INVEST Grant

What is the INVEST grant?

INVEST is a German federal funding programme that subsidises private investors who take a stake in young innovative companies. The money goes to the investor, not to the company.

That is precisely its purpose: it reduces the risk of an investment and thus makes possible investments that would otherwise not happen.

The two components

• Acquisition grant: a share of the investment amount is reimbursed to the investor after the investment has been made. One of the conditions is a minimum holding period.
• Exit grant: on the later sale of the shares, a flat-rate compensation for the tax on the capital gain is granted.

The exact rates, maximum amounts and holding periods are set by the competent federal office and have changed over the years. They should be checked there before the round and not taken from an older source.

The conditions in brief

On the company side: a young company below certain size and age limits, in an innovative sector or with corresponding evidence, registered office in the European Economic Area (EEA) with a permanent establishment in Germany, legal form of a capital company (Kapitalgesellschaft).

On the investor side: a natural person or an investment company held for this purpose, no affiliation with the company, minimum amount per investment, new shares from a capital increase, holding period.

The order that decides

1. The company applies in advance for confirmation of eligibility for funding.
2. The investor applies for the grant, before the investment is completed before a notary.
3. After completion, the supporting documents are submitted.

The second point is the most common source of error. Anyone who has the investment notarised first and applies afterwards receives nothing. This cannot be remedied.

How it works in a round

INVEST does not reduce the company's capital requirement. It improves the risk-return ratio on the investor side and is thus an argument when approaching business angels.

In practice, this means: it belongs in the documents for private investors, with a note that the company's eligibility for funding has already been confirmed. This preparatory work makes an investment noticeably easier for the angel.

Common mistakes

1. Applying after notarisation. Too late, without exception.
2. Not having eligibility confirmed in advance. It is the point that the company has in its own hands.
3. Existing shares instead of a capital increase. New shares are what is funded.
4. Overlooking the holding period. A premature sale leads to repayment.
5. Overlooking affiliation. Family members and persons already holding shares are generally excluded.

Frequently asked questions

Does the company receive the money?

No, the investor does. For the company, the benefit lies in an investment becoming more likely.

Does it also work for convertible loans?

The programme provides its own rules for this, with different conditions. This should be checked in the individual case before the contract is concluded.

How long does the confirmation take?

A few weeks. It therefore belongs at the start of round preparation, not in the week before the notary appointment.

The Roemer Capital view

In rounds with the participation of private investors, we have eligibility for funding confirmed early and mention it in the approach. It is a small point with a noticeable effect: for an angel weighing up two investments, already clarified eligibility is a difference that costs no negotiation.