Those who provide financial support to innovative start-ups often take on a high level of risk. This is precisely where the ‘INVEST – Venture Capital Grant’ programme of the German Federal Ministry for Economic Affairs and Climate Action (BMWK) comes in. With non-repayable grants of up to 40% of the investment amount, the programme creates financial incentives for business angels to invest in young, innovative companies. The application must be submitted to the German Federal Office for Economic Affairs and Export Control (BAFA).
What does BAFA INVEST support?
It supports private investments in innovative start-ups based in Germany. The focus is on companies with:
a maximum of 10 years in business,
fewer than 50 employees,
annual turnover or total assets of no more than 10 million euros,
and a proven level of innovation, e.g. a registered patent or funding from a recognised innovation programme.
Business angels who invest in such start-ups receive funding of:
a 15% subsidy on the purchase of shares (purchase subsidy) and
an additional 25% exit subsidy on the profit from the sale of the shares (tax-free),
i.e. a total funding rate of up to 40%.
Who can apply for INVEST?
The INVEST programme focuses on two target groups:
Investing natural persons residing in the EU (business angels) or
Investment companies, provided they meet the requirements for business angels under INVEST.
Important: The application for funding must be submitted before the purchase agreement is concluded.
The start-up itself must register with the BAFA in order to be eligible for INVEST-approved investments.
Why is INVEST worthwhile?
BAFA INVEST is an effective tool for activating private venture capitalists. The subsidies reduce the risk for investors and at the same time help innovative start-up teams to grow.
Especially for start-ups with high capital requirements, such as those in the deep tech, green tech or digital business model sectors, taking on an INVEST-funded business angel can offer a decisive competitive advantage.
Example: INVEST in practice
A business angel invests €100,000 in a recognised start-up. The BAFA pays €20,000 as a grant. If the investor sells the shares a few years later at a profit of €50,000, a further €12,500 tax-free exit grant is added.
Application and deadlines
Applications are submitted entirely digitally via the BAFA portal. Start-ups must first apply for recognition as an eligible company, after which investors can submit their application.
The investor's application must be submitted before the contracts are concluded. The grant notification usually grants a period of three months to submit the necessary investment documents to the BAFA. The processing time is usually four to six weeks. The grants are paid retrospectively.
Our tip
Prepare early! Both start-ups and potential investors should work together to assess whether INVEST funding is an option. EurA is happy to assist you with the application process and approaching suitable investors.
Do you have questions about the INVEST programme or need help with the application process? Our venture capital consulting experts are happy to assist you.
Text: Monika Dimitrova
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As a Financial Consultant and Investment Manager at EurA, I support my clients on a daily basis with their large-scale projects in areas such as financing instruments, financing structures and financial planning. I advise companies from all over Europe on financial matters and connect them with the right debt capital providers or investors. Thanks to my bachelor's and master's degrees in finance, as well as years of experience in the banking and private equity world, I am ideally networked to support you in your projects. I look forward to getting to know your company and optimising the financing structures in your company together with you in order to advance your projects in the best possible way.
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