When seed funding is tight and the banks don’t care, who does a young e-commerce startup turn to? Their trade association, of course!
Although mention of its name has drawn blank stares from a couple of young German founders I’ve spoken to, Germany actually does have an e-commerce trade association, Händlerbund. It boasts 6,000 members that run around 12,000 sites, and it’s just opened up a crowdfunding platform.
International outfits like Kickstarter have seen projects run in Germany, and there are some local alternatives such as Seedmatch, but the Gründerplus Crowdfunding Platform is specifically targeted at online retail operations and comes through an organization that already offers extensive support to startups in the region.
The Händlerbund originally set up its Gründerplus subsidiary in 2010 to act as an incubator and to provide legal advice to new companies. That incubator’s still going, but it only has a couple of companies and the trade association decided a larger-scale approach was needed.
Hence the crowdfunding platform. According to the association, there will be no limit to the number of fundraising initiatives that can run concurrently on it.
Fittingly, the preview platform’s first project, started on Wednesday evening, is actually itself — over the next 30 days, it’s trying to raise up to €100,000 to get finalized and ready for real startups to feel the benefit. The system is by now pretty familiar: the startup posts a video, along with a business plan and fact sheet, and investors get equity as silent partners in the funded venture.
So what’s the advantage of raising funding through this platform as opposed to its established rivals? The Händlerbund told me the added value comes in the form of that previously-mentioned support framework.
A spokeswoman told me:
Because of the connection to the Händlerbund, it’s legally secure. We have lawyers who check the legal side of founding a company and give some advice.”
Another thing the Gründerplus platform may have going for it is that the minimum contribution is €50, as opposed to Seedmatch’s €250 floor. But on the flipside, the maximum amount that can be raised is — in common with its rivals — €100,000.
That’s because German law forbids any greater amount to be raised via crowdfunding. It’s an irritating limitation, but – as startups in the US will know – crowdfunding is a relatively new concept that can often fall foul of legal grey areas and regulations built for an earlier age.
When a local VC called for Germany to get its own Kickstarter equivalent, this is almost certainly not what he meant. But that said, €100,000 is equivalent to decent early-stage angel funding, so it’s not to be sneezed at.