Last year the German Government introduced a program to support
venture seed and pre-seed investments into innovative start-ups
from private investors. The basic idea was that private investors
will get a 20% payback from the Government on their investment if
the criteria applicable to investor and start-up are met. In April
2014 the Government re-launched the program which is now called
"INVEST". These changes came into effect on April 22,
2014 and are summarized below. German Government has allocated a
total of EUR 150 million in funds until 2016 in the official
budget. Main changes include:
Expansion of the range of innovative industries eligible for
the INVEST program to now also include the production of technical
textiles, surface and heat treatment as well as medical and
a startup is considered to be innovative if it holds a patent
or has, within a period of two years preceding the application for
subsidy, received a subsidy or state aid for an R&D or
a subsidiary company can also be eligible, provided the parent
company fulfills the requirements for the subsidy;
there can be up to four shareholders, provided one shareholder
holds at least 50%;
the investor can now also be a corporation whose business
purpose is consultancy or asset management;
it is planned that the subsidy shall be tax exempt.
Please note:Thus, a startup whose founder holds
more than 50% of the startup through a special purpose vehicle
(founder GmbH) is now eligible for the subsidy.
However, the startup may still not be older than 10 years, must
fulfill the criteria for SME (< 50 FTE, < EUR 10 million
annual revenue) and may not be in financial distress. Further, the
startup must operate in an industry that is in general eligible for
the subsidy. The startup must have its registered office within the
EU with at least one establishment or branch being in Germany for
the whole subsidy period of three years and must be operational on
a continuous basis.
Please note: Before approaching potential
investors, startups can request a statement from the competent
Federal Office of Economics and Export Control (Bundesamt
für Wirtschaft und Ausfuhrkontrolle - BAFA) confirming
that the startup is eligible for the INVEST program.
On the other hand, the investor must be at least 18 years old
and must have his or her main residence within the EU. If the
investor should invest through an investment holdco, such holdco
must have its registered office within the EU and its investors
must also be resident within the EU. The investor may not already
be a shareholder in the startup; the INVEST program applies only to
the investor's first investment but not to subsequent
The maximum subsidy amount per startup is EUR 200,000 p.a. and
EUR 50,000 per investor p.a. The investor must invest at least EUR
10,000 of his own money per investment.
Please note: For details, guidelines and
application forms see the INVEST website under www.exist.de and
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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