Conda founders Daniel Horakand Paul PöltnerToday, Austrian business consultancy Conda has announced the launch of its crowdinvesting platform www.conda.at at a press conference in Vienna. The Vienna-based Conda will start operations with the project Wohnwagon on 1st of March. As one of the first Austrian online portals to offer startups and SMEs this alternative way of getting funds (the other being 1000 x 1000, which has launched its first project in November), Conda is entering largely unknown territory – also legally speaking (see our article on the issue). Founded as a GmbH by Daniel Horak and Paul Pöltner in 2012, Conda aims to connect investors with entrepreneurs by “supporting projects with their consulting expertise” and its network of mentors “to ensure the success of their innovations.”
100.000 euros to build caravans
Wohnwagon co-founder Christian FrantalThe first project aiming to raise funds via Conda is Wohnwagon, a co-operation between Viennese entrepreneur Christian Frantal of pimp my home and creative agency feinripp. Wohnwagon wants to raise 100.000 euros to build its first two prototypes of energy-self sufficient custom caravans manufactured from natural materials just outside of Vienna. According to Frantal, caravans will cost starting from 30.000 euros for a basic 25 square metre version.
Wohnwagon’s crowdinvesting campaign is scheduled to run for two to three months. Further projects will be presented by Conda in the course of March. Conda said they would focus their portfolio on Austrian startups and SMEs “not just from the web sector but also local manufacturing companies, like Wohnwagon.” So far, the have had enquiries for about 40 projects but want to limit their campaigns to 3 to 5 at a time, so that “investors can have a broader portfolio to choose from,” as Horak said.
The amount of money Wohnwagon aims to raise will correspond to 20% of the company shares. 100.000 euros is also the maximum sum that can be raised in Austria (as well as the rest of the EU countries) without falling under the legal obligation to issue a costly prospectus (“Prospektpflicht”). The valuation of Wohnwagon, which will be founded as a GmbH once the fundraising goals are met, will me made based on expert opinions and will be announced upon the start of the crowdinvesting campaign in March.
The feinripp Team: Benedikt Schmidinger, Jana Frantal and Theresa Steininger
Crowdinvesting at Conda: How does it work?
Investors interested in supporting the project of Wohnwagon can make investments starting from 100 euros to up to 3.000 euros. The offer will be limited to Austrian citizens for legal reasons, as Pöltner confirmed. Conda plan to promote projects seeking to raise between 50.000 and 1,5 million euros. Raising sums above 100.000 euros would however require respective legal changes on behalf of the Austrian government, as they are aware. Investors will sign a “Treuhandvertrag”, an escrow agreement, with Conda. The relationship between the investors and Conda, on the other hand, is subject to Austrian “Substanzgenussrecht”, a form of participation right entailing the right on shares of profit as well as liquidation gains on basis of a continuing obligation but no say as far as company decisions are concerned. Investors will have shares of the company’s substance, profits and losses, which will be remunerated at the end of each year. They also have the right to drop out at the end of each year.
Conda will hold a share in the company, which according to Horak would be minimal and “could amount to just about 70 euros”. As Horak argued, this allows them to have a say in the company and thus “ensure security of the crowd’s investments.” “Otherwise founders could just spend the money to buy a Porsche or sell off the company once they receive the investment,” he said. Conda will administer all of the investments as a trustee under private law. Companies who try to raise money through Conda have to pay a fee of 1,5% of their investment goal to Conda beforehand as well as a 7,5% success fee once the money has been raised. They also have to cover running expenses ranging from 1,5 to 3,5% for Conda’s services, including mentoring and a “Gründerwerkstatt” – a founders’ workshop.
According to Pöltner, Conda are exempt of the obligation to hold a banking license, which was a problem in the case of Heini Staudinger and which according to Austrian law is otherwise mandatory when accepting and administering outside capital (see this article on the topic by an Austrian lawyer on derStandard.at). “Conda does not accept deposits or outside capital but equity, thus we do not require a banking license,” he explained. Conda will, however, aim to help companies attract further outside capital through their business angel network.
Mixed expectations
Wohnwagon co-founder Theresa SteiningerOnce Wohnwagon generates its first profits – which co-founder Theresa Steininger of feinripp estimates to happen one year after starting operations – investors will be paid their percentage of the profit. As for the expectations of the crowdinvesting campaign, Steininger said, “It is hard to assess how this will take off in Austria. The case of Staudinger and GEA, his company that produces eco-sustainable shoes and furniture, has shown that there is a desire for new possibilities of investing. On the other hand, Austrians are still rather conservative when it comes to investments.” Frantal and Horak are more optimistic about the campaign. They see the reactions on the Staudinger’s law suit with the Austrian Financial Market Authority (FMA) as a good sign that Austrians have real interest in supporting local and sustainable businesses. Horak detects particular potential for lower, two digit investments.
It seems as though Conda’s launch comes just in time. Sparked by the Staudinger debate, crowdfunding has become a buzzword in the Austrian media and has also entered the political realm. Last month, the WKO’s Junge Wirtschaft set up an advisory board to help establish a legal framework for crowdfunding last month, which Conda are part of (see our coverage on it here). Now, Austrian politicians from the SPÖ (Social Democrats) as well as the Green Party have started campaigning for improving the legal conditions for alternative financing before this year’s general elections in September (see this APA feature in derStandard.at). Moreover, the EU parliament has announced that it would take steps to facilitate crowdfunding (see a further APA feature). It remains to be seen how Conda will be dealing with the lack of a legal framework for crowdfunding in Austria and the EU. According to Horak, Conda are in contact with the FMA and are confident that they are on the legal safe side.
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