DThe federal government is resuming a support program for private start-up investors and increasing the subsidy rates. The “Invest” program will be extended by four years until the end of 2026, the Ministry of Economic Affairs announced in Berlin on Tuesday. In this way, the federal government is promoting investments by so-called business angels in other start-ups with tax-free grants.
“Business angels” are often former founders who help other young companies. “Invest” expired at the turn of the year because the funding guidelines were revised and approval from the EU Commission was still missing. According to the Federal Ministry of Economics, the program now has a volume of around 45 million euros.
Specifically, private investors receive a government subsidy of 25 percent of the capital employed if they make money available to a start-up – previously the rate was 20 percent. In addition, the minimum investment sum has now been reduced from 25,000 to 10,000 euros. The federal government expects a leverage effect from the grants. The maximum subsidy per investor is 100,000 euros.
With the new funding conditions, the federal government wants to appeal more to investing “business angels” for the first time. They reacted particularly strongly to higher grants, said the start-up officer in the Federal Ministry of Economics, Anna Christmann. The ministry has been promoting start-up investors with “Invest” since 2013 and, according to its own statements, has thus mobilized almost 1.4 billion euros in venture capital.
More venture capital
In the coalition agreement, the federal government had set itself the task of strengthening the start-up industry in Germany and giving start-ups better access to venture capital. Despite some progress, company founders in Germany have a much harder time getting venture capital from investors compared to countries like the USA. In view of higher interest rates and the uncertainty surrounding the Ukraine war, financing for German start-ups collapsed in 2022.
The start-up industry reacted with relief to the extension of the Invest program. “This is good news for business angels and startups, who can now plan again,” said Christoph Stresing, Managing Director of the startup association. One disadvantage, however, is that follow-up financing is no longer supported.