3.9 Start-up funding for young entrepreneurs
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Entrepreneurs have access to a comprehensive range of support services during the start-up phase.
Access to information
The federal government (Bund) and the states (Länder) fund advisory services for start-ups (and company takeovers). The competent ministries are, at federal level, the Federal Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz, BMWK) and, at federal state level, the respective ministries in charge of economics and entrepreneurship.
Chambers of commerce and industry (Industrie- und Handelskammern), chambers of trades and crafts (Handwerkskammern) and local business development organisations (kommunale Wirtschaftsförderer) also offer extensive advisory services which young people can also advantage of.
BMWK runs a number of portals that help start-ups find the right funding options. These services are also aimed at young entrepreneurs.
- The funding database (Förderdatenbank) of the federal government offers an overview of the funding programmes of the federal government, federal states (Länder) and European Union.
- BMWK's business start-up portal provides information about starting up a business and lists the contact details of public bodies and institutions offering start-up advice.
- The National Agency For Women Start-Ups Activities and Services (bundesweite gründerinnenagentur, bga) has an information platform for young women entrepreneurs.
- The Gründerplattform also offers a wide range of information on issues relating to starting a business.
- The nexxt-change.org portal matches business owners interested in succession with young entrepreneurs.
Access to capital
BMWK supports young entrepreneurs and start-ups with a range of funding schemes. These include:
- the EXIST business start-up grant
- ERP start-up loans: low-interest loans from the European Recovery Programme for business and freelance start-ups and young enterprises for up to five years after their launch.
The Federal Office of Economics and Export Control (Bundesamt für Wirtschaft und Ausführkontrolle) supports young, innovative companies and small and mid-sized companies (SMEs) with a range of instruments:
- The "promoting entrepreneurial know-how" scheme (Förderung unternehmerischen Know-hows) contributes towards consultation costs for small and medium-sized businesses. The scheme will continue with a new funding directive from 1 January 2023, irrespective of the expiry of the framework guideline on 31 December 2022.
- INVEST contribution to venture capital (INVEST – Zuschuss für Wagniskapital) matches innovative young businesses with investors and encourages private investors, especially business angels, to offer these companies venture capital.
- The STARK programme supports projects that promote the transition process towards economic structures that are ecologically, economically and socially sustainable in coal regions. The funding guidelines require the participation of the federal state in which the project operates for each application.
The federal states also contribute towards consulting costs and/or provide free start-up advice for the pre-launch phase.
Deutsche Börse Venture Network® is an initiative by the German Stock Exchange that helps emerging growth companies take the step to go public. The network has expertise in capital market financing and contacts in the venture and capital market sector. It matches young, fast-growing enterprises with international investors to help them finance their growth effectively and build a broad network of contacts.
Business Angels Netzwerk Deutschland e.V. is the umbrella association of German private investors, who provide equity to young enterprises, and is funded by BMWK, among others. Alongside financial support, a business angel also assists the start-up with their expertise. Business angels usually become investors in the company. Other frequently used options are silent partnerships and convertible loans that can be converted into an investment at a later stage.
Access to EU funding
Germany participates in the European Employment, Social Affairs and Innovation (EaSI) programme. The programme aims to promote employment and social inclusion by improving access to and the availability of microfinance for micro-enterprises and people from socially vulnerable groups who want to start or expand their own micro business. It offers support to intermediary finance companies that provide funding for social enterprises or micro-loans for entrepreneurs.