Meanwhile, the €2 billion aid package for startups announced by Federal Finance Minister Olaf Scholz on April 1st has taken shape: The program consists of two pillars, depending on whether a startup has a VC on board or not. However, so far, only the first pillar has been completed. The uncertainties surrounding Pillar II are not only straining startups' nerves, but are also increasingly scaring off investors.
The distribution of announced funds is organized in two pillars: For startups with VC, the VC must contact KfW Capital or the European Investment Fund (EIF). This provides additional capital through the so-called Corona Matching Facility. Only private VC funds are eligible to apply for this facility.
Young companies without VC, on the other hand, are to receive support through a network of state development banks, SME investment companies, and business angel networks. However, this pillar is still under development. So far, neither program conditions nor a timeline are known. Furthermore, the question arises, according to the Business Angel Network Germany (BAND)whether those who already invested in March 2020 can rely on Pillar II, whether this will only take effect retroactively from 2 April 2020 or whether it will only start on the day the measure is publicly announced.
Waiting for Pillar II puts investments on hold
As BAND further reports, this has led, among other things, to many already prepared deals for investments in startups currently being put on hold. Message from the association it says:
"Nobody wants to close a deal that might be constructed in such a way that it runs counter to Pillar II requirements. So, a collective wait for Pillar II. That's fatal: startups need the money now."
In addition, BAND fears a possible federal patchwork in the course of the implementation of Pillar II. If Pillar II is not put together as a uniform federal aid package or cannot be put together in the short term, then the decision-makers should ensure that there are no serious differences between the individual state programs and that they do not start at different times if possible.
