Five equity-free funding options for German founders + some bonus tips for expat founders
This list is not an exhaustive one, but here are the grants that I explored over the course of the last year. As mentioned in my last post, it is important to read the fine print to see if you are eligible! Bonne Chance!
BSS
BSS - The State of Berlin, with support from the European Social Fund Plus (ESF+), offers a dedicated incubator program to assist technology-oriented founders. The program is designed to support innovators in developing their products to market maturity and establishing them sustainably in the marketplace.
Key Details:
Scholarship amount: Up to €2,500 per month per founder.
Funding duration: Between 6 and 36 months.
Eligibility Criteria:
To qualify for the program, applicants must meet the following conditions:
Be planning to develop an innovative, technology-oriented product or solution.
Demonstrate a clear potential for bringing the product to market maturity.
Be based in Berlin or willing to relocate to Berlin for the duration of the program.
Commit to working full-time on the business project during the funding period.
Have not yet commercially launched the product.
Be eligible under ESF+ guidelines, including residency or legal working status in the EU.
Your company must not have been incorporated (i.e. logged within the commercial register) longer than six months from the point of applying in Berlin.
The funding is provided as a grant and passed directly to selected scholarship recipients which can be found here.
EXIST
EXIST is a nationwide program in Germany that supports university graduates, students, and researchers in launching innovative startups. Funded by the Federal Ministry for Economic Affairs and Climate Action and the European Social Fund (ESF+), this program aims to foster entrepreneurship in academia.
Key Features of the Grant:
Monthly stipend: €1,000 to €3,000, depending on qualifications and family status.
Additional funding: Up to €30,000 for materials, equipment, and other startup-related costs.
Duration: 12 months of funding.
Training and coaching: Entrepreneurs receive support in the form of mentoring and business training.
The grant is ideal for individuals in the early stages of transforming innovative ideas into viable business ventures.
Eligibility Criteria:
Applicants must be graduates, students, or academic staff with a business idea.
The business concept should focus on innovation and technology-oriented solutions.
The company must not have been incorporated - not ideal for Expats who need a self-employed visa tied to a German-incorporated company…
GründungsBONUS
The GründungsBONUS is a funding program provided by the Investitionsbank Berlin (IBB) to support innovative startups in Berlin. The program aims to help young companies in the early stages of development by providing financial support to accelerate their growth and market entry.
Grant amount: Up to €50,000 per startup.
Funding rate: Up to 50% of eligible project costs can be reimbursed.
Purpose: To support activities such as product development, market-entry, and operational scaling.
Funding period: Typically up to 12 months.
Eligibility Criteria:
To qualify for the GründungsBONUS, startups must meet the following conditions:
Location: The startup must be based in Berlin or planning to establish its headquarters in Berlin.
Business age: The company must be less than 12 months old at the time of application.
Innovation focus: The startup should demonstrate a strong focus on innovation, whether in technology, business models, or services.
Legal entity: The business must be registered as a legal entity (e.g., GmbH, UG, or other recognized forms). Sole proprietorships are typically not eligible.
Job creation: The project should aim to create new jobs or contribute to the economic development of Berlin.
Business concept: A viable business plan or concept must be submitted, detailing the innovation, market potential, and use of funds.
Considerations:
Startup Age Restriction: Businesses older than 12 months are not eligible, so it’s critical to apply within the first year of registration.
Funding Coverage: The grant covers up to 50% of eligible project costs, so startups must secure additional funding or have capital to cover the remaining 50%.
Accountability: Recipients must use the funds as outlined in their business plan and may need to provide proof of expenditures or project progress.
Combination with Other Grants: The GründungsBONUS can often be combined with other programs, but overlapping funding for the same costs is not allowed.
Local Focus: The program strongly emphasizes the economic impact on Berlin, including job creation and innovation within the region.
Top tip: If you have a consultant to support you on your application, you can get 50% off their fee (make sure it is success-based) if you:
Have a call with IHK - email them with the subject title ‘Förderung für Unternehmensberatungen für KMU’ and get a letter to say you have done so
Choose a consultant that is BAFA certified, they will then submit their consulting job to the BAFA body for approval and once you receive confirmation they will reimburse 50% of consulting fees to the consultant
SPRIND
The Federal Agency for Disruptive Innovation (SPRIND) was established by the German government to support groundbreaking, high-risk innovations with the potential to solve major societal challenges or significantly transform industries. The program focuses on fostering bold, transformative ideas that may not yet be commercially viable.
Type of funding: Grants, investments, or tailored financial support specific to the project’s needs.
Equity-free funding: SPRIND offers equity-free grants for early exploration and prototype development phases. However, for larger-scale or advanced-stage projects, SPRIND may negotiate equity or other returns, depending on the nature of the funding agreement.
Focus areas: Disruptive technologies, sustainability, health innovations, digitalization, energy transformation, and other forward-thinking fields.
Duration: Project-based, with timelines defined by project milestones.
Funding amount:
Up to €1 million for initial exploration phases.
Larger-scale projects may receive funding in the range of €5 million to €20 million or more, depending on their potential and societal impact.
Eligibility Criteria:
To qualify for SPRIND funding, applicants must meet the following conditions:
Innovative potential: The project must demonstrate a significant departure from existing solutions, offering the potential for disruptive change.
High risk and uncertainty: The idea should involve risks that make it unattractive for conventional investors at the current stage.
Societal impact: The innovation should address societal challenges or present opportunities to improve economic, environmental, or health outcomes.
Geographic focus: The applicant or project must have a strong connection to Germany, either by location or collaboration.
Development stage: Proposals can range from early research concepts to advanced prototypes, provided they align with SPRIND’s mission.
Considerations:
High Risk, High Reward: SPRIND focuses on ideas that carry high risks of failure but also have the potential for significant breakthroughs if successful.
Flexible Support: Funding is highly adaptable, and SPRIND may collaborate with innovators to customize the funding structure for each project.
Equity-Free for Early Phases: Initial exploration and prototype development funding are equity-free, making it highly attractive for innovators. However, equity or other forms of returns may apply for larger, long-term investments.
Multidisciplinary Collaboration: SPRIND encourages partnerships between researchers, startups, and established companies to leverage diverse expertise.
Public-Private Synergy: Projects often aim to bridge the gap between public-sector goals and private-sector scalability.
Unemployment Benefits and Entrepreneurial Support
Germany also offers generous support for individuals transitioning from employment to self-employment. If you’ve been employed in Germany for at least two years, you may qualify for unemployment benefits, and these can be leveraged to support your entrepreneurial journey.
Standard Unemployment Benefits (Arbeitslosengeld):
Duration: Up to 12 months.
Payment: 60% of your last salary.
Additional benefits: State contributions to health insurance and pension.
Considerations:
Regular unemployment benefits prohibit you from earning additional income.
Gründungszuschuss (Startup Grant):
If you wish to start your own business, you can transition from unemployment benefits to a startup grant by submitting a comprehensive business plan to the unemployment agency.
Support duration: Six months of unemployment benefits, converted into a grant.
Additional support: An extra €300 per month to cover your health insurance.
Earning potential: You can generate additional revenue during this period.
Considerations:
As a self-employed individual, you’ll need to cover the full cost of health insurance and pension contributions, which can be higher than when employed.
You need to submit an application to apply for this grant funding which is quite laborious, you can get a start-up coach to help you and the unemployment agency will cover the costs.
It needs to be clear that you did not quit your job to start a company but rather, during your unemployment journey, you discovered that you wanted to start a business.
Not finding what you are looking for?
Here is a website that outlines all the potential grant funding available in Germany, only in German but Google Translate will work wonders for you…
Attractive debt funding
I have not explored this option in too much detail but as your business matures, there are some attractive debt-based options that the German Government provides, such as ERP Special Fund and KfW Capital but ​​both require you to have some form of recurring income.
Similarly, there are private debt providers you can explore such as re:cap, float, and fulfin.
Visa tips
Excitingly, last year, Germany released an attractive visa scheme whereby if you successfully show that you are on an accelerator or grant programme, they will give you a visa for up to 18 months. See section ‘investors/self-employed, founders and freelancers when you click on the link above.
A lot of equity-free grant programmes are contingent on you having not actually registered a company yet, this can be challenging for expats who, if they want to apply for a ‘self-employed’ visa must have a registered company in Germany… I hope to encourage more expats to start companies in Germany so that this ‘check-box’ requirement will be revised!
Some useful folks to know
Berlin Partner - Super helpful for supporting you on which is the best grant funding for you as well as fast-track your visa application process
Funded - Alex and the team have successfully helped individuals acquire millions in equity-free funding
Unternehmenswerk - Pavel was great with my unemployment start-up grant
Other advisors include:
https://meryt.eu/, https://www.linkedin.com/in/julianhernichel, https://www.linkedin.com/in/marius-l%C3%B6we-14514a81/
I hope this helps and please feel free to ping me if I have missed any key snippets of information that/people who can support founders on their journey.