Applying for the INVEST Grant: 15 Percent from the Government If You Follow the Steps in Order

Business angels who invest in a young, innovative company can have 15 percent of the investment amount reimbursed by the government, tax-free in Germany. But the deadline is approaching: under the current funding guideline, complete applications for this acquisition grant must reach Germany’s Federal Office for Economic Affairs and Export Control (BAFA) by the end of 2026, and whether the program will continue after that is an open question. The INVEST grant also comes with strict rules, and a single step taken too early can cost investors the grant. In a masterclass in June 2025, Sarah Buge and Hajredin Xhaka of Companisto explained what investors need to watch for.

An investor puts €20,000 into a startup. If BAFA approves the application and all requirements are met, the agency transfers €3,000 to the investor months later, tax-free. But if the investor signs the investment agreement or pays the investment amount before the application reaches BAFA, they get nothing. In every case, the agency checks whether the application arrived before the payment, “even down to the minute,” Sarah Buge said in the Companisto masterclass “INVEST-Zuschuss für Startup-Investments” (“The INVEST Grant for Startup Investments”).

The INVEST grant, officially “INVEST – Zuschuss für Wagniskapital” (“INVEST – Venture Capital Grant”), is meant to encourage private individuals to provide venture capital to young, innovative companies. The program, run by Germany’s Federal Ministry for Economic Affairs, has existed since 2013. It has two parts: the acquisition grant (Erwerbszuschuss) when an investor buys in, and the exit grant (Exitzuschuss) when the shares are later sold at a profit.

What the acquisition grant is worth

The acquisition grant is 15 percent of the issue price of the shares, including any share premium (Agio). On €20,000, that comes to €3,000. There is no legal right to it; BAFA decides case by case, and only within the limits of available funding.

According to BAFA, the grant is tax-free (Section 3 No. 71 of the German Income Tax Act, EStG); this refers to German income tax. Anyone who is subject to tax in another country, Austria for example, should have the tax treatment in that country reviewed. All investors should ask a tax advisor whether to report the investment on their tax return at the full amount or net of the grant. Companisto is not allowed to comment on this for legal reasons, Xhaka explained in the Q&A session.

Several limits apply to the funding:

• Minimum amount: An investor must put at least €10,000 into a company. If the money is paid in tranches tied to the startup’s milestones, each individual payment must reach this amount.
• Cap per investment: The grant covers no more than €333,333.33 per individual investment, which corresponds to a grant of €50,000.
• Cap per person: Across all investments, each private individual receives no more than €100,000 in acquisition grants. All acquisition grants approved or paid out since 2013 count toward this cap.
• Cap per startup: For each company and calendar year, BAFA approves no more than €450,000 for all investors combined, which corresponds to investments of €3 million. It processes applications in the order in which they are received in complete form.

The deadline for the acquisition grant is December 31, 2026

The current funding guideline, dated March 6, 2024, is time-limited. For the acquisition grant, the startup’s and the investor’s applications must reach BAFA in complete form by December 31, 2026, each with the supporting documents the application form requires. The guideline calls this an exclusion deadline (Ausschlussfrist), and BAFA does not process applications submitted after it. For an investment in the final weeks of the year, that means the application must, as always, be filed before the investor signs and pays, and it must be complete by year-end. And because the startup has to file its application first, time can get tight in funding rounds that don’t begin until late in the year.

For applications received in complete form by December 31, 2026, the guideline and the approval notice continue to govern after 2026, covering supporting documents and payout as well as the holding period and reporting obligations. Private individuals can still apply for the exit grant until June 30, 2037, provided the other requirements are met.

Whether the acquisition grant will continue after 2026, and on what terms, is an open question. As of October 19, 2026, no extension or successor program had been published on BAFA’s website or in the federal government’s funding database. The terms have changed several times in the past. For a long time, the grant rate was 20 percent; in February 2023 it was raised to 25 percent, and since March 2024 it has been 15 percent. Investors should therefore check the current terms on BAFA’s website before every investment.

Who is eligible

The acquisition grant is open to private individuals of legal age whose primary residence is in the European Economic Area (EEA), meaning the EU, Iceland, Liechtenstein, or Norway. People whose primary residence is in Switzerland are not eligible, not even through a holding company. The shares must be acquired in the investor’s own name, for the investor’s own account, and with the investor’s own money; debt financing such as a loan is not allowed.

First investment only: The grant covers only an investor’s first investment in a given startup. Anyone who already holds shares in the company, directly or indirectly, gets no grant for additional shares, even if they did not apply for one the first time. A previous loan that is not a convertible loan, on the other hand, does not stand in the way of a grant, Buge said. That is consistent with the guideline, because the investor does not acquire any shares with such a loan. However, the new investment must not be used to repay the loan or convert it into equity; the money has to come on top of the loan.

Anyone who personally subscribed to shares in a public round of a stock corporation (AG) and still holds them already has a direct stake; in that case, there is no acquisition grant for another investment in the same startup. Anyone who acquired profit participation certificates (Genussscheine) through a special purpose vehicle (SPV) in a funding round of a limited liability company (GmbH) is not a shareholder of the startup, but should ask BAFA before applying whether it regards this as an indirect stake. In the application, the investor must disclose any previous stakes in the company, as well as past and planned payments from the startup to the investor, such as interest on a loan.

No connection to the startup: Anyone connected to the company, for example as an employee, is excluded. The grant is meant to reward risk-taking, Xhaka explained. Employees of a startup may have information that outsiders don’t, he said, so their risk is “maybe not really as big as that of investors who truly have no connection.” On this point, he said, BAFA is “very strict.”

Under the guideline, people considered connected include anyone who

• is employed by the startup or belongs to its management;
• receives fees from the startup or its shareholders for office, management, consulting, advertising, or sales services that exceed €10,000 in a calendar year or half of the investment amount in total;
• holds more than 25 percent of the shares or voting rights.

Under the guideline, other services for the startup do not disqualify an investor as long as the compensation is reasonable and necessary; BAFA decides how an activity is classified. An investor is also considered connected if a close relative meets one of these conditions. Close relatives include, above all, spouses and civil partners, siblings, and lineal relatives such as parents and children. The rules apply from two years before the investment until the end of the three-year holding period. Being a customer of the startup, by contrast, is no obstacle.

Investing through a holding company

An investor’s own holding company, often called a business angel GmbH or UG (entrepreneurial company with limited liability), can also apply for the acquisition grant, as can a comparable company from another EU country, such as an Austrian GmbH. To do so, it must meet several conditions:

• It has no more than ten shareholders, all of whom are natural persons.
• Its business purpose includes acquiring and holding equity stakes; beyond that, only asset management and advisory services are permitted.
• It has its registered office in the EEA, and all of its shareholders also have their primary residence there.
• The requirements for investors apply to the company and to all of its shareholders, with one exception: it is enough for at least one shareholder to be of legal age. Neither the company nor any of its shareholders may be connected to the startup or already hold shares in it.
• The investment is financed without debt, and shareholder loans also count as debt for this purpose.

In that case, the company is the investor. As Xhaka explained, the company becomes a shareholder of the startup, not its individual shareholders. But BAFA looks closely at who is behind the company, Buge added. The grant counts toward the shareholders’ personal caps, as a rule in proportion to their stakes in the company. Holding companies do not receive the exit grant; it is reserved for private individuals.

A case Xhaka described shows how strictly BAFA applies the rules. An investor had already used up his €100,000 cap and wanted to apply for another grant through a GmbH he held together with his daughter and son, Xhaka said. When Companisto asked, BAFA said no, according to Xhaka, even though the children together held more shares than their father and had never applied for a grant. Whether a shareholder holds 1 percent or 90 percent makes no difference, Xhaka said: “As soon as one of them has used up [their cap], that’s it. At least for that company.” The guideline provides for this as well. If one shareholder reaches their cap, BAFA approves the grant for the company only up to that limit, or rejects it.

New shares only, and only directly

The grant covers the direct acquisition of newly issued shares, meaning shares in a GmbH or UG or shares in an AG, in exchange for a cash contribution or through the conversion of a convertible loan. The shares must participate fully in the company’s risk. Arrangements that reduce the investor’s risk, such as a commitment to buy back the shares, are not permitted; market-standard liquidation preferences and anti-dilution clauses, on the other hand, are allowed if they apply equally to all external investors in a round. Newly issued preferred shares (Vorzugsaktien) are not eligible. There is no grant for shares an investor buys from another shareholder; that also applies to purchases on the secondary market. Indirect stakes, for example through a special purpose vehicle, are also excluded.

At Companisto, the INVEST grant is available only in eligible Angel Club rounds. In these rounds, business angels invest at least €10,000 directly in the startup and become shareholders themselves. In the second, public phase of a funding round, in which investors come in with smaller amounts, the grant is not available at Companisto, regardless of whether the startup is a GmbH or an AG. In GmbH rounds, investors in this phase invest through a special purpose vehicle and receive profit participation certificates; they do not become shareholders of the startup. Through such a vehicle, investors hold only an indirect stake, Xhaka explained. In AG rounds, investors in the public phase also become shareholders themselves; their voting rights are pooled.

Which startups qualify

Not every startup is eligible. But the vast majority of companies that people invest in through Companisto are, Buge said. Among other things, the funding guideline requires that the company

• is no more than seven years old, counting from its entry in the commercial register;
• is a small enterprise, meaning it has fewer than 50 full-time employees and annual revenue or total assets of no more than €10 million;
• has its headquarters in the EEA and a registered branch or permanent establishment in Germany;
• operates mainly in an innovative sector;
• has received no more than €15 million in risk capital in total, including the current funding round.

Sectors explicitly listed in the guideline, such as IT services, mechanical engineering, or the pharmaceutical industry, count as innovative. Companies in other sectors can demonstrate that they are innovative, for example with a patent, public research funding, or, if BAFA requests one, a short expert report. BAFA reviews whether the startup meets these conditions when the startup applies; the confirmation is valid for one year. It is not a seal of approval. According to the funding guideline, in determining eligibility, BAFA assesses neither the quality nor the safety of an investment.

On Companisto, eligible funding rounds are marked with a note about the INVEST grant and the INVEST logo. There are two variants. “Eligible” means that BAFA has already confirmed the startup’s eligibility; that is the norm. Less often, the label says “Pending.” In that case, the startup has filed its application and the review is still underway. Buge advised investors to file their own application regardless of the status, since they can do so before the decision on the startup is in. The confirmation usually comes later, she said. If it never comes, there is no grant, even if the investor has already signed and paid. Even when the startup is confirmed, the investor must also meet the requirements.

Apply first, then sign and pay

The process runs online through BAFA’s application portal and follows a fixed sequence:

• The startup applies to BAFA for confirmation of its eligibility.
• Next, the investor files an application for the acquisition grant, citing the company’s application number. If facts that the form designates as material to the subsidy (subventionserheblich) are stated incorrectly or incompletely, the investor risks having the grant denied or reclaimed; the investor may also be criminally liable for subsidy fraud, in some circumstances even for gross negligence (Leichtfertigkeit).
• Only then may the investor sign the investment agreement, a declaration of subscription (Übernahmeerklärung), or a subscription form (Zeichnungsschein) and transfer the investment amount. The investor does not have to wait for the approval notice. But anyone who signs and pays before the notice arrives bears the risk that BAFA will reject the application.
• If BAFA approves the application, the notice is generally valid for three months, or for 24 months for payments in milestone-based tranches and for convertible loans. Within this period, the investment must be completed, and it is up to the investor to submit to BAFA the supporting documents listed in the notice, including proof of payment, the startup’s confirmation that it received the payment, and the contracts. This deadline cannot be extended. If the investor misses it, the grant is forfeited. If the investment does not go ahead, or goes ahead with a different amount than the one applied for, the investor must inform BAFA without delay.
• Once all documents have been received and the requirements are met, BAFA pays the grant into the investor’s account. The payout is 15 percent of the amount the investor actually paid to the startup and documented, but no more than the sum stated in the notice.

How it works at Companisto

Companisto has built the application step into its digital investment process. In the Angel Club, investors first state in a bidding process how much they would like to invest; the investment agreements are not drawn up until after that. Later, investors adjust their bid to the actual investment amount and are forwarded to BAFA’s online application; Companisto provides the information needed to fill it out. At several points, the platform uses a checkbox to ask whether the application has been filed, and only then do investors receive the payment details. Investors should likewise wait until their application has reached BAFA before signing investment documents, subscription forms, or powers of attorney for the capital increase. Because there is no direct interface with BAFA, Companisto cannot verify whether an application has actually been received; the checkbox is meant to keep anyone from overlooking the step. Responsibility for filing a timely and complete application remains with the investor.

Companisto compiles the paperwork BAFA requires as proof: the investment documents and the articles of association, statements from the escrow account at secupay AG into which investors’ payments are made, and the founders’ confirmations that the payments were received. The documents are uploaded to the investor’s Companisto account under “My Account” in the “My Documents” section; investors also receive an email. Investors must submit them themselves, together with their own proof of payment and within the deadline set in their approval notice. Companisto provides the documents as quickly as possible, Buge said, and if questions come up, the team helps by phone, email, or Zoom. If the deadline is getting tight, investors should get in touch early.

Follow-up questions from BAFA

BAFA always sends follow-up questions to the investor, never to Companisto, Buge said. Questions about the investor personally or about the investment itself must be answered by the investor, she said. The team helps with questions about documents Companisto has provided, meaning notarial documents, the shareholder list, or the escrow account statements. If a query concerns several investors in a round, the platform prepares the answers and sends them to BAFA and to everyone affected, according to Buge; Companisto also posts an update in the startup’s communication ticker.

Waiting for the payout

When Buge started at Companisto almost five years before the masterclass, it took about three to six months for the money to arrive, in her experience. In June 2025, she put the wait at six to twelve months. At that point, applications from May and June 2024 were in final processing, a good year after they were submitted, Xhaka added. “It’s a government agency; the wheels turn slowly,” Buge said. The grant is paid only once BAFA has approved the application, all requirements are met, and the supporting documents have been submitted on time.

Hold for at least three years

Anyone who receives the grant must hold all of the funded shares for at least three years. The holding period begins when the shares are acquired. In a capital increase, what counts, according to Xhaka, is the entry in the commercial register following the notary appointment; BAFA requires this entry as proof. And BAFA does check. According to Xhaka, BAFA requests proof every year, first from Companisto or the startup, and in the third year from the investor as well.

The investor must notify BAFA without delay of important changes, such as a move, a sale of the shares, a change in the startup’s sector, a resolution to dissolve the company, or an insolvency filing; anyone who fails to disclose changes that must be reported may be committing a criminal offense. After the three years are up, the investor must confirm in writing within three months that they owned the shares the entire time and complied with the conditions of the notice; if the investor fails to do so, BAFA can reclaim the grant. Records and contracts must be kept for five years after the holding period ends.

If the investor sells or transfers the shares earlier, for example in an exit, as a gift, or by contributing them to their own holding company, the investor generally has to repay the grant with interest. There is an exception for cases in which the startup has to shut down. If the company is wound up because its business model has failed and none of the investors receives any money from the liquidation, BAFA does not reclaim the grant. The agency generally assumes this is the case if insolvency proceedings are opened, or if the conditions for opening them were already met when a resolution to dissolve the company was adopted.

BAFA can, however, reclaim the grant if the startup stops meeting the eligibility requirements during the three years, for example if it is no longer active in an innovative sector or no longer has a branch in Germany. That applies even if the investor has no influence over it, because the notice is subject to this condition.

The exit grant and its cap

Private individuals who have received the acquisition grant are in principle also eligible for the exit grant if further conditions are met; they must apply for it separately after the sale. The exit grant is 25 percent of the capital gain, meaning the difference between the sale price and the issue price. It is intended as a flat-rate offset for part of the taxes due on the gain and, according to BAFA, is also tax-free. However, BAFA reports the payment to the investor’s tax office.

The requirements at a glance:

• Only private individuals may apply. For the shares sold, they must have received an acquisition grant that was applied for after January 1, 2017, and their primary residence must be in the EEA when they apply. If BAFA has reclaimed the acquisition grant, or there are grounds for doing so, there is no exit grant.
• The sale takes place no earlier than three years and no later than ten years after the acquisition, under a contract executed before a notary, and not to relatives or to companies controlled by the investor or the investor’s relatives.
• The gain is at least €2,000.
• The application reaches BAFA no later than six months after the purchase agreement is signed, together with proof that the purchase price has been paid. Only the amount stated in the purchase agreement counts as the sale price, and only to the extent that it has actually been paid by the time of the application; later payments, for example from an earn-out or a purchase price holdback, are not taken into account.

The exit grant is capped at the amount of the acquisition grant the investor received for the shares sold. It will never be higher, “even if, on paper, it could be higher,” Buge stressed. And because startup exits often take many years, the ten-year limit can also cost investors the exit grant.

A worked example with €20,000

In the masterclass, Buge walked through a hypothetical example; it does not account for taxes on the gain. An investor puts €20,000 into an eligible startup. After three years, the company is sold, and the investor receives €100,000 for the shares.

Together, the two grants come to €6,000 in this case, or 30 percent of the original investment. At the current grant rate, the cap is reached as soon as the gain equals 60 percent of the funded investment amount, which in the example is €12,000; any gain beyond that no longer increases the exit grant.

The example describes a very favorable outcome; whether and when an exit happens is uncertain with startups. If the startup fails, the investor can lose the entire €20,000. If the company is then wound up, for example after insolvency proceedings, the investor can generally keep the acquisition grant; before taxes, the net loss is €17,000. There is no exit grant in that case.

The bottom line

The INVEST grant can make startup investments considerably cheaper. If BAFA approves the application and the supporting documents are submitted on time, investors receive a grant of 15 percent of the investment amount when they buy in, tax-free in Germany; after a successful exit, private individuals can, subject to further conditions, receive up to the same amount again. The application for the acquisition grant must be filed before the investor signs and pays, and it can take a year or more for the money to be paid out. Under the current guideline, investors can apply for the acquisition grant only until the end of 2026; no successor arrangement has been announced so far. Even so, the deadline alone is no reason to make an investment sooner. Whether an investment is worthwhile depends on the startup; the grant only improves the math.

At Companisto, the investment process leads investors to the BAFA application before it is time to pay. Investors who want to use the grant receive the payment details only after confirming that their application has been filed. The platform compiles the investment documents, escrow account statements, and payment confirmations that BAFA requires as proof. But the application and the deadlines remain the investor’s responsibility, and BAFA alone decides on the grant.

The grant does not change the risks of the investment itself. It reduces the investor’s own outlay, but the money invested can be lost entirely. Startup shares are also usually difficult to sell, and anyone who has received the grant would generally have to repay it after a sale within the first three years. It often takes many years to reach an exit. Investors should therefore invest only money they can spare for the long term and spread it across several investments.

Note (as of October 19, 2026): This article is based on the Companisto masterclass of June 24, 2025, and on the INVEST funding guideline of March 6, 2024. Only the applicable funding guideline and BAFA’s decisions are authoritative; there is no legal right to the grant. This text is for general information only and does not constitute legal, tax, funding, or investment advice. Investing in startups involves considerable risks and can result in the total loss of the capital invested.