1) German law makes equity crowdfunding almost impossible due to strict regulations around prospectus obligations, advertising restrictions, and investor identification for small investors. 2) Debt-based crowdfunding is a better investment model in Germany for deals under 2.5 million Euro due to lower regulatory requirements compared to equity deals. Debt deals allow for a simpler and faster capital funding structure. 3) Data from crowdfunding platforms in Germany from 2011-2017 showed over 100 companies were successfully funded for over 45 million Euro, generating over 300 million Euro in annual revenue and 12% average growth, though 16 companies did declare bankruptcy.

1. JOHANNES RANSCHT
CHIEF EXECUTIVE OFFICER
DEBT VS. EQUITY
CROWDFUNDING: A GERMAN
PERSPECTIVE.

3. 19.02.18
è
KLEINANLEGERSCHUTZGESETZ (SMALL INVESTOR
PROTECTION LAW) IN CONNECTION WITH
VERMÖGENSANLAGENGESETZ (INVESTMENT LAW)
ŸPROSPECTUS OBLIGATION
ŸADVERTISING RESTRICTIONS
ŸDIFFICULT INVESTOR IDENTIFICATION
è
EQUITY CROWDFUNDING IS ALMOST IMPOSSIBLE

4. INVESTMENT MODEL
è Depending on the capital requirements
LOAN (Subordinated)
BOND
< 2.5 Million €
> 2.5 Million €
Less regulatory requirements
Under investment law
Less risk
Full risk
Simple and inexpensive structure
Prospectus obligation
Fast capital funding
Difficult drawing process

5. Fixed interest rate of
8 % p.a.
One-time bonus
at the end of contract
as a „venture kicker“
Exit participation or
performance-related
bonus interest
Profit-related, annual
bonus when break-even
is reached
INVESTMENT MODEL LOAN
SEED INVESTMENT
VENTURE DEBT

6. 19.02.18
Seite 6

10. èMore than 100 companies succesful funded
èMore than 45 million € capital raised
èMore than 300 million € in annual revenue
èMore than 12% growth p.a.*
è16 companies went bankrupt
DEVELOPMENT PORTFOLIO COMPANIES
*consolidated analysis 2011-2015; loss through insolvency included

11. Fixed Interest
Fixed Interest +
Bonus
Equity Equivalent
Crowdinvesting SME in Germany
Growth 2011 - 2017
*Data was provided by crowdfunding.de

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Seite 12
WHAT WOULD HAVE BEEN WITHOUT
STRICT REGULATIONS?

13. Johannes Ranscht
j.ranscht@seedmatch.de
www.seedmatch.de
www.facebook.com/seedmatch
www.twitter.com/seedmatch
www.youtube.com/seedmatch