INVEST - Grant for Venture Capital


This entry is an excerpt from the OECD’s International Compendium of Entrepreneurship Policies (2020), which contains 16 case studies from 12 OECD countries. The Compendium examines the rationale for entrepreneurship policy, presents a typology of policy approaches and highlights principles for policy success. Case studies span policies for regulations and taxation, entrepreneurship education and training, advice and coaching, access to finance, internationalization, innovation, and holistic packages for ecosystem building. (OECD Publishing, Paris,


The programme aims to increase the amount of private venture capital available to start-ups by reducing risks and creating incentives to investment for business angels. This is expected to help start-ups find investors more easily.

The Investment Grant for Business Angels (INVEST – Zuschuss für Wagniskapital) offers a lump-sum participation in investments in innovative start-ups. The investment grant is not repayable if the start-up fails. The grant amounts to 20% of venture capital investments that remain for more than three years in a start-up.

Since 2017, the programme also includes an Exit Grant (Exitzzuschuss). The Exit Grant amounts to 25% of the profit made when selling the shares. It aims to compensate the taxes to be paid on the capital gains upon exiting.

The grant is capped at 80% of the initial purchase price: the total amount received (Investment Grant and Exit Grant combined) may thus not exceed 100% of the initial investment price. The Office for Economic Affairs and Export Control (BAFA), a federal agency in charge of export control and economic development, with a focus on SMEs, manages the implementation of the INVEST programme.

The programme supports start-ups in search of investors by offering a certification to existing young firms and new start-ups eligible for INVEST funding. The certified start-ups can register to be listed in a dedicated database to make it easier for potential investor to find them. The listing includes basic information on the firm and its business concept as well as contact information. Potential investors can search the database by multiple criteria, including sector, location, firm size and investment requirement.

The programme is organised along three steps. First, entrepreneurs apply for certification online.9 Second, the investor applies for the Investment Grant before the investment agreement is finalised. Third, once the shares have been purchased, the investor requests the payment of the Investment Grant for a value of 20% of the investment.

Finally, investors applying for an Exit Grant can receive their non-taxable reimbursement upon presentation of proof of selling their shares after the three years holding period.


Federal Ministry for Economic Affairs and Energy (BMWi)

Federal Office for Economic Affairs and Export Control (BAFA), one of the six agencies of the BMWi


To be eligible for the programme, an investor must be a natural person or invest through a specialised small limited liability company. The investment grant can be used only to acquire newly issued shares with the investor’s own money or through a convertible loan. Follow-up investments after a first INVEST-supported investment are also eligible. The minimum holding period is three years and the maximum is ten. The Exit Grant is limited to natural person investors investing directly (i.e. not through a GmbH or UG).

To be eligible for INVEST certification, firms must be new or have been operating for less than seven years and have less than 50 employees. Their turnover must be under EUR 10 million and they must be present in Germany and headquartered in the European Economic Area (EEA). They should demonstrate innovativeness. Finally, the firm must remain active for a year after the investment is made, or should become active no later than one year after the investment is complete for new firms.



Changes were implemented starting in January 2017.


An evaluation of the programme was conducted in 2016. It involved an online survey comparing INVEST-supported investors and investors who have never participated in the INVEST programme. Interviews with experts of the German capital market were also conducted. A control group approach was used to estimate differences in investment volumes between participant and non-participant firms.

Quantitative key performance indicators (KPIs) measured included:

• Grant amount
• Average equity volume by INVEST-supported investors
• Average equity volume by other investors
• Total equity volume received as compared to non-INVEST firms


The 2016 evaluation of INVEST found that the programme successfully incentivised new investors to get involved in new innovative firms. Investors who previously were not active in supporting innovative entrepreneurs invested an estimated EUR 14.3 million through the programme, representing 30% of all investors who used INVEST. Among these, 21% were altogether first-time investors. The programme also increased investment from experienced investors. The evaluation estimates that 88% of the INVEST supported investment constituted additional capital invested in young innovative firms and that each euro invested through the programme generates another EUR 0.50 of investment.

The evaluation found that the firms that received INVEST-supported investment tended to have founders with higher qualifications and to be more growth- and innovation- oriented than those that were funded outside of the programme. However, the evaluation found that participation in the INVEST programme was initiated by firms looking for investors rather than the opposite, suggesting that these firms did not organically find investors and the programme successfully extended funding opportunities to new firms rather than those that would have been funded anyway.

The companies that received INVEST-supported investment tended to receive higher amounts of funding that those who did not. The advantage was higher for the firms with very low capital requirements: firms that received EUR 2 000 or less received on average 38% more funding if they were funded through INVEST than otherwise.

In terms of implementation, the evaluation found that both investors and companies found the process to be efficient with low red-tape. The administrative cost of the measure was estimated to be low, at 2.54% of the budget.

The evaluation found that awareness of the programme was limited outside of angel networks: 80% of the investors interviewed who did not use INVEST did not know about the programme.

Recommendations included a simplification of the application process, and of the legal examination of company contracts. The evaluation also recommended extending the programme to other legal forms and business purposes for business angels as well as extending the programme to follow-up investments. It also recommended expanding company eligibility to other sectors and increasing outreach.

Following the evaluation, changes were introduced in the programme, including:

  • A doubling of the eligible investment amount to EUR 500 000 per year and an increase of the maximum subsidy an investor can receive from EUR 80 000 to EUR 100 000 per year;

  • The introduction of an Exit Grant;

  • The extension of eligibility to UG companies (previously only GmbHs);

  • The extension of eligibility to follow-up investments;

  • The extension of eligible investments to convertible loans;

  • The broadening of the innovation criteria to include previously excluded sectors.

The evaluation did not assess INVEST’s sustainability, given the short time elapsed since the programme’s start. Similarly, the evaluation states that impact of the INVEST programme on growth and innovation could only be assessed in subsequent exercises, 8 to 10 years after the programme’s inception.


No significant challenges were encountered aside from the limited awareness of the programme among business angels. However, several changes were implemented in the programme in 2017 to improve attractiveness and foster sustainable investment in successful young firms, as described above.

Lessons for other ecosystems:

The evaluation found that the INVEST programme successfully reached the type of start-ups (innovative with growth potential but having difficulties securing funding) that it endeavoured to support without conducting any assessment of firms beyond the eligibility criteria. This was identified as a strength for the programme as it suppresses the need to develop extensive business expertise in-house, leaving investors free to select their investments limiting disruption on the finance market.

Based on INVEST’s initial evaluation, the following lessons could inform the development of similar programmes:

  • Programmes should consider setting a minimum holding period for subsidised investments. This was identified as a success factor by the evaluation.

  • An important factor for attracting for first-time investors was the possibility to co-invest with experienced investors, which facilitated firm selection.

  • Programmes should develop a multi-prong outreach strategy. The evaluation of INVEST found that there was little awareness of the programme outside of angel networks, and that outreach would need to use a variety of channels as the target group (non-organised investors) is very diverse. Tax and financial advisors could be used as multipliers to raise awareness of similar schemes.

  • Programmes should endeavour to minimise red tape and simplify the application process. This may include allowing for online applications and ensuring clear communication on eligibility criteria and limiting systematic checks as much as possible.

  • Programmes should focus on young firms, as older firms with more extensive track record and finance history are less affected by the information asymmetry that puts younger firms at a disadvantage when seeking funding.


Global Entrepreneurship Network
United States
Global Entrepreneurship Network
United States