What's in store for start-ups in 2021

New support from the government, some changes in the law and possible top IPOs are on the horizon: The new year brings changes that should interest most founders.

The year 2020 was dominated by one theme: Corona, Corona, and Corona again. Honestly, 2021 won't be any different immediately. But there are several other issues besides the ubiquitous pandemic that will become important in the coming months. A quick overview:

A sovereign wealth fund is to come

For a long time, the economics and finance ministries have been discussing a state growth fund to end shortages of venture capital in Germany. In the fall, the plans finally became concrete. Now the responsible persons plan among other things a fund of funds, which will support the venture capitalists, also private investors are to enter. Among other things, the policy is targeting insurers who want to invest large sums of money, but have so far shied away from investing in start-ups.

Until 2030, the federal government alone wants to provide ten billion euros. The fund could be managed by the state development bank KfW. The budget politicians of the Bundestag have already given their approval. A final decision could therefore follow before the Bundestag elections in September.

Also currently in the parliamentary process is a reform of the taxation of employee shareholdings. From mid-2021, the tax-free maximum amount is to rise from 360 to 720 euros. In addition, employees will have to pay tax on the profits when they sell the shares. This should make participation models more attractive for employees.

Legislative changes take effect

First of all, some Corona aid is probably expiring. For example, the VAT cut that was supposed to boost consumption no longer exists as of January 01. Now rates of 19 and seven percent, respectively, apply again.

What is still possible: to pay their own employees a one-time tax-free Corona bonus of 1,500 euros. The corresponding scheme will run until June 30.

interesting for founders could be the new regulation of the investment deduction. This sounds complicated, but in principle it only means that you are allowed to deduct the purchase amount of a capital good from your profits already before the acquisition. Two changes come into effect for this, also already retroactively for 2020: On the one hand, a profit cap of 200,000 euros now applies, regardless of the accounting method up to which one may claim the amount. In addition, 50 instead of 40 percent of the costs are now allowable.

The health insurance certificate is going digital

Scholars argue about the success and failure of the reduction of bureaucracy in Germany. But a sensible project was launched at the turn of the year: electronic sickness notification is possible from 01 January. Until now, the employee received three pieces of paper: one for the employer, one for the health insurance company and one for himself. Now the doctor sends the certificate directly to the insurance company, which in turn makes it available to the employer. There is still a transitional period until 31 December 2021, during which the paper certificate will still be available. From 2022, however, this will be a thing of the past. This should also relieve the bureaucracy in start-ups.

At least one start-up could go public

In 2020, there were no major IPOs by startup stars in Germany. That could change this year.

A very hot candidate for the stock exchange floor is the used car platform Auto1, which is said to have already instructed banks to prepare an IPO. A valuation of around five billion euros is considered likely.

Online fashion retailer About You, a subsidiary of the Otto Group, has also been planning to go public for several months, according to Manager Magazin. The Zalando competitor could be worth around three billion euros on the market.

Other possible candidates are said to be the Prosiebensat.1 subsidiary Parship, the comparison portal Check24 and the long-distance bus company Flixmobility. However, it remains to be seen whether all these companies will take the plunge onto the stock exchange floor this year or wait for the corona pandemic to subside. Flixmobility, for instance, is reportedly already considering postponing its long-awaited IPO until 2022.