In February 2023 Spiritualme UG was assessed as a young innovative company by the German Federal Ministry for Economic Affairs and Climate Protection and therefore qualified for the INVEST venture capital grant. This is valid until Janaury 2024. Details for potential investors can be found below.
Note: the below is translated and modified for potential investors from the German original here.
Here (without guarantee) is an overview of the most important conditions of the INVEST grant for venture capital from the directive in force since 06.02.2023.
INVEST brings together Spiritualme and private investors who believe in the team and our product sissoo.com. The INVEST support program mobilises more private venture capital from business angels and thus helps Spiritualme find an investor more easily. Start-ups often fail in the initial phase because they lack the necessary venture capital. This is where the German Federal Ministry for Economic Affairs and Climate Protection comes in with the INVEST funding program.
I. Acquisition grant
General framework conditions for the 25% (investor) grant are:
- 25% acquisition grant for direct share acquisition and for convertible loans
- Introduction of an "INVEST budget" of 100,000 euros in acquisition grants per investor (i.e. no further INVEST funding if 100,000 euros in acquisition grants have been paid or approved)
- 100,000 euros minimum investment amount*
- 200,000 euros maximum eligible investment amount per investment
- Extension of the permissible legal forms for eligible companies to include registered cooperatives (eG)
* Set by Spiritualme vs. the INVEST minimum of 10,000 euros.
The most important prerequisites for the investor:
- Natural person with residence in the European Economic Area (EEA) or a company, including limited liability corporations, with headquarters in the EEA including the headquarters of the shareholders in the EEA. The number of shareholders is limited to a maximum of ten and at least one partner must be of legal age. If the participation is made via a Business Angel GmbH, each shareholder must also meet the requirements with regard to the investor. A legal form of an EU state comparable to the German GmbH is also permitted.
- The business angel GmbH (or EU state equivalent) must have the "acquisition and holding or sale of investments" as its business purpose. The business purposes "asset management" and "consulting" are only permissible in addition.
- Share acquisition must be economically motivated (profit-making intention), on your own account/with your own money and must not be credit-financed.
- It must also be a first-time participation in the company. Follow-up investments are not supported.
- The investor must not be affiliated with the company.
The most important rules regarding participation:
- Ordinary, fully risk-bearing shares in a corporation (GmbH, UG, AG - or EU state equivalent) or a cooperative (eG) that are newly issued.
Customary anti-dilution rules and liquidation preferences are exempt if they apply equally to all investors in a round.
Convertible loans (25%) are also permitted under the following most important conditions:
- Convertible loans are issued under market-standard clauses
- The company must have additional financial resources as a result of the convertible loan, i.e. the money must be transferred by the investor to the company at the time of the application.
- Later conversion must be provided for in the loan agreement
- Conversion must be made within 24 months of the approval notice
- Only one payment call can be made, even if the conversion of the loan takes place in several capital increase rounds
- Payment of the acquisition grant only occurs after conversion
- Combination of convertible loan with a milestone agreement is not permitted.
The most important procedural rules:
- Responsible: Federal Office of Economics and Export Control (BAFA) in Eschborn
- Online procedure
- Two-track approach:
- Company Spiritualme UG applied and is eligible, the decision is valid until 10.02.2024.
- Investor applies for grant and gives application number of the company
- Payment only after proof of the investment, in the case of milestone agreement according to milestone investment, which must be at least €10,000 each, in the case of convertible loans only after the conversion.
- No recovery of the grant within the holding period if the business model has failed, e.g. in the event of insolvency.
II. Exit grant
The exit grant amounts to 25% of the profit from the sale of a participation supported by the INVEST acquisition grant.
The most important rules for the exit grant
- Recipients of the exit grant are exclusively natural persons
- The acquisition of the shares for which the exit grant is applied for must already have been supported by INVEST from 01.01.2017
- A minimum holding period of three years and a maximum holding period of 10 years applies, so that the exit subsidy is only eligible for capital gains from 01.01.2020. The application period ends on 30.06.2031
- The profit from the sale must be at least 2,000 euros
- The amount of the exit grant is 25 percent of the profit from the sale of shares supported by the acquisition grant.
- On 27.04.2017, the Bundestag adapted the tax exemption of the INVEST grant to the newly drafted INVEST guidelines, the Federal Council approved the decision on 02.06.2017. The new regulation thus applied for the first time to the 2017 tax year, so that all INVEST grants benefit from 01.01.2017. More information here: http://www.business-angels.de/invest-zuschuss-jetzt-in-voller-hoehe-steuerfrei/
- for investors
INVEST database of eligible start-ups on the BMWi website