Start-up BW Pre-Seed – Financing in the early stages
Start-up BW Pre-Seed is aimed at startups with an innovative business idea that need a loan of up to €200,000 in their early stages. The state will provide up to €160,000 of this as an interest-free loan, as long as your startup looks promising and shows an above-average level of innovation. At least two people must be working for your startup. The registered office of the business must be in Baden-Württemberg. Additionally, there must be a co-investor on board who will provide at least 20% of the total as a loan. For more information, visit the official website.
As a Start-up BW Pre-Seed partner, CyberLab will be happy to guide you. Our free CyberLab Accelerator is the perfect preparation for applying for a Start-up BW Pre-Seed loan! Still have questions? Check out the FAQs below. Or send your questions to us.
FAQ on Start-up BW Pre-Seed
Your co-investors should not only take on part of the funding, but also support you with your plans. If they know your industry or are experts in your field, they can open doors for you, establish contacts and act as advisors. Friends and family are not allowed to be pre-seed co-investors. Your co-investor must grant at least 20% and can grant up to 50% of the total pre-seed amount as a convertible loan.
Yes, BW Pre-Seed can be very good ongoing finance.
At the time of your application, the capital of your startup may not exceed the amount requested in the pre-seed. Previous investments (including conversion options) are not a problem, as long as they do not result in these exclusion criteria.
Your startup will sign one contract each with :
• the co-investor: loan agreement with conversion option
• the L-Bank: loan agreement, lower priority with debtor warrant and conversion option
There is no link between the co-investor agreement and the L-Bank agreement. The pari passu principle applies here. In other words, the agreements are identical apart from some terminology, as the L-Bank is dealing with a contract under public law. CyberLab as a pre-seed partner has an agreement with the state in which we agree to provide support, but are not liable.
The agreements are not linked to each other, but need to have the same duration. There is no standard duration. Generally, agreements last 24 or 36 months. It is possible to extend the agreement by 12 months.
If all formal requirements have been met and agreed upon by us, the co-investor is on board with at least 20% investment (LOI as evidence) and we are happy to proceed as a pre-seed partner, then we will present the startup to the Ministry. Your startup will then pitch the business idea in a jury session. If the Ministry accepts it, you can submit your application to L-Bank. The acceptance from the Ministry is valid for 6 weeks.
When you have submitted the required documents, the decision will be made within 15 working days. If there are no objections, payment is usually made a few days later.
BW Pre-Seed is a convertible loan. The conversion option is triggered if a successful round of financing takes place during the term.
The L-Bank usually does not use the conversion option. However, it is very likely with the co-investors. Co-investors and the L-Bank decide separately and independently from one another but always bilaterally with the startup. Important: co-investors and the L-Bank may convert, but do not have to. The conversion itself is at market price.
The market price corresponds to the value of the startup for the investors in the first major financing round. Two figures are needed for this: the total of the planned investments and the company shares issued for it. On this basis it is extrapolated to 100%. – Example: A startup gives 10% for €1 million, so in the future 10% of the business is worth €1 million. The business valuation therefore amounts to €10 million.
Yes, that is possible wihin the first 12 months. After 13 months, the financing body must be informed and asked for permission. The financing body consists of co-investors, L-Bank, ministry and the BW Pre-Seed partner.
Additionally, the same conditions must be offered to the L-Bank. Otherwise it is considered a subsidiary agreement, which is not allowed.
The declaration of subordination in the co-investor agreement protects the startup and places the co-investor's claims behind those of other creditors (excluding the L-Bank). The refund therefore may only be requested if there is no risk of insolvency. Partial payments, however, are allowed. There is risk of total loss.
For more information visit the L-Bank's FAQ page.
funded as part of the Start-Up BW state campaign:
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