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Financing, investment and government support
Government support
Does the government provide any incentives or support programmes to promote fintech innovation in your jurisdiction (eg, tax incentives, grants and regulatory sandboxes)?
No such incentives specifically focused on fintech innovation have been introduced by the government thus far. Nevertheless, the Federal Ministry of Economic Affairs has started a programme called INVEST under which angel investors can apply for a tax-free reimbursement of 20% of their investment if they invest more than €10,000 into a start-up. Further, the reimbursement is available for taxes paid on investment returns.
Some federal states (eg, Saxony-Anhalt) have also set up an innovation fund for start-up support.
Further, the European Union offers support through the European Investment Fund (EIF). For example, investments from angel investors can be matched by the EIF on a pari passu basis (ie, by the same amount) in order to incentivise angel investors and attract further investors.
Has the government concluded any international cooperation agreements to promote and facilitate the cross-border expansion of fintech businesses?
No.
Financing and investment
What private financing and investment schemes are available and commonly used for fintech start-ups in your jurisdiction?
Private finance and investment schemes in Germany are largely similar to common venture capital programmes worldwide. However, typical start-ups would go through a seeding phase, with angel investors stepping in. The venture capital funds then contribute at a slightly later stage and already have the exit in sight. One peculiarity with fintech start-ups is that traditional companies from the financial sector will often cooperate with fintech start-ups. This cooperation is rather long-term oriented (eg, banks seeking to participate in know-how and benefit from lean structures). Therefore, the whole structure of the investment schemes may be designed to endure. However, some start-ups have lately even abandoned the classical paths of financing and are using initial coin offerings instead to raise their capital.
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