Danube Angels for investors

In 2017 Danube Angels GmbH was founded as a company with limited liability of three partners, who already own successful companies, to make use of the legal possibilities of crowd financing (“crowd-investing”) in Austria. The partners are Mag. Peter Helesic MBA (Helecom s.r.o.), Mag. Jakob Hütthaler-Brandauer (Rechtsanwaltskanzlei Hütthaler-Brandauer) and Paul G. Putz MBA (Paul Putz & Partner Management Consultants GmbH). Danube Angels selects and analyses participation possibilities in start-ups and growth companies in Austria, Germany, Switzerland and the CEE-region (“danube region”). After a positive outcome of the analysis, the investment project will be presented to the network investors of the Danube Angels, whereby the Danube Angels partner themselves always act as co-investors to express their commitment and belief in the target companies. Danube Angels has made it their goal to combine their partners’ expertise to increase the shareholder value for both investors as well as the target companies

In crowd-investing potential investors purchase shares of a company and provide capital to support it (typically in a new, young company with an innovative concept). This means that the investor – depending on the model of participation – is proportionally involved in profits and losses and in a possible future increase of the shareholder value. The individual investments are usually relatively small and allow the investor, to keep his risk per project in a financially manageable framework.

Best case scenario: The idea is accepted and converted into marketable products or marketable services. After reaching the break-even point and making up any start-up losses, the company achieves profits, in which the investor is involved. In the case of existing companies, this capital allows further growth. Dividends/interest payments are paid, the company grows, creates many jobs and flourishes. The value of the company increases and investors also profit from that effect. In case of an exit the investor receives a multiple of his initial investment, depending on the amount of participation of the company.

Worst case scenario: The idea fails to achieve the objective and is not accepted. The established or existing company becomes insolvent and the entire invested amount is lost. Margin obligation does not apply.

If crowd-investing is successful, attractive returns are possible. However, no reliable forecasts of future returns can be made. In particular income earned in the past are no indicator of future revenues. Each investment can lead to a total loss of the invested capital. So, notably the following risks become important:

• Insolvency risk: This means the risk of insolvency of the issuer and regularly leads to a total loss.
• Malversation risk: This means the risk of criminal offences by employees/organs in the company of the issuer. This can never be excluded entirely. Misconduct can directly or indirectly harm the issuer and lead to an insolvency.
• Risk concentration: This means the risk that arises if an investor makes no or only a small diversification of his portfolio. An investment in only a few companies is therefore strongly advised against.
• Difficult transferability of assets: This means that investments in accordance with § 1 (1) Z 3 KMG are only transferable under certain conditions and that there is generally no market value. Investment sums must be chosen so low that even a longer holding period will cause no liquidity problems.

General criteria for the choice and approval as issuer:

• The seat of the issuer is in Austria, Germany, Switzerland, Czech Republic, Slovakia or Hungary
• The legal form of the issuer is a corporation
• The corporation uses the capital of the investors for its operative business
• The company is profit- and growth-orientated

Because of the high complexity of companies and their projects no specific selection criteria can be developed. Therefore, Danube Angels is free to select or reject companies after their own judgement. Danube Angels receives up to eighty applications per month for crowd-investment from growth companies from the DACH region (Germany, Austria, Switzerland) and the CEE region (Czech Republic, Slovakia, Hungary). Danube Angels filters out the most interesting and promising companies from these applications. Nearly one percent of the applying companies are given the opportunity to present themselves on our platform.

Both natural persons and legal entities can invest in Danube Angels projects.

According to the Austrian Alternative Investments Act the investment sum per person and project may not be more than 5.000 Euros within 12 months. This limit can only be exceeded if the person or entity does not invest more than double of their average monthly income over 12 months or 10 percent of their financial fixed assets. This means, the investor must earn more than 2.500 Euros on a monthly average or have a financial fixed asset of at least 50.000 Euros to be allowed to invest more than 5.000 Euros per project and year. There is no maximum investment amount for legal entities.

The yields can be different depending on the project. However, no reliable forecasts of future returns can be made. In particular income earned in the past are no indicator of future revenues. Information to yield possibilities can be found in the investor-information sheets and the trust agreement of the projects.

Funding limit means the amount of money which will be maximally raised for a project. This amount can not be exceeded. The funding threshold lies under the funding limit and is the minimum amount that must be raised to realise the project. Only after reaching the funding threshold the trust agreement becomes valid.

If the funding threshold is not achieved during the allotted time, you receive your money (plus any interest which may have been accrued during this timeframe) back within 14 days.

The invested capital will be held in trust by Danube Angels Treuhand GmbH. If the funding threshold is not achieved during the allotted time, you receive your money back within 14 days. If the threshold is reached, Danube Angels Treuhand GmbH will transfer the collected capital to the target company and will hold the participation for all investors in trust.

1. Discover our projects and select a growth company in which you would like to invest.
2. Fill in our investment questionnaire.
3. Transfer your investment amount.
4. Benefit from the profits and increases in value of growth companies.

The investment duration can vary according to the project. Information to durations can be found in the investor-information sheets and the trust agreement of the projects.

• Pre-selected and interesting projects: Danube Angels receives continuously applications for crowd-investing projects and check them in advance for investors. Only around one percent of the applications meet our quality standards in terms of team, business model, scalability, market volume and USP and are approved for a campaign on our platform.
• Investor protection: Each investment contract with the companies is negotiated personally by Danube Angels for our investors. Therefore, you will always find the most important investor protection rights in these agreements.
• Participation by a trustee: You do not have to spend a lot of time looking after your investment. The trustee of your investment manages and takes care of your investment together with Danube Angels.
• Profit participation: You will not find a fixed interest rate with countless payout clauses in our contracts. If business is going well, you will receive a distribution. If the entire company is sold (exit), you receive your share of the sales proceeds.
• Transparency and reporting: You will find all information and documents for your investment decision on our project page. Through the support of the trustee or Danube Angels, you will receive half-yearly reports on the development of the company and other important events. And should you still have any questions, our team will be happy to assist you.

Commitment of Danube Angels: During the duration, the investor will be regularly informed about the development of his participation. This is done in three stages:

• Annual updates about the investment/investments
• Semi-annual updates about the investment/investments with information about the business development and the status of the implementation of the growth strategy
• Individual information about important (extraordinary) incidents (per email)

If specific questions arise, you also have the possibility to contact Danube Angels under info@danubeangels.com at any time.

The assignment of rights of the trust agreement by the trustor is permitted. However, a partial assignment of rights of the trust agreement by the trustor is not allowed. Further information to the assignments of rights of the trust agreement can be found in the investor-information sheets and the trust agreement of the projects.

Participation in a limited liability company

The limited liability company must deduct 27,5% capital gains tax (KESt) from dividends and pay them to the Austrian tax office. Austrian citizens must no longer pay tax on these profits (final taxation). If you have little income, a “standard taxation” can be requested and you will get back a part of the capital gains tax.

If the participation is sold with capital gain, you have to inform your tax office and pay 27,5% capital gains tax to it.

Foreign investors must indicate dividends and interest in their home country and will credit the Austrian capital gains tax. Capital gains are not subject to tax in some countries, therefore more favourable tax rates can arise for foreign investors.

If there is specific interest, we recommend to contact a tax advisor.

Please note: If the participation is held via a corporation, these regulations do not apply.