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By Companisto

Proposed Law Contradicts Promotion of Start-ups



Dear Companists,

As mentioned before, the German federal government has recently drafted and published a law on the protection of small investors. This proposed law seriously threatens the future of equity-based crowdfunding in Germany. In this update, we would like to inform you about the developments since our last article.

The law on the protection of small investors (see here for more information) contradicts not only the recently presented digital agenda, but also the investment subsidy initiated by the federal government. The affected investors firmly reject the actions proposed by the federal government, and the German Crowdfunding Network has also commented on the draft of the law. Moreover, the unsatisfactory access to venture capital in Germany influences the country's international compatibility.


German Competitiveness Also Suffers from Unsatisfactory Access to Venture Capital

Incidentally, these regulations are being discussed against the backdrop of the latest Global Competitiveness Report 2014/15 by the World Economic Forum in Davos, which concluded that Germany's competitiveness has decreased, which is also due to unsatisfactory access to venture capital (Germany ranked 28th out of 144 countries). Furthermore, Germany also ranked 28th in regard to capital market access in the latest Doing Business Report by the World Bank, which constitutes a lower rank than in the previous year (when it ranked 24th). Equity-based crowdfunding was originally introduced to improve this situation.


Survey Results

You have dealt as much with the draft of a law on the protection of small investors as we have. This is reflected by your many comments, messages, and the large number of participants in our survey: More than 500 Companists have already participated. A clear 96.15 % majority of participants voted for an electronic version of the investor information sheet, and 81.66 % of participants were in favor of a maximum funding amount of more than 1 million euros. Thus, the latest draft of the law contradicts the interest of those involved.

We are still accepting participants; you can find the survey here (German only).


Reaction by the German Crowdfunding Network

The German Crowdfunding Network (GCN) has prepared a position paper (German only) on the proposed law, which was significantly influenced by Companisto. The German Crowdfunding Network is the industry association of the German-speaking crowdfunding scene and represents people and companies related to the subjects of crowdfunding and equity-based crowdfunding. This includes companies and organizations from Germany, Switzerland, and Austria – in other words, platform operators, investors, advisors, researchers, and campaigns as well as start-ups and providers of capital.

The position paper illustrates on 17 pages how dramatic the effects of the law for the young German crowdfunding industry would be if the law remained unchanged. You can find the paper here. In order to provide you with a brief overview of the position of the German crowdfunding industry, we have summarized the central ideas of the position paper below.


Summary of the Position Paper by the German Crowdfunding Network

The GCN considers the latest draft unacceptable and demands that both the executive and the legislative branch make changes to this draft in order not to threaten the German crowdfunding industry. These changes include in particular:

  • an increase of the threshold below which a prospectus for investment projects is required to at least five million euros
  • the abolition of the maximum investment per investor of 10,000 euros or a significant increase of this amount for natural persons and the introduction of opening clauses for legal persons and for investors who are particularly wealthy and able to bear risks
  • a complete abolition of the prohibition of advertising outside of business media
  • no requirement to manually sign and mail an investor information sheet
  • an extension of transitional periods after the law has been passed



The GCN is convinced that the crowdfunding industry – in close cooperation with other types of financing – will succeed in turning crowdfunding into a true driver of growth and ideas not just for start-ups but also for SMEs and industry. The GCN intends to work on achieving this goal together with the federal government and the parliament.


What You Can Do

You can also campaign for ensuring that crowdfunding and equity-based crowdfunding will remain attractive types of investment and early-stage financing for start-ups and real estate in Germany. Talk to friends and colleagues about this subject and use any contacts you may have to raise public awareness of it.

Do you have any other suggestions as to how the proposed law may be changed or any good points that have not been made yet? Let us know by emailing


Best regards,

The Companisto team


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