Business Angels Germany (BAND), the association of business angels in Germany, breathed a sigh of relief in the ecosystem of business angels and start-ups. The reason is the news from the Federal Ministry for Economic Affairs and Climate Protection (BMWK) that business angels can use the INVEST subsidy for another four years. With the grant, the ministry supports the financing of start-ups with private capital, which is often the only source of finance for young innovative companies.
The grant, introduced 10 years ago, is being evaluated in 2022. “Fortunately, fears in advance that it would only be available to business angels funding a young company for the first time, so-called Virgin Angels, have not been confirmed “, says Roland Kirchhof, CEO of BAND. It is also good that the subsidy has been increased from 20 to 25 percent and that convertible loans are once again treated as par. The minimum investment amount has been lowered again from 25,000 euros to 10,000 euros.
A total grant budget of EUR 100,000 per natural person has recently been introduced. Business angels who exceed this budget can no longer receive the grant. In this way, investors will gradually abandon financing. The Ministry's underlying expectation is that they will continue to invest, while the budget gives new angels an incentive to invest not just once, but more often.
According to Kirchhof, whether these hopes will materialize remains to be seen, which is why the market needs to be closely monitored. Angels who no longer benefit from the subsidy could increasingly turn to other forms of investment, also in consideration of the changed interest rate environment. Regardless, however, it is imperative that the funding continues.