularly in a period of tighter access to venture capital funding and reduced hiring activity.

According to the report, startups across APAC and the Middle East have scaled back recruitment efforts since the hiring surge between 2019 and 2022. This pullback has coincided with a more conservative approach to compensation, with the median size of initial equity grants to new hires in APAC and the Middle East shrinking by over 30% since 2021.

The study finds that ESOPs in APAC and the Middle East typically grow from 7% of fully diluted equity at the pre-seed stage to 11% at the seed round, before stabilising in the 11-13% range at subsequent fundraising stages.

ANZ startups are maintaining larger ESOP pools than those observed in East and Southeast Asia or in the Middle East and South Asia.

The prevalent use of larger ESOPs and higher employee uptake rates points towards the persistence of a pro-equity culture within the Australian startup ecosystem. The report notes that while initial equity grants for new hires have become smaller, companies are maximising the value of these grants for employees in the current environment.

Bhavik Vashi, Managing Director of Carta for APAC and Middle East, commented on the findings: "Australia is punching above its weight on employee ownership, and our latest data shows this trend is only continuing. Aussie founders recognise that giving employees a genuine stake in the business keeps teams motivated and committed, even when capital is tight."

"They want to share the upside, but need simpler and more accessible ways to do it. That's why we've introduced Carta Launch in Australia, putting robust, compliant equity tools within reach of every early-stage company. Now, Aussie founders can make ownership their strongest recruitment and retention advantage from day one."

Carta is responding to this shift by introducing Carta Launch in Australia, a free platform intended to assist early-stage founders in managing cap tables and issuing ESOPs from the outset. The service is targeted at startups with fewer than 25 stakeholders and which have raised under USD $1 million.

Carta Launch is already used by over 25,000 companies globally, which have collectively raised more than USD $24 billion.

The report suggests that widespread employee ownership is becoming a strategic advantage for startups by enabling founders to retain key personnel during periods of cash constraint, fostering shared accountability within smaller teams, and encouraging long-term commitment through uncertain market cycles.

Effective early structuring of employee ownership can streamline future capital raising and signal maturity to investors, reducing administrative burdens as startups grow.

The data and platform rollout indicate that Australian startups are leveraging employee equity not only as a means of managing compensation in a constrained economic climate, but also as a tool for sustaining workforce engagement and company growth over time.