A 20% acquisition grant on venture capital, for business angels and the companies they back.
INVEST lowers the risk of business angel investment: private individuals who invest in young innovative companies receive 20% of their investment as a grant from BAFA. The key hurdle: the target company has to operate under an industry code on the official whitelist.
Eligibility
- Target company: a corporation (UG, GmbH or AG) based in the EU or EEA and active in Germany.
- Target company: no more than 10 years since incorporation, no more than 50 employees, annual turnover or balance sheet total no more than €10m.
- Target company: active under a WZ industry code on the BAFA whitelist (updated regularly).
- Investor: a natural person, an EU citizen, with no connection to the target company before the investment.
- Minimum investment: €10,000 per investor, held for at least 3 years.
Eligible costs
- The capital contribution (share capital, share premium, convertible loan with a mandatory conversion).
Common pitfalls
The industry code isn't on the whitelist
The whitelist sets out the eligible industry sectors. Many B2C services and conventional trading activities are excluded. Check before investing, otherwise the funding is lost even with a formally perfect application.
Applying for eligibility too late
The application for eligibility has to be filed **before** the investment. Late applications are rejected, even when every other criterion is met.
Selling before the holding period is up
Anyone who sells the shares before the 3-year holding period ends has to repay the acquisition grant in full. The only exception is economic necessity (insolvency and similar).
Blowing the de minimis ceiling
For the target company the acquisition grant counts as de minimis aid. Together with other de minimis funding (start-up grants, innovation vouchers and so on) the €300,000 ceiling can be exceeded.
The application process
- 1. Application for eligibility (target company). The target company applies to BAFA for a ruling on eligibility. BAFA checks the size and age limits and the industry code.
- 2. Completing the investment. The business angel invests (share capital, share premium, convertible loan) and the shares are entered in the commercial register.
- 3. Grant application (business angel). Within 3 months of the register entry: an application to BAFA for the acquisition grant, with proof of the investment and confirmation from the target company.
- 4. Payout. BAFA checks and pays 20% of the investment to the business angel as a grant.
- 5. Holding period and optional exit grant. Hold for at least 3 years. On a sale after year 3 there is an optional exit grant as tax compensation on realised gains.
How upsmart helps
Before the investment we check whether the target company is on the WZ code whitelist, keep an eye on the deadline for the eligibility application (before the investment) and for the grant application (three months after registration), coordinate between investor and target company, and track de minimis exposure in combination with other funding.
Combining it with other programmes
It can be combined with EXIST, ZIM and the Forschungszulage at the target company. There is no parallel funding programme for the equity stake itself.
Frequently asked questions
The whitelist is the list of industry sectors (WZ 2008 codes) that INVEST applies to. It has been extended several times and today covers tech and IT, medical technology, biotech, mechanical engineering, chemicals, environmental technology and more. Not included: pure trading, real estate and financial services.
25% tax compensation on the capital gain after a holding period of at least 3 years, capped at 80% of the original INVEST-funded investment.
Yes. Up to €100,000 in acquisition grant per calendar year, cumulatively up to €500,000. It can be spread across several target companies and funding rounds.
Application for eligibility: around 4–6 weeks. Grant application after the investment: around 8–12 weeks until payout.
Read on in the blog
The INVEST grant: the WZ code whitelist
Primary sources
- INVEST guideline (BMWK)— BMWK
- BAFA INVEST portal— BAFA
- WZ code whitelist (BAFA)— BAFA
- De minimis Regulation (EU) 2023/2831— European Commission
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