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By Companisto

Digital Agenda Contradicted by Law on the Protection of Small Investors


Dear Companists,

The German federal government recently presented its digital agenda, according to which the increasing digitalization of all areas of society provides great opportunities: "We want Germany to be the #1 country in Europe in terms of digital growth."

To achieve this ambitious goal, the government plans to improve the conditions of start-up financing by creating a competitive environment for venture capital and crowd investments among other things. Indeed, this is long overdue, for there has been a lack of venture capital for German founders who could realize innovative business ideas for many years.

However, the recent draft of a law on the protection of small investors by the German federal ministry of finance and by the federal ministry of justice and consumer protection intends to do precisely the opposite and seriously jeopardizes start-up financing through crowdfunding. Several industry associations within the digital economy have come to this conclusion, for instance:

One of the main aspects criticized by these associations is that investments on equity-based crowdfunding platforms are not supposed to be made online anymore in the future. The draft of the law on the protection of small investors includes a provision that would require crowd investors to print out, stamp, and send to the crowdfunding platform an investor information sheet for each investment of 250 euros or more to become effective. An electronic process is not supposed to be permissible any longer.

This ignores the requirements of equity-based crowdfunding because the entire crowdfunding process takes place online. The process now proposed by the government thus contradicts the realities of the digital age and represents a move toward a different medium – even though the digital agenda intends to prevent precisely such unnecessary moves between different media. 

As a brief survey among crowd investors on Companisto and in social networks showed, 96.15 % of the participating investors disagreed with the requirement of having to sign an information sheet and preferred an electronic process instead.

The goals of the digital agenda are right and should be supported. If the digital agenda is meant to be more than just a statement of intent, proposed laws related to the digital industry must take the goals of this agenda into account as well. So far, however, this has not been the case.


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