Participation Forms on Companisto

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All participation forms at a glance

7 minute read

Investments in startups and growth companies can be a lucrative investment. At Companisto, investors have the opportunity to choose from three different forms of investment. Depending on the type of investment, investors benefit either from a fixed interest rate or from a profit and exit participation. What forms of participation are there and how do they differ?

 

Participatory loans are loans with profit participation and exit participation. This means that the investor generates a return if the startup makes a profit or if the startup is sold (also known as an exit). The amount of the return depends on the participation rate and the invested sum. The minimum investment on Companisto for participatory loans is EUR 250.

Participatory loans are the most common means of crowd financing of startups. Financing rounds of between EUR 300,000 and EUR 2,500,000 can be carried out with this participation model. This form of equity crowdfunding is regulated by the Asset Investment Act (VermAnlG). As a result, investors are entitled to an Investment Information Sheet (VIB) in which all important details of the investment and the associated risks are listed. The maximum investment amount is legally limited to EUR 10,000 per investor.

The minimum term of the loans is seven to eight years. Participatory loans include lifetime participation. The participation agreements no longer require the Companists' participations to end at the end of the minimum term through termination by the startup. Investors can thus participate in the profits of the startups and in a possible sale of the company for the rest of their lives if they so choose. However, they still have the option of terminating their commitment after the minimum term has expired.

With participatory loans, investors do not become a co-owner of the startup; however, they participate in the startup's profits and exit proceeds as if they were co-owners. In the event of potential voting by investors on takeover or redemption offers, a pooling of voting rights takes place. Companisto has continuously refined this form of participation and brought it closer to equity capital as far as the legal framework permits.

 

Venture loans are a special form of participatory loans. Venture loans do not involve participation in profits and exits, but a fixed interest rate of up to eight percent. The interest is paid to the investor every six months. The minimum investment amount is EUR 250. With a term of three to four years, venture loans have a shorter term than participatory loans with profit and exit participation. At the end of the term, the company pays back the loan amount to the investor.

The venture loan is used for growth companies that are already generating significant sales. This participation model can be used for financing rounds of between EUR 300,000 and EUR 2,500,000. This form of equity crowdfunding is regulated by the Asset Investment Act (VermAnlG). As a result, investors are entitled to an Investment Information Sheet (VIB) in which all important details of the investment and the associated risks are listed. The maximum investment amount is limited to EUR 10,000 per investor.

Venture loans are also participatory loans with qualified subordination. If the company becomes insolvent, the lenders' claims are subordinated to the claims of senior creditors (employees, suppliers, banks, etc.). The investors do not become co-owners of the company. In the event of a possible vote on takeover or redemption offers, the investors' voting rights are pooled.

 

When it comes to investments in startups, professional investors have a preferred choice: equity investments. Business angels and venture capitalists use this investment model because it has advantages for investors and startups. It is the ideal way to finance growth for companies with a capital requirement of EUR 3,000,000 or more.

Companisto offers two forms of equity investments: Investments in limited liability companies (GmbHs) and investments in stock corporations (AGs). In both investment models, investors invest directly in the equity of the company and thus receive all ownership rights. This particularly includes voting rights in shareholder resolutions or at the general assembly of the stock corporation.

Both investment models allow investors to claim an INVEST grant of 20 percent under certain circumstances. The INVEST grant is a state subsidy program for venture capital investments and is awarded by the Federal Office of Economics and Export Control (BAFA). Investors who invest at least EUR 10,000 in a company's equity are reimbursed 20 percent of the investment amount by the state as a premium if the company is eligible for the INVEST grant.

 

The two participation models vary in some respects. Investments in limited liability companies (GmbH) are subject to the German Investment Act (VermAnlG). The investor not only receives an Investment Information Sheet (VIB) but also a more detailed Investment Prospectus with all the important details and risks of the investment. As a result, financing rounds of an unlimited volume are possible for growth companies. The maximum investment amount is also waived.

Companisto differentiates between two share classes for investments in limited liability companies: A-Shares (Angel investments) and B-Shares (Companist investments). Both A-Shares and B-Shares feature profit participation and exit participation so that investors achieve a return if the company generates profits or if the company is sold (also called exit). In both cases, the investor becomes a shareholder of the company and receives all associated ownership rights.

 

For A-Shares, the minimum investment is EUR 10,000. An A-Share investor is entered as a shareholder of the company in the commercial register by name. In shareholder voting, the A-Share investors pool their voting rights. Investments in equity interests of EUR 10,000 or more in companies that comply with the guidelines of the INVEST grant program receive a state subsidy of 20 percent.

The minimum investment amount for B-Shares is the price for one share in the limited liability company. The price of a GmbH-share, in turn, depends on the share capital of the company and the company valuation and can vary from case to case. A B-Share investor is not entered as a shareholder of the company in the commercial register by name. Instead, a trustee acts as a shareholder for all B-Share investors. A trustee pooling of the B-Share investors takes place during shareholder votes. The trustee exercises the voting rights of the B-Share investors. B-Shares are not subsidized by the INVEST grant program and cannot be converted into A-Shares.

 

Unlike GmbH investments, investments in stock corporations (AG) are subject to the German Securities Trading Act (WpHG), as the shares issued are securities. Investors receive a securities information sheet (Wertpapier-Informationsblatt, WIB) with all the necessary details of the investment opportunity. A securities prospectus is not required for AG investments, as the law allows stock corporations to raise up to EUR 8 million per year without a prospectus.

Investors who participate in an AG on Companisto become shareholders with full voting rights. The companies' share registers will be linked to Clearstream. Through the Clearstream connection, the shares will receive an ISIN (International Security Identification Number) enabling them to be held in any securities account at a bank or an online broker.

The minimum investment amount for AG investments is the price of one share. The price of a share, in turn, depends on the company's share capital, the company valuation and the number of shares issued and can, therefore, vary from case to case. The maximum investment amount for AG participations is EUR 10,000 per private individual. The voting rights of all investors who subscribe to shares of a company via Companisto are pooled.

 

 

 

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André Jasch
Please note
The acquisition of the offered securities and investments is associated with considerable risks and can lead to the complete loss of the invested assets. The expected yield is not guaranteed and may be lower. Whether it is a security or an asset investment can be seen in the description of the investment opportunity.
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