In our glossary you will find the explanations of some important technical terms. Further definitions can also be found in our contract documents. If individual terms are unclear to you, please contact us. Your input is important so that we can gradually add to the glossary with your help.
The articles of association ("Satzung") constitute the essential basis for the company. Principles such as name and registered office, objective, organs and tasks (management, board of directors), structure etc. are laid down in the articles of association.
Business angels support founders of startups in a very early phase of the company, both in a financial and advisory capacity. These are usually experienced entrepreneurs who pass on their experience and at the same time provide seed capital.
Corporate Social Responsibility (CSR) describes the voluntary assumption of social responsibility by companies that goes beyond compliance with legal regulations. This responsibility extends to sustainable economic, ecological and social relationships – i.e. to people, society and the environment. The inclusion of SDG (see Sustainable Development Goals) can form a building block of CSR measures.
Learn more about our understanding of CSR here.
Crowdfunding has been a popular form of financing by many investors at the same time in Germany since 2010. We distinguish between four types:
Equity Crowdfunding (also called “Crowdinvesting” or equity-based Crowdfunding)
This is an investment in a company in the form of an equity-like investment using an internet service platform. In Germany it is often offered as a subordinated loan. Therefore, a return is expected on repayment.
In crowdlending – also known as "lending-based crowdfunding" – investors provide debt capital in the form of loans. In return, an interest-bearing repayment is agreed.
Reward-based crowdfunding is often used to implement art or music projects or to create a product prototype (e.g. backpacks, handbags or technical gadgets). The reward is mostly a product: After the campaign, supporters then receive a copy of the music CD, a copy of the film or one of the first backpacks produced.
These are donation-based financings for which no consideration is given. Another term for this type is "donation-based crowdfunding".
Distant selling contracts are contracts in which the trader or a person acting in his name or on his behalf and the consumer use only means of distance communication (e.g. telephone, fax, email) for the negotiation and conclusion of the contract, unless the contract is not concluded within the framework of a sales or service system organised for distance selling.
In an escrow account – also called trust account, the account holder manages the assets of another person. However, the owner of the assets does not lose his rights to them. The account holder is also the trustee: he is the only person with access to the account, but he is not the owner of the money deposited. He is also liable for the deposited assets.
The abbreviation ESG stands for Environment, Social and Governance. They are regarded as criteria for assessing the sustainability of companies and play a key role in determining the design of sustainable financial products.
General Terms and Conditions (GTC) are pre-formulated contractual conditions that one business party provides to the other upon conclusion of the contract. They serve to simplify the conclusion of contracts and the processing of transactions. The contents of the GTC are predetermined by law within the various contract forms. Thus, the contractual details are not adapted to a specific case. Instead, the same conditions apply to all contractual partners.
The investment information sheet (Vermögensanlagen-Informationsblatt – VIB) is a 3-page document required by law, which is prepared for all public investment offer brokered via an Internet service platform and deposited with the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin). The VIB is intended to inform investors about the key features and risks of the investment. In addition, the standardized VIB also allows better comparability between the various investments.
The interest period defines the frequency of interest payments to lenders. Common interest periods are quarterly, semi-annual, annual or final, i.e. at the end of the loan agreement. We list the interest periods in our investment options. If you have already invested with Innovestment, you can also find the interest periods in your investment account.
§ Section 2a of the German Asset Investment Act (Vermögensanlagengesetz – VermAnlG) defines the brokerage of an investment in the context of crowd financing (crowdinvesting) as an Internet service platform. This definition exempts platforms like Innovestment – up to a certain amount of the investment – from the obligation to prepare and publish a sales prospectus. Instead, we prepare a Asset Information Sheet (Vermögensanlagen-Informationsblatt – VIB), the publication of which we have obtained the approval of the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin).
An investment in general is the act of putting money into something to make a profit. In Germany we distinguish different types of investments. Vehicles for the investment of funds such as subordinated loans, loans with profit participation rights, dormant holdings, shares in trust assets, profit participation rights and registered bonds belong to the category of "Vermögensanlagen" and are regulated by the German Asset Investment Act (Vermögensanlagegesetz – VermAnlG). Other investment vehicles such as securities, funds, ETFs or life insurance policies belong to other investment categories.
A detailed description can be found on the website of the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) in German language.
According to Section 16 (2) of the Financial Investment Brokerage Ordinance (Finanzanlagenvermittlungsordnung – FinVermV), financial investment brokers and thus also crowdinvesting platforms (legal term: Internet service platforms) are legally obliged to obtain knowledge and experience from investors with regard to transactions with certain types of financial investments, insofar as this information is necessary to assess the appropriateness of the financial investment for the investors.
The term describes transactions in the corporate sector. Mergers define the fusion of two or more companies or its parts, while acquisitions describes the purchase of a company or certain areas of the company.
Mezzanine capital or financing is understood to be types of financing that represent a hybrid form of equity and debt capital. Companies can use mezzanine capital to improve their equity base without having to (immediately) give up company shares. The instruments include e.g. subordinated loans, dormant equity holdings and profit participation rights.
The offer of subordinated loans ends with the expiry of the offer period published on the platform. The offer period may be extended, shortened, interrupted or suspended at the reasonable discretion of the borrower and ends at the latest upon full placement.
A private placement is a financing instrument with a selected group of investors – other than a public offering placed on the capital market. If no more than 20 units are offered or the amount of the investment per investor is at least 200,000 euros, the private placement is exempt from the obligation to publish a prospectus in accordance with the German Securities Prospectus Act (Wertpapierprospektgesetz – WpPG) and the EU Prospectus Regulation.
In case of a subordinated loan with qualified subordination, in case of insolvency or liquidation of the borrower, the lenders shall subordinate all claims arising out of or in connection with the loan agreement (in particular, its claims for repayment, interest and also costs) to the extent of all claims of current and future other creditors of the borrower (with the exception of other subordinated or equally ranking creditors).
The effectiveness of the subordinated loan agreement is subject to the resolutory condition that the borrowers have been granted subordinated loans in a minimum total amount, taking into account any declared revocations or terminations at the end of a previously defined period. If the resolutory condition is met, the lenders will be informed immediately by email and the amount of money paid will be transferred to the lenders without any deductions.
Sustainable Development Goals (SDG) are understood to be 17 different goals for sustainable development. They were launched by the United Nations as part of Agenda 2030 and cover a broad spectrum of global sustainability issues such as climate change, innovation and social equality. Their implementation explicitly addresses the target groups governments, business enterprises and civil society. The goals are the fight against global poverty and the chance for a dignified life for all people. The inclusion of SDG can be a building block of CSR measures.
Learn more about the SGG and our understanding of CSR here.
The term SME covers micro, small and medium-sized enterprises. According to the recommendation of the EU Commission, companies are considered SMEs if they employ fewer than 250 employees and generate annual sales of less than €50 million or a balance sheet total of less than €43 million.
From 2015 to 2017, subordinated loans at Innovestment were pooled in a special purpose vehicle (SPV) established specifically for the respective company. The aim was to improve the company's ability to obtain follow-up financing, to increase the investors upside potential and to simplify investor support. After a successful financing round, the SPV participated in the company as an independent shareholder by contributing the pooled investment amount to the company to be financed via a capital increase. With this model, Innovestment took on a pioneering role in crowdinvesting.
A subordinated loan "is an unsecured loan or bond that ranks below other, more senior loans or securities with respect to claims on assets or earnings. Subordinated debentures are thus also known as junior securities. In the case of borrower default, creditors who own subordinated debt will not be paid out until after senior bondholders are paid in full.”
The total amount repayable – also called total redemption amount – describes the amount that investors will receive after the end of their investment. It includes the capital invested plus the interest earned during the term. The time of payment depends on the interest period.
A trustee performs certain assigned tasks on behalf of a client. In the case of Innovestment, he manages the incoming funds of the investors. He has sole access to the account (see also escrow account) and manages all payments. This procedure serves to secure and protect all parties involved.
Venture Capital – also known as "risk capital" – is used to finance startup companies and small businesses with long-term growth potential. The capital usually comes from wealthy investors, so-called "business angels", investment banks and other financial institutions. Venture capital is often provided not only in the form of money, but also in the form of technical or business expertise.