The Federal Ministry for Economic Affairs and Energy (BMWi) is expanding the funding program “INVEST – Grant for Venture Capital”In the future, investors will be able to receive, among other things, up to 100,000 euros per year in grants for new investments in young, innovative companies and have their capital gains tax refunded.
Since May 2013, the BMWi has been subsidizing business angel investments in young, innovative companies with €20 million through INVEST. Effective January 1, 2017, the program will be supplemented with an additional funding component, an exit grant. The exit grant, amounting to €25 million of the capital gains generated from INVEST investments, represents a lump-sum refund of the taxes payable by the investor on the capital gains. In addition, the upper limit for eligible investment amounts per investor will be doubled. This means that investors can now receive up to €100,000 per year in acquisition grants for their investments in young, innovative companies.
Milestone for Germany as a venture capital location
Federal Minister for Economic Affairs Sigmar Gabriel is confident that this is another step in the right direction:
"The expansion of INVEST is another important milestone on the path to making Germany a more attractive venture capital location and improving growth financing for startups. Since its launch, INVEST has had a strong mobilizing effect. We have already supported over 2,700 private investor investments in young, innovative companies through the program, thereby mobilizing an additional €200 million in venture capital in Germany. By expanding the program, we want to give the German business angel market a further boost. Business angels are indispensable partners for many startups in Germany, not only providing money but also providing advice and support."
Further optimization suggestions from the recent evaluation of the program have also been implemented. Private investors who wish to invest through an investment company can now also do so through a limited liability company (UG) (previously only GmbHs). In addition, the requirement of a majority shareholder has been removed, and the number of permissible shareholders in the investment company has been increased from four to six.
Extended funding criteria for young, innovative companies
With the entry into force of the new directive, convertible loans will also be eligible for funding. Another new feature is the possibility of receiving grants for follow-up financing of INVEST-supported initial financing.
The funding criteria are also being expanded for young, innovative companies: Until now, innovativeness was assessed exclusively by industry classification (or patents or public innovation funding). In the future, innovative companies that do not meet these criteria can have their innovativeness certified through an external, independent short report.
Funding applications can be submitted from 1 January 2017.
