From now on, founders will receive start-up financing even earlier. Many founders lack the necessary financing, especially in the early start-up phase. As a result, innovative business ideas are often never realised. However, the state of Baden-Württemberg wants to change this in future.
WHAT IS THE START-UP BW PRE-SEED?
"We need a new risk culture to significantly boost start-up momentum. "We must therefore have the courage to break new ground when it comes to financing instruments." Economics Minister Dr Nicole Hoffmeister-Kraut said at the launch of the new programme.
The pre-seed programme is an important step for the promotion of start-ups in Baden-Württemberg. It supports innovative founders in the so-called seed phase. This is the phase in which an initial idea for a product or service exists. It is also the phase in which investors are often cautious. This is because the risk for the capital invested is very high.
The state of Baden-Württemberg would therefore like to support start-ups with 14 million euros in 2018 and 2019. The funds will be awarded in close cooperation with experienced accelerators, incubators and start-up initiatives. "Start-up BW Pre-Seed" is modelled on the successful Israeli early-stage funding programme.
Each company will receive between 50,000 and 200,000 euros. The mezzanine financing instrument will be granted without the usual bank collateralisation. One fifth (20%) is to come from investors. The majority (80%) will be provided interest-free by the state. The transaction will be handled by the L-Bank (the state bank for Baden-Württemberg).
A CALCULATION EXAMPLE
The start-up will receive funding totalling 200,000 euros. The state funds provided for this amount to €160,000 (80%). The state will provide €20,000 of this as a grant (non-repayable). Convertible loans from programme partners, business angels or venture capitalists in the amount of €40,000 (20%).
The state grant contains a repayment proviso and conversion options for the remaining amount. It is repayable after two to five years, provided the company has sufficient liquidity. The start-up's repayment right amounts to an interest rate of 20% per year within the first 12 months. There is also a conversion right in the event of a valued financing round.
The aim is to promote young start-ups based in Baden-Württemberg. They should be growth-orientated and demonstrate an above-average degree of innovation. During the support programme, the start-ups must develop a business model. They should also bring goods or services to market maturity. At the same time, the business model must be ready for financing.
WHICH START-UPS HAVE ALREADY RECEIVED PRE-SEED?
In 2018/2019, many start-ups have already received financing commitments of €200,000 each. The following start-ups can therefore also look forward to a successful financing round:
- the innoWerft startup & photovoltaic experts from BRC Solar
- the wedding photo service imiji
- the software start-up nesto
WHO ARE THE START-UP BW PRE-SEED PARTNERS?
innoWerft joins forces with the Mannheim start-up centres and the Heidelberg Technology Park as project partners. "Together, we want to promote start-ups and give them the tools they need," says Thomas Lindner, Managing Director of innoWerft. "Especially in the initial phase, it is important for start-ups to have a strong partner at their side that they can rely on." Lindner continues.
The Up2B Accelerator is being realised together with partners from Heidelberg and Mannheim. Up2B is a programme funded by the state and the EU. Short-term programmes are carried out to prepare for the first investment. The Start-up BW Pre-Seed Programme is primarily aimed at successful Up2B Accelerator participants. However, the programme is also available to other start-ups in the project partner network.
THE UP2B PROGRAMMES ARE:
- Breakthrough | For young start-ups | 20.04.-29.05.2020
- Product Booster | For advanced start-ups | Date to follow
- Fire Camp | For market-ready start-ups | 22.06.-26.06.2020
WHAT ROLE DOES INNOWERFT WALLDORF PLAY IN THIS?
innoWerft is a Start-up BW Pre-Seed support partner accredited by the state of Baden-Württemberg. We were able to be involved in the development of the model at a very early stage and contribute our own ideas. In addition, innoWerft can act as a co-investor for suitable start-ups. Whether as a co-investor or support partner, innoWerft works completely free of charge. Because every euro of financing goes to the startup.
HOW DOES THE PROGRAMME WORK WITH THE INNOWERFT?
The founders contact us at innoWerft. We check whether the start-up project is suitable for Start-up BW Pre-Seed and explain the financing instrument in more detail. If the programme is suitable, we work with the start-up to find a suitable co-investor. This is because 20% of the financing must come from a third party. This can be innoWerft, a business angel, a fund or a bank. However, it must be someone who is not directly connected to the startup. We finalise the documents together and send them to L-Bank. A decision is made there quickly and easily.
WHY IS START-UP BW PRE-SEED ATTRACTIVE FOR STARTUPS?
It's quick, it's uncomplicated and financing of between €50,000 and €200,000 is possible. 20,000 of this is even a grant. The rest is a very attractively structured convertible loan. It can be used to finance start-ups that are not yet ready for traditional start-ups. Just pre-seed.
Talk to us, we look forward to seeing you!
FURTHER INFORMATION ON START-UP BW PRE-SEED:
- Press release from the Baden-Württemberg Ministry of Economic Affairs, Labour and Housing
- Presentation of the Start-up BW Pre-Seed pilot programme
- Information sheet for interested co-operation partners