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When exiting a startup: Does a financial holding company bring founders more money?

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When exiting a startup: Does a financial holding company bring founders more money?

“A financial holding company should be equipped with sufficient capital right from the start,” advises tax expert and guest author Nicole Haaf. Lisa Hantke

A specialist article by lawyer Nicole Haaf. She is a partner at the law firm Haaf Partners and specializes in tax law issues in the area of ​​venture capital and start-ups. She is also the host of the podcast “taxitup”, a tax and legal podcast for VC topics.

In venture capital, setting up a financial holding company before founding a startup is, to a certain extent, “good form”. Most founders are aware that such a financial holding company has tax advantages – especially when it comes to selling their company later. This article aims to clarify what the financial holding actually means and whether there are disadvantages in addition to tax advantages.

Financial holding – a definition

A “financial holding” describes a corporation – usually in the form of a GmbH, but sometimes also found as a UG (limited liability) – whose sole purpose is to acquire assets (often in the form of investments ) to maintain and manage. Anyone who sets up such a financial holding company as a private person usually has a 100 percent stake in it as the sole shareholder. The financial holding company itself holds shares in one or more startups. Consequently, a private individual only has an indirect interest in the startup capital company via the financial holding company.

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