Preseed

Frequently Asked Questions

The FAQs are non-binding basic information and list the funding terms and conditions in a comprehensible manner. The individual funding agreement, the guideline specifications valid at the time the agreement is signed and the “Programme to Fund the Establishment and Setting up of Innovative Companies” guideline valid at the time the agreement is signed as well as their legal basis take precedence.

 

What is the objective of the aws Preseed Programme?

The goal is to help young, innovative high-tech projects that have remarkable product ideas and scalable business models to prepare, implement and validate the proof of concepts on a technical and economical basis. Because the companies that are funded by aws Preseed usually have to compete with others on a global scale, the international market acts as the benchmark for evaluating the companies’ innovation.

 

How does the aws Preseed Programme define high tech?

Deep-tech or high-tech start-ups are based on tangible scientific advances and discoveries and time-consuming in-house high-tech development, which is associated with significant technological risks and requires exceptionally high investments. The company must be in a position to expand and secure in a lasting way its competitive position on account of its international technological leadership (technology leap), secured by patents, licences and other options for protection.

 

How can I apply for aws Preseed funding?

The page for submitting applications can be found at https://foerdermanager.aws.at. It is an electronic submission. If you require technical support, please use the contact number provided.

 

In how much detail must the application form be filled out?

You will be guided through the fields required for the application. Any detailed information (such as on the project schedule plan) can also be submitted subsequently, albeit swiftly. The information in the application form can be kept to a minimum. This initial information must allow us to draw qualitative conclusions about the technology, the distinction to the state of the art and the target market.

After the initial assessment, an iterative process will commence during which you will provide detailed information and can edit the documents according to the formal requirements.

 

What are the requirements for the project plan and financial planning?

The international market situation and international competition in particular must be analysed comprehensively and, if possible, backed up with figures and sources. In addition, the used technology should be described in detail. The detailed target specification (data sheet, feature list, etc.) in comparison to existing products is an essential point of reference for classifying the project. Furthermore, it is important to clearly present how the company wants to earn money (business model) and how overall financing is supposed to be structured. Furthermore, team composition and the track record of each team member must be shown. The IP strategy and status regarding FTO, trademark applications and proprietary patent applications also have to be described.

 

Will financial planning spanning two years suffice?

No, financial planning should span 4–5 years. For the Preseed phase, the planning document “Integral Planning” (available for download on the aws website at https://www.aws.at/foerderungen/aws-preseed/ should be prepared. Additionally, a more detailed planning for the next 2–3 years, representing the company’s further development, must be submitted. Even though the planning uncertainties in the start-up phase are great, a four to five-year plan is a working hypothesis that should and must be continuously refined as the company grows.

 

I already have a company. Can I apply for Preseed for a new company?

The company to be founded must be independent within the meaning of the EU’s definition of SMEs.

 

Why is the entrepreneur or team of entrepreneurs so important?

Start-up companies, especially those in the high-tech industry, are faced with high risk but also great opportunities. Entrepreneurial success and failure highly depend on management. For this reason, when selecting start-up projects, it is vital to have an experienced, committed and risk-averse start-up team.
The following minimum requirements apply: At least one shareholder who has a minimum of a 25% stake in the company is 100% active in the project. Those who have the essential know-how must also hold at least 25% of the shares and be actively involved in operations.

 

Am I allowed to have already founded a company in order to apply for aws Preseed?

Because Preseed funding is aimed at projects in the pre-foundation phase, the company must not be founded before the application is submitted.  Sole proprietorships or partnerships (e.g. Offene Gesellschaften, OGs) are allowed to already have been established but are not allowed to be making any significant sales.

 

According to which Austrian and EU guidelines is funding structured?

Funding within the European Union is subject to extensive legal regulations, to which Austria Wirtschaftsservice GmbH (aws) is bound.

The “Programme to Fund the Establishment and Setting up of Innovative Companies” is based on the Guideline for Funding the Establishment and Setting up of Innovative Companies (Seed Financing Guideline 2016). The Preseed Programme is based on Commission Regulation (EU) No 1407/2013 of 18 December 2013 in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis state aid (OJ L 352 of 24 December 2013, p. 1–8).

 

Is aws Preseed funding a de minimis aid?

Yes. aws Preseed is a de minimis aid, i.e. the de minimis threshold of EUR 200,000 may not be exceeded within 3 years.

 

Why do founders have to bring in equity capital in cash?

How the company is managed (and thus how the company value is influenced) is in the hands of the founders. It is possible and also probable to achieve a high growth in value of companies. Adequate risk participation is therefore a matter of course.

 

Can aws Preseed funding be recognised as equity when pursuing other funding schemes?

aws Preseed is public funding. Therefore, these funds cannot be counted towards an equity contribution or complementary own equity financing for other funding schemes that finance, for example, 50% of the project costs and as such must be financed with other private capital (own funds, long-term shareholder loans, lines of credit, company profits). However, it is possible to provide evidence of sufficient overall funding (in compliance with the respective aid intensities) by including aws PreSeed.

 

Can I have my own work output credited as equity in aws Preseed?

No, the founders’ minimum own cash contribution is considered reasonable.

 

Can I have the work hours for which I receive remuneration from aws Preseed financing credited towards other funding as an “own contribution”?

No, as that would be an impermissible double grant.

 

Is/are the founder(s) allowed to be remunerated?

Depending on how high the own funds contributed in cash are, the founder(s) may be remunerated. This is determined within the context of the economical use of the aws Preseed funds. The ceiling for mostly publicly funded Preseed companies is the rate for the “Senior Postdoc” level of the Austrian Science Fund FWF (www.fwf.ac.at; standard personnel costs). The founders should first and foremost be interested in the company’s growth (i.e. in an increased value).

 

Why is there an assessment panel?

The members of the assessment panel have many years of entrepreneurial and/or scientific experience while also being knowledgeable about the uncertainties of founding a company in the high-tech industry. The members of the panel are able to identify many of the potential bottlenecks along the company’s growth trajectory. Information or conditions will be provided as part of any recommendation for funding.

 

What is the aid intensity?

Aid intensity is the amount the public sector gives, expressed as a percentage (present value) of (partial) project costs. Depending on the funding guidelines or the importance of a business promotion programme for an economy, the aid intensity can range from a few percent to almost 100 percent.

 

What is the present value?

The present value describes the benefit of funding, expressed in financial terms, taking into account financial mathematical methods and risk assessment. A grant usually keeps 100 percent of its present value, while a loan or guarantee has a much lower present value depending on the repayment conditions.

 

Does Austria Wirtschaftsservice GmbH (aws) receive shares in the company as part of aws Preseed?

No. However, in order to ensure that the funds are used in compliance with the financing, Austria Wirtschaftsservice GmbH (aws) reserves the right to extensively audit and inspect the company's operations. Because the aws Preseed interests are similar to those of an equity investor, any major entrepreneurial decisions and changes such as to the shareholder structure must be first discussed with Austria Wirtschaftsservice GmbH (aws).

 

What happens when new shareholders are admitted to the company?

aws must be verifiably notified of a new shareholder entering the company or of a change in shareholders within two weeks. If this leads to a change of control, the prior written consent of aws must first be obtained.

 

What happens if the company is sold?

If the company is sold in whole or in part or if there is an exit without first obtaining the consent of aws before doing the final account statement of the grant and up to 12 months afterwards, the funds must be repaid.

 

Do the founders have personal liability?

Yes. However, only in the event that the company is sold without the consent of aws before the final account statement of the grant and for up to 12 months afterwards, or if the company is offshored during this period. For other liability cases, the existing legal regulations apply. Founders planning to have company shares of 10% or more should join the Preseed agreement and thus be personally liable.

 

If I have received aws Preseed funding, can I be a part-time entrepreneur, i.e. hold another job?

Technically no. In special cases, such as and especially when a positive synergy has clearly resulted from academic research, significant shareholder-employees can also be available to the company on a part-time basis. Successfully setting up a business requires all available resources, which is why a company as a sideline is generally a grounds for exclusion from aws Preseed funding. Under no circumstances are all of the shareholders and persons with know-how allowed to work in the company on a part-time basis.

 

Which expenses are NOT funded?

The expenses not eligible for funding include: Any expense that is not related to the technology project in terms of content (e.g. food, other expenses strongly connected to “personal lifestyle”), expenses that have already been claimed for other funding; expenses that cannot be recognised as business expenditures within the meaning of the Income Tax Act (Einkommensteuergesetz); expenses that do not comply with the principle of economy and expediency; travel expenses that do not follow the guidelines of the federal business travel regulations.

 

What should be taken into account when doing the account settlement?

The funds are accounted for on the basis of verifiable costs. There is an accounting form for this, which must be filled out accurately and correctly. We recommend you keep this list up to date from the start of the project onward. Each invoice must have a proof of payment or proof of cash flow (e.g. bank statement). Only the eligible costs may be invoiced. For this purpose, grant recipients will generally consult tax advisers/public accountants for assistance.

Further details and important information can be found in the account statement guidelines:

https://www.aws.at/fileadmin/user_upload/Downloads/Abrechnung/aws_Preseed_Seedfinancing_Abrechnungsleitfaden.pdf

 

Can vehicles be purchased?

Purchasing a vehicle from Preseed funds is not permitted. Rentals or leases are allowed, provided it is economical, appropriate and approved as part of the business plan.

 

Why are the tranche payments based on milestones?

The pre-seed phase poses many risks. Agreeing on interim targets allows for feasible growth and an ongoing assessment of the start-up project.

 

Do the funds have to be repaid?

The Preseed funds are a non-repayable grant. In the event of a serious breach of contract, the funds must, however, be repaid with interest.

 

What other financing options are available?

A distinction must be made between equity capital, debt capital and other funding. The website www.foerderpilot.at offers help in finding additional financing options.

 

Is it possible to receive Preseed funding if a business model or technology that is already internationally established is brought to Austria/Europe for the first time?

No, a technological leap can usually no longer be presented in this instance.

 

How long does it take to receive aws Preseed funding?

The period is comparable to a typical Austrian venture capital financing. From the time that documents are made available that provide clarity and detail, you can expect an approval period averaging 3 months, subject to the availability of funds and a favourable vote in the assessment panel.