Since May 2013, the Federal Ministry for Economic Affairs and Energy has been supporting private investment in young, innovative companies through its INVEST - Grant for Venture Capital programme. Under the scheme, private investors are rewarded for their investments in startups by a tax free purchase grant worth 20% of their investment. The objective of INVEST is to improve startups’ access to venture capital and to mobilise private venture capital investment in Germany. The latest evaluation of the INVEST programme by ExperConsult has confirmed again that the programme is having the desired effect.
Said : “INVEST is working. Not only do investors pass on the full amount of the grant to the companies. They also top up the amount by 52 cents per euro. This is exactly the kind of leverage that we’re looking for. INVEST has given the private investment market in Germany a fresh boost. Since the start of the programme in May 2013, it has been used almost 10,000 times and provided a funding volume of approx. €160 million. This has meant that grants have been used towards almost €800 million of venture-capital investments in startups. For this reason, the programme is to be continued beyond 2020. Our ongoing evaluation serves to inform us about the need for adjustments to the funding guideline, which we will make when this text is renewed this year.”
Almost half of the investors that have participated in the scheme were first-time investors in a young company. The programme provided an incentive for them to become a private investor. In addition to the actual investment, the investors also provide important non-monetary support to the startups they invest in. The companies receiving funding under INVEST were found to be more innovative and successful than the control group, and to create more jobs.
The evaluation also showed that the participating investors and companies are very happy with the administration of the programme, which is done by the Federal Office for Economic Affairs and Export Control (BAFA).