European Angels Fund (EAF)
Since March 2012, the European Investment Fund (EIF) supports with the program European Angels Fund (EAF) the financing of young innovative start-ups via venture capital. The program is currently only available in Germany but it is planned to roll-out the program to other European countries. As a so-called co-investment facility the EAF increase the investment power of Business Angels. The European Angels Fund was developed in cooperation with BAND, the Federal Ministry of Economics and Technology and the European Recovery Program (ERP). The EAF has a total volume of € 60 million, which shall be carried equally by the EIF and the ERP.
Goals and objectives:
The EAF provides Business Angels and other non-institutional investors equity to finance innovative small and medium enterprises (SMEs).
Eligible applicants are Angel investors and non-institutional investors.
The applicant must have sufficient experience in the desired field of investment and be able to demonstrate successful investments in the past. In addition he must have a good access to high quality investments. The EAF can only be used for new investments. The Business Angel must have a financial capacity of at least € 250,000 for investments during a period of 10 years..
Type and amount of support:
The level of participation will depend on the investment sum the Business Angel intends to invest (50:50 Co - Investment). The investment per deal should be between € 250,000 and € 5 million.
The umbrella fund is managed by the European Investment Fund (EIF). Requests should be addressed directly to the EIF.
Further information: www.eif.org
The financing of innovative SMEs by the ERP-Startfonds depends on the investment volume of a private lead investor. The lead Investor can be a Business Angel. Both, the KfW and the Business Angels may not require collaterals, in connection with the financing.
Generally the withdrawals of the capital financed by the ERP-Startfond are made in the same amount and at the same time as payments by the lead investor. The duration of KfW's involvement depends on the maturity of the investment by the lead investor. Details are defined in the shareholder agreement.
Which companies are financed?
The ERP-Startfonds is addressed to small and young, innovative technology companies. The company must have less than 50 employees and a turn-over of less than 10 million Euros. The company may not be older than 10 years.
Newly developed products and services offered by the company must be differing significantly from previous offers. The new products and services must mainly based on the own research and development activities of the company.
Tasks of the lead investor
- The lead investor must invest at least the same amount as the KfW.
- He advises the company in all economic and financial issues, also in the field of management and marketing
- In general, the lead investor should be willing and able to provide additional capital.
- Before an investment by the KfW can take place the lead investor checks the company to secure that the company fulfils all requirements concerning the ERP-Startfonds.
- During the holding period, the lead investor supports the management of the company. He has to inform the KfW regularly.
- Details are regulated in the agreement between the lead investor and the KfW.
Form and conditions of the KfW – participation
- The participation of the KfW depends on the participation of the lead investor. KfW participated on the same economically conditions.
- The total funding must be secured.
- CEO, founder, and other key persons must hold at least 25 % of the company shares
Amount of the KfW – participation
- The maximum amount is 5 million Euros.
- The first and any further investment by the KfW is up to 2.5 million Euros each 12 -month period
Further information: www.kfw.de
High-Tech Gründerfonds (HTGF)
The High-Tech Gründerfonds (HTGF) invests in technology-oriented start-ups with high potential. The seed funding is guaranteed for a period of at least 12-18 months. Criteria are technology orientation, market perspective, quality of the team and financially adequate commitment of the founder team.
The company has to apply during one year after starting the active business. The company may not have more than 50 employees. The annual turnover or annual balance sheet total must not exeed 10 million Euros. The company must be based in Germany or has to have a branch office in Germany. The nationality of the team members is not important.
To facilitate the analysis and assessment of the business concept, the HTGF has defined a transparent four-step process. The process consists of:
- Business Plan
- Term Sheet
- Due Diligence
- Equity holding
If in the preparation of the business plan is needed the HTGF provides the support of an experienced coach or network partner (often a Business Angel).
At the end the decision concerning an investment is made by one of the three investment committees (each investment committee is focused on another technology).
Companies can receive up to 500,000 Euro Venture Capital in a first financing round. HTGF acquires 15% of the shares (nominal value) and gives a subordinated shareholder loan over a period of 7 years. The interest rates (currently 10 %) of the subordinated loan will exposed for 4 years in order to preserve the liquidity of the start-up.
The own capital contribution of the founding team should be 20 % (10% in the new federal states, including Berlin) of the investment sum of the HTGF. Half of these 20% (10%) can be financed by investors (Business Angels, regional seed funds , private or public investors).
Business Angels, seed funds and other investors are invited to be active as side- investors.
Further information: www.high-tech-gruenderfonds.de