The COVID19 Startup Fund is a repayable grant between 10.000€ and 800.000€ in order to support start-ups in overcoming the effects of the COVID19 pandemic.
The COVID-19 pandemic had negative effects on the Austrian economy and companies.
The first measures of the government were the implementation of a guarantee fund that, in the beginning was limited to financially sound companies with positive equity and required the involvement of a bank with their internal loan approval processes.
This led to lack of access for many start-ups to the guarantee facility.
Therefore a program had to be launched where direct support by the government could be provided in order to help start-ups in maintaining their liquidity and continuing their activities.
The result was the instrument of a repayable grant.
In addition to proper equity also equity-like instruments such as subordinated loans are accepted, as long they fulfil the following requirements
• Maturity not within the following 5 years
• No fixed interest
The grant is limited to the amount of equity provided after March 15th 2020 and can be supplemented by equity received between Sept. 15th 2019 – March 15th 2020 while this earlier equity can account for up to 25% of the grant.
The application process is held simple. The start-up provides basic data, which have to be confirmed by a certified tax consultant.
The grant bears no interest or fees. It has to be repaid as soon as the beneficiary generates profits. The amount repaid corresponds to 50% of every annual profit until full repayment of the grant.
The use of the funds must be accounted for within 9 months
aws receives between 40-50 Mio.€ plus 3% for admin.costs by the ministries of economy and p.a. There is one person dedicated full time for this action. Additionally this person is supported by experts on CI, the IT-, the media-, as well as by the customer service-team during the application phase.
Evidence of success
Within the first 2 months of operations more than 200 applications were filed, of which about 160 grants were paid out.
More than 200 start-ups received equity of about 40 Mio.€.
Aws receives applications for a grant volume of about 5 Mio.€ per week.
The process of administrating the applications is lean and leads to a response within 3 days. This is possible by involving the start-ups’ tax consultants in the process, who provide confirmations of the relevant criteria of the program.
The guidelines were quite unspecific concerning defining young start-ups in accordance with EU regulation 651/2014, especially considering affiliated companies and the requirement of not having “taken over the activity of another enterprise”. We set-up a detailed set of FAQ to specify the guidelines
Potential for learning or transfer
The start-up fund provided a lean process to offer unbureaucratic support to start-ups in times of a financial crisis.
The target group was properly defined, although some of the definitions left room for interpretation.
The definition of an innovative start-up was held deliberately wide, based on the expectation that investments in young start-ups would require a certain degree of innovation.
The exclusion of the main shareholder and of the managing director (as well as their closest relatives) proved to be useful, but also gave reason for discussion and a lack of understanding within the start-up community.
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