THE INVESTMENT MODEL
Østjysk Innovation invests its own funds as well as government funds on behalf of the Danish Ministry of Science, Technology and Innovation.
Østjysk Innovation’s investments take the form of capital contributions and subordinate loan capital. With the capital contribution, we purchase a share of the company and the subordinate loan capital serves to create a financial safety net for the company’s operations during the first couple of years.
The typical investment model for Østjysk Innovation is therefore quite straightforward:
Together with you, we establish a private limited company with an equity of DKK 125,000. You contribute 51–75% of the capital and we contribute the remaining 25–49%. The exact investment ratio depends on an assessment of the business idea, among other things.
Once the company has been established, we make a loan of approximately DKK 1.6 million available to the company, which can draw on this loan for operating and development activities in accordance with an agreed plan. The loan is subject to a rate of interest of 12% per year – a rate that reflects the fairly high risk involved. Note that it’s the company – and not the entrepreneur – that is liable for the loan.
As a general rule, you should expect to have to raise up to DKK 100,000 to establish a new company. It’s often possible to get a bank loan for this amount.
During the initial period after setting up the company – what we call the preliminary project – the company typically has two owners, the entrepreneur and Østjysk Innovation A/S (also representing the government share).
As already mentioned, this is the typical investment model. We may, of course, have to find another model because of the nature of your business idea. At Østjysk Innovation, we’re always prepared to consider other options. It could be appropriate, for instance, to involve more investors from the very beginning.
Once the preliminary project has been completed, the continued operation of the company usually requires additional capital. Together with the government, Østjysk Innovation can invest additional capital in your company (up to DKK 2.5 million), but only if private investors contribute additional capital at the same time.
In most cases, this investment takes the form of capital deposits in the company. The new investors therefore own part of the company, and you as the entrepreneur own a reduced part – but of a much larger whole. The size of the new investors’ share of the company naturally depends on the value of the company and the amount of money invested. Following a new round of investments, the ownership distribution may appear as follows:
Østjysk Innovation’s investments take the form of capital contributions and subordinate loan capital. With the capital contribution, we purchase a share of the company and the subordinate loan capital serves to create a financial safety net for the company’s operations during the first couple of years.
The typical investment model for Østjysk Innovation is therefore quite straightforward:
Together with you, we establish a private limited company with an equity of DKK 125,000. You contribute 51–75% of the capital and we contribute the remaining 25–49%. The exact investment ratio depends on an assessment of the business idea, among other things.
Once the company has been established, we make a loan of approximately DKK 1.6 million available to the company, which can draw on this loan for operating and development activities in accordance with an agreed plan. The loan is subject to a rate of interest of 12% per year – a rate that reflects the fairly high risk involved. Note that it’s the company – and not the entrepreneur – that is liable for the loan.
As a general rule, you should expect to have to raise up to DKK 100,000 to establish a new company. It’s often possible to get a bank loan for this amount.
During the initial period after setting up the company – what we call the preliminary project – the company typically has two owners, the entrepreneur and Østjysk Innovation A/S (also representing the government share).
As already mentioned, this is the typical investment model. We may, of course, have to find another model because of the nature of your business idea. At Østjysk Innovation, we’re always prepared to consider other options. It could be appropriate, for instance, to involve more investors from the very beginning.
Once the preliminary project has been completed, the continued operation of the company usually requires additional capital. Together with the government, Østjysk Innovation can invest additional capital in your company (up to DKK 2.5 million), but only if private investors contribute additional capital at the same time.
In most cases, this investment takes the form of capital deposits in the company. The new investors therefore own part of the company, and you as the entrepreneur own a reduced part – but of a much larger whole. The size of the new investors’ share of the company naturally depends on the value of the company and the amount of money invested. Following a new round of investments, the ownership distribution may appear as follows:
Please don’t hesitate to phone or write to us if you have further questions regarding our investment model.
Østjysk Innovation · Incuba Science Park · Åbogade 15 · DK-8200 Aarhus N · T +45 87 34 58 90