Startups Stack Exchange Archive

Government funding and financing in Germany?

We are starting a company in Germany. We are currently considering external financing. I was told that there are stately subsidized credit lines startups may apply for. Apperently there are quite a few, for example:

https://www.kfw.de/inlandsfoerderung/Unternehmen/Gr%C3%BCnden-Erweitern/

http://www.bmwi.de/DE/Themen/Mittelstand/Mittelstandsfinanzierung/gruendungsfinanzierung.html

I have three questions:

(1) How and where can I get an overview to all governmental subsidies/funds?

(2) What are the pros/cons to governmental subsidies?

(3) What are the general requirements to get funded by the German government?

Answer 5546

I think it is not that easy, to get a complete overview about such programs. There are programs not only by the federal government but also by the federal states' governments. Also, you have programs that might be generally in place, but are shut down for a period of time e.g. due to excessive request.

For example, there are programs by the Sächsische Aufbaubank in Saxony or the NRW bank which does funding in North Rine-Westfalia. Usually you should be able to get a consultation at those institutions about a suitable program.

There is also a program called Exist, which is mentioned in your link too and aims at funding startups from universities. This program lasts for about twelve month, and you get support in creating a business plan and can take consultations in business related questions, besides the basic income they pay you. This is relevant mostly for mixed teams of students and professionally experienced people.

A prerequisite might be, that you have a residence in Germany. But not sure about that, I am not an expert.

Answer 5556

I’m by no means an expert on Germany, but I do know quite a bit about how it works in the Netherlands, and applied for some subsidies in the past. Here are my lessons learned:

  1. (Most Important) Applying is by no means a guarantee, and you have to consider the throughput time. Here, it can easily take 6 months before your application is evaluated, and until it’s evaluated completely, there’s no guarantee whatsoever. In short, I always treat a ‘subsidy’ like a ‘bonus’, so I’m by no means dependent on it.
  2. Subsidies involve additional administration and therefore work. That’s not necessarily a bad thing - if you work as a professional, you need most of these things (project plannings, outcomes, research reports, etc) anyways, so you can use this fact to reflect if you’re producing the right things. Still, think about your willingness and ability to spend the extra time.
  3. Check prerequisites, if you should apply, etc - preferably directly at the source (e.g. call the government). Call them before you start writing anything: you can easily spend a month writing, while a phone call could have told you it’s not going to work or that you need to apply elsewhere.
  4. If you don’t know, hire an expert (Be picky! Best to invite a few companies over to pitch and ask similar questions). In the Netherlands there are a few good subsidy specialized companies, that help you with your application and help you set up the requirements with f.ex. the accountant. Especially if you don’t know what you’re doing (f.ex. for your first application), this can be a good idea.
  5. If you hire an expert, check their conditions. Be sure that you’re able to break the contract in limited time if it doesn’t work out. Also, personally I make it a habit to pay them a success-based fee (you can always re-negotiate if you intend to break the contract) - although that’s a matter of taste. Don’t be a cheapskate; it’s interesting what effect it can have if you promise them a higher percentage for less labour on your side – and as a starter you probably need all the time you need for building your company.

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