If you’re ready to get started, check out the State of Baden-Württemberg’s Pre-Seed Program. We’re a pilot partner and are here to help you!
Who is this program intended for?
All young startups that want to grow rapidly and are looking for investors in 1–2 years. This approach can help bridge the financial gap until then and increase the company’s valuation, so that you’ll have to give up fewer shares later or be able to secure more funding.
Is the money being given away for free?
No, it’s a loan; 80% of it comes from the state, or rather, from L-Bank. The loan must be repaid after the pre-seed funding round—unless the L-Bank wants to convert it into equity, but that’s not very likely.
And what about the 20% from the lender (co-investor)?
We think it’s more likely that the co-investor will want to convert his loan into equity. After all, he’ll get at least 3%, even if the company performs even better. That’s his bonus.
What’s in it for the co-investor?
He enables the startup to receive a substantial amount of funding from the state, thereby strengthening the startup scene.
In doing so, he’s also doing something for our region.
Plus, you can get to know each other at your own pace before you commit. This way, the co-investor saves the money that would otherwise go to lawyers and tax advisors for a due diligence review.
In most cases, the co-investor certainly wouldn’t have put up the entire amount, but with a 20% stake, it’s just exciting to see what an interesting startup is up to—and the risk is significantly reduced.
And as a bonus and in recognition of his contributions, he receives a conversion option with a minimum of 3%, as well as a discount and preemptive rights.
How does this benefit us as a startup?
Money, of course, but also interesting partners whom you can get to know first and who will open a door or two for you.
Some protection against having to give up too many shares for too little money at the outset. The conversion option is capped at 10% each for the co-investor and L-Bank, for a maximum of 20%.
We’ll be there for you through thick and thin.
Does that cost anything?
Yes, of course—equity shares (for the co-investor and, if applicable, L-Bank) and your commitment. In addition, there’s a small flat fee for our services, approximately 3% of the total amount.
Is the program running?
The program is going great—larger companies, in particular, immediately realized how beneficial it is, and more than a third of the funding has already been allocated. So don’t wait too long!
… to be continued…
