The Innovestment Contract (art) work
Simple from the ground up

It is important to us that you understand exactly what you are signing, what conditions you are entering into and what risks are involved. That is why we have kept our contracts compact and easy to understand. We follow the motto "as detailed as necessary, as simple as possible".

A standard set of contracts applies to all projects. This means that you only have to study everything once or, if necessary, you can go through it with your legal or tax advice. For all future projects it is therefore sufficient to know the key data, read the risk information and decide on the basis of the information available to you whether and how much you want to invest. This is much more fun than having to check and recheck endless contracts over and over again.

In this "contract artwork series" we present the individual components to you step by step. You will see: Many parts repeat themselves across the various contract components. Annoying, but unfortunately indispensable.

Background:

As a platform, we act as a "matchmaker" between investors and companies raising capital. Both contracting parties are our clients - therefore we aim to offer both parties with a balanced, transparent contract with a complete overview of their respective rights and obligations.

Our goal: The development of a modern, digitally supported financial instrument that is ideally suited both as an investment and as a financing option. Over the years, we have designed, developed and tested various models - both for equity and debt capital. The decision has now been made in favor of subordinated loans. As a hybrid, mezzanine loan, it provides companies with an additional piece of the puzzle for their financing: It is a simple, low-cost variant that is similar to equity and can be easily combined with other financing components.

In turn, our subordinated loans offer investors attractive interest rates with manageable terms. Their uncomplicated design makes it easy for them to add alternative investments to their personal portfolio.

Your Contract

After each attachment you will receive a confirmation e-mail to which the documents of your individualized contract described below as well as our distance selling information (platform) are attached. You will also find the documents in your investment account once you have successfully completed your subscription.

Our contract packages consist of the following components

Subordinated loan agreement

The ten-page subordinated loan agreement is concluded directly between the company to be financed and the investor(s) and forms the basis for their business relationship. It is accompanied by the four annexes described below. The subordinated loan agreement contains all the key data. It also governs all details of payment processing, interest, term, termination and other rights and obligations. The transferability is also specified here.

Annex 1 - Distance selling information

Distance selling information  is aimed at the special feature that investments on platforms such as Innovestment are not concluded in person, but via "remote communication media (Fernkommunikationsmittel)". In our case, this specifically involves the conclusion of subordinated loan agreements online or by e-mail (by telephone).

The paper includes general information about the borrowers, such as their address, contact details and description of their business activities. Similar data is also listed again for Innovestment.

It also describes the technical process that takes place during the drawing process. Last but not least, all the key features of the investment are listed again, similar to the investment information sheet. Information on the right of withdrawal and out-of-court dispute settlement round up the explanations.

Why do we need the distance selling information?

Due to the special feature already described above, that communication between you and us is by telephone, special information duties arise in accordance with the German Introductory Act to the German Civil Code, usually abbreviated to EGBGB (Einführungsgesetzes zum Bürgerlichen Gesetzbuch).

Annex 2 - Investor information

At 14 pages, the Investor Information is by far the longest document in our contract documents. You will also find some of the contents in the other contracts, as the various investments must exist independently of each other.

The investor information consists of two parts: the "General Investor Information" and the "Special Investor Information". The general part first contains extensive information on Innovestment - our master data, cost structures and payment methods. It also states that Innovestment does not advise and does not check whether investors have the necessary expertise to invest (although we are obliged to request knowledge in the registration process).  The way in which Innovestment reviews projects is also listed. The listing of the various risks, including the special features of a subordinated loan, also plays a major role.

The part of the "Special Investor Information" is then aimed directly at the investment you have requested or already subscribed to. In addition to information on the issuer, the payment service provider and the target markets, this section also deals once again with special risks relating to the investment.

Why is the investor information required?

This is where two regulations come into play at once: firstly, the Trade Regulation Act (Gewerbeordnung - GewO), and secondly the Financial Investment Brokerage Ordinance (Finanzanlagenvermittlungsordnung - FinVermV). Both together oblige us to inform you as an investor about these data as well as about compensation and benefits, costs and ancillary costs, risks and conflicts of interest.

Annex 3 - Investment information sheet (Vermögensanlage-Informationsblatt - VIB)

The VIB summarizes all the key characteristics of the investment on three pages. We did not come up with the three pages, the format is prescribed by law and approved by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin) on its behalf.

BaFin itself refers to the VIB as the "package insert" of the investment offered. This is a successful designation, as the short information sheet summarizes the following points, among others:

  • the nature and exact description of the investment,
  • investment strategy, investment policy and the investment objects,
  • term and period of notice,
  • conditions of interest and repayment,
  • the risks associated with the investment of assets (in this case also the specific case of subordinated loans)
  • the prospects for contractual interest and repayment under different market conditions,
  • investment expenses and commissions.

Why is the VIB required?

The obligation to prepare a VIB results from § 13 Para. 1 of the German Capital Management Act (Vermögensanlagengesetz - VermAnlG). According to this, the issuer must prepare a VIB and have it approved by BaFin before commencing a domestic public offering of an investment. The VIB is intended both to make it easier for investors to compare the investment with other financial investments and to increase the transparency of the investment offered. It is regarded as a civil law liability document.

Annex 4 - Privacy policy

In the five-page document, issuers comply with their obligations under the Basic Data Protection Regulation (Datenschutzgrundverordnung - GDPR) and the Federal Data Protection Act (Bundesdatenschutzgesetz - BDSG). It explains, for example, what data the issuers collect from you. This is usually personal data such as your name, your address and your e-mail address. It also includes bank, order and turnover data, for example your bank and IBAN as well as details of the contracts you have entered into through your investment via Innovestment. In addition, we explain, among other things, to whom they are passed on (for example, to our payment service provider Secupay, which acts as a trustee), how long your data is kept and how it is protected. A note on revocation is also included.

Why do we collect this data?
Without this personal data, we or the issuer are usually not able to enter into or execute a contract with you. In plain language: we need your e-mail address to communicate with you and your IBAN to pay out your interest.

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