Question
Hello everybody
I am working for a start-up company based in Germany. Please allow me to ask a question concerning crowd-based funding. In Germany, there is a platform called seedmatch.de that offers crowdfunding for start-ups, but not in the common way kickstarter, indiegogo and the like are doing it (that is, a reward-based approach), but they offer an actual equity investment of at least 250 EUR per investor by way of a profit-dependent subordinated loan ("partiarisches Nachrangdarlehen"). I am wondering if such a service is a good way to secure seed funding or whether there are unforeseen legal problems to avoid. Also, is there an equivalent in the U.S.-American or British start-up funding scene?
Thank you very much!
Thomas
Answers: 1 public & 0 private
Hi Thomas
Crowd-based funding is an excellent way to obtain funding for your start up. However, one important legal issue that you need to be aware of is that most, if not all, crowd-based funding require disclosure of your technology in order to secure the funding.
This disclosure may preclude you from obtaining patent protection for your technology in some countries around the world. However, there are countries (such as Australia) that provide a grace period to allow you to file a patent application after you disclose your technology. As such, if you decide to go down the path of patent protection, it may be prudent to file a patent application before promoting your technology via crowd-based funding. This just provides you maximum flexibility in deciding which countries you want patent protection in.
Regards
Jing
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