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Indirect participation
What is an indirect participation?
An indirect participation is established through profit participation rights (Genussscheine) that are registered on the blockchain (tokenized). This form of participation is designed to reflect an ownership interest in a limited liability company (GmbH).
Why all this?
Shares in a GmbH can only be transferred through a notarized deed. This process is time-consuming, complex, and costly. At the same time, the GmbH is the most common legal form for small and medium-sized enterprises (SMEs) in German-speaking countries.
Many well-established SMEs and young companies require equity capital to invest, grow, and remain competitive. For investors, SMEs—some of which have been on the market for decades—offer attractive investment opportunities. Until now, flexible participation in these companies has been difficult to implement.
Our solution is therefore an indirect participation.
How does it work?
- Step 1: Formation of a Special Purpose Vehicle (SPV)
We establish a so-called Special Purpose Vehicle (SPV), which exists solely to invest in the target company and issue profit participation rights (Genussscheine). - Step 2: Issuance of profit participation rights
The SPV issues profit participation rights that reflect the economic interest in the target company. These rights can optionally be registered on the blockchain (tokenized) to enable easier transferability. - Step 3: Investment in the target company
The SPV uses the raised capital to acquire shares in the target company and thus becomes its shareholder. - Step 4: Profit distribution
If the target company generates profits and distributes them, the SPV passes on these distributions proportionally to the holders of the profit participation rights.
As an investor, you receive:
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Entitlement to a proportional share of the profit distributions of the target company
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Participation in the proceeds of a potential exit (e.g., sale of the company)
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Transferable profit participation rights (more flexible than direct GmbH shares)
Important notes:
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You are not a direct shareholder of the target company, but rather a holder of profit participation rights issued by the SPV
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Administrative costs and fees of the SPV reduce the total distributions
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Shareholder rights (e.g., voting rights, access to information) remain with the SPV but are represented indirectly through it
Return Opportunities:
Proportional profit distributions
Participation in the proceeds from a potential exit of the target company
Term:
Usually a fixed term of several years
Termination options often limited (e.g., waiver of termination for 10 years)
Type of Capital:
Equity
Opportunities for Investors
- Participation in profits and value growth of established SMEs
- Diversification of the portfolio with SME investments
- Easier transferability compared to direct GmbH shares
Risks for Investors
- Risk of total loss in the event of insolvency of the target company
- No influence on company management
- Dependence on proper administration by the SPV
- Liquidity risk due to the absence of a regulated secondary market
This form of participation gives investors access to SME investments with simplified handling, but it also carries the typical risks of equity investments.
Please note:
These are high-risk investments that are rarely secured. Only invest if you can afford to lose your entire investment. Your investment is not protected by European deposit guarantee schemes.
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