4. Investment
◈ Investing: the act of placing
money, effort, time, skills
into an activity with the goal
of generating income or
appreciation
◈ Investor: The individual (s)
who invest
◈ Investment: An endeavor
undertaken by an investor(s)
https://www.wallstreetmojo.com/invest
ment-examples/
8. ● German industry’s annual spending on R&D
reached approx. 62.8 billion euros in 2016
● Industry = Over than ⅔ of R&D activities in
Germany
Key areas of investment in Germany
1. R&D investment
11. Investment grants in Germany
Investment grants: non repayable cash incentives provided by the government to
a firm to reduce its costs of production
12. Gemeinschaftsaufgabe Verbesserung der regionalen
Wirtschaftsstruktur (GRW)-Joint Task for Improving Regional
Economic Structures
;
Aim To strengthen investments within structurally weak German regions
Donor Federal Ministry for Economic Affairs and Energy
Calculation
basis
EU commission sets a GRW incentive map for a funding period
Current GRW map is valid from 07/2014 till 31/12/2020
EU commission sets grant rates within those regions
Assumed Investment costs of a firm for 2 subsequent years.
Costs include buildings, machinery ,wages etc
13.
14. GRW GRANT-Conditions
● Firms must be in the manufacturing industry or service industry
● Pure marketing and sales activities are not eligible
● Assumed Project related capital expenses in the first 3 years after project start
● Assumed staff costs of the newly created jobs in the first 2 years (the federal state
sets the lower and upper wages of the firm)
● At Least 25% of the project financing must be free of any subsidy
15. GRW GRANT-Application process
● Firms must apply at the responsible state development bank operated by the
local federal state
● Firms must submit the official application form, business plan, SME status if
applicable, banking financing statement on secured project financing
16. Zuschuss für Wagniskapital -Venture Capital / INVEST grant
;
Aim To encourage private investors especially business angels to supply venture capital
to early innovative start up companies
Donor Federal Ministry for Economic Affairs and Energy through the INVEST program
Calculation
basis
2 types of grants: Acquisition grant and Exit grant
Acquisition grant : A tax free refund of 20% of the capital invested
Exit grant: A lump sum tax refund of 25% of capital gain from selling purchased
shares
Exit grant only applies to private individuals , capital gain >= 2000 euros
17. INVEST GRANT-Conditions on firms
● Must be <= 7 years old
● Must have <= 50 full time employees
● Annual turnover should be <=10,000,000 euros
● Must have a head office in the European Economic area and at least 1 branch in
Germany listed in the trade register
● Must have innovative capacity
● Must have ongoing trading activities no later than 1 year after investment
18. INVEST GRANT-Conditions on investors
● Equity investment must be >= 10000 euros
● Must hold newly issued shares that were not previously owned
● Must buy shares with their own money
● Duration of investment must be >= 3 years
19. INVEST GRANT-Application procedure
● Does online application on the website of federal ministry of economic affairs
and export control to receive certification of eligibility for funding
● Investor(s) submits application for acquisition or exit grants online
20. Exist start up grant
;
Aim To support particularly technical start up projects at universities and research
centers by first supporting product development then the set up phase of the firm
Donor Federal Ministry for Economic Affairs and Energy through project management
Juelich
Calculation
basis
1 year grant
students €1,000/month
technical staff: €2,000/month
graduates: €2,500/month
Doctorate degree holders : €3,000/month.
Material costs <= €30,000
Coaching<= €5,000
21. Exist GRANT-Conditions
● Innovative technology oriented start up project
● Academics and non university researchers
● Innovative services offering substantial benefits based on scientific findings
● Graduates or former research assistants (not longer than 5 years after graduation)
● Students must have completed at least half of their study
● team up to 3 people. 1 of them can have a recognized vocational qualification or
completed education more than 5 years ago
22. Exist GRANT-Application procedure
● The application is submitted by the university or research institute
● The applicants submit a summary report of their business idea
● The university or research institute commits to provide a mentor that will give
specialist ideas to the applicants
24. Instruments of funding
In Germany, the Federal Government and the 16 states (Länder) share
responsibility for funding education, science and research. There are three
instruments for this:
1.Institutional funding
2.Project funding
3.Departmental research funding
The Federal Government spends 15.6 billion euros a year on R&D. Of this
amount
● 61% is spent by the Federal Ministry of Education and Research (BMBF)
● 21% by the Federal Ministry for Economic Affairs and Energy (BMWi) and
● 6% by the Federal Ministry of Defence (BMVg)
● IN addition to this, the German states invest another 11.3 billion euros a
year in R&D.
25. Budget of funding.
IN Germany, the Federal Government and the 16 states (Länder) share responsibility for funding
education, science and research.
BUDGET
Public-sector R&D spending, 2015/16;
The Federal Government spends 15.6 billion
euros a year on R&D (2016). The German states
invest an additional 11.3 billion euros (2015)
26. Public sector funding
The public sector provides almost 30 % of all spending
on research and development in Germany (in 2016 this
amounted to approx. 27.5 billion euros)
To funding higher education, the public sector also
finances non-university research organizations that are
especially involved in foresting research talent.
The Federal Government and the Lander continue to
finance funding organisations such as German Academic
Exchange Service (DAAD) , Deutsche
Forschungsgemeinschaft.
28. ◈ Foreign Direct Investment (FDI) : an international investment in which the
investor acquires a lasting interest in a business in another country.
◈ Germany is one of the top ten countries
in the world as a recipient of foreign
direct investment
(FDI).
FDI
29. → FDI inflows in Germany decreased by 30%
→ This decline is caused by the Brexit and US tax reforms, the tightening of the labor
market, and the stagnation of the auto sector
FDI Stock
30.
31. Why foreign countries invests in Germany?
Germany's strengths for FDI are:
● Strategic location in the centre of Europe
● Political stability and a good anchor in
international relations
● The largest population of the European
Union
● Infrastructure developed
● Strong manufacturing basis
● Strong exports
● Advanced technology and expertise
● Highly qualified workforce
Germany's weaknesses in FDI are:
• The aging of the population weighs heavily
on growth
• The German economy is highly dependent
on exports, particularly to China
• Aging infrastructure
• unproductive service sector
• Insufficient infrastructure for start-up
development
33. Conclusion
◈ Germany was the 4th leading economy worldwide with 4,20 trillion dollars of
exports in 2018
◈ The key areas of investment in Germany are the R&D, automotive, electrical
and mechanical industry
◈ The german government uses investment grants like INVEST grants, Exist
grants and the GRW grants to promote investment rates within the country
◈ The german government uses project funding, institutional funding and
departmental research funding as instruments of public funding of
investments
◈ Germany is very attractive as an FDI recipient due to its high skilled labour,
advanced technology, consolidated public finances
34. Conclusion
The real estate market in Germany offers immediate investment opportunities
suitable for all categories of investors.
It is the 2nd largest commercial property market in Europe.
The profile of domestic and international investor ’s active in the German real
estate market includes large and small, private or semi-private . Whilst the retail
and office segments occupy the lion’s share of the commercial market, the
country is also home to Europe’s largest residential investment market.
