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If they now would be able to invest in foreign companies like GmbHs or UK Limiteds it would be perfect. I understand why they don’t want to do that but I think

If they now would be able to invest in foreign companies like GmbHs or UK Limiteds it would be perfect. I understand why they don’t want to do that but I think for a lot of companies to which YC could be interesting (us included) it’s simply not possible or very difficult to do a flip to a US company.

deleted 7y ago
[deleted]
robk 7y ago
German notary requirements make investing hell compared to us or uk
- ThePhysicist 7y ago
  Yeah I know that's unfortunate. Maybe we will see some innovation in that area with Covid-19 now, the problem is that the notary system has created a class of wealthy people that will fight vigorously against anything that threatens their income stream, even though many transactions could be done digitally. The main problem is that you need to appear personally, otherwise it's not such a big deal I find.
- hef19898 7y ago
  My impression was that investments in US entities requires, kind of, a lawyer. So not that much different, if you ask me. With Germany being in the EU, you can also incorporate in whatever EU country you want. The UK is obviously out for now, but take Estonia for example. Makes taxes a lot more complex for the company, but much less so when compared to YCs way of transforming into a US Inc. with a German / EU local entity. Especially when there are now US based operations. That being said, there is nothing wrong with sticking to one market. Not the last reason being to avoid the above mentioned entanglements.
  - vikramkr 7y ago
    From what I understand, The us market is way way easier than most foreign markets you dint need a lawyer to incorporate or frankly to deal with the first few hundred thousand bucks of investment using standard terms, and the amount of bureaucracy and red tape is far far less here. Caveat: I cant speak to Germany specifically and can only speak to my experience with building a company in the us and what I hear from friends in europe and asia
    - hef19898 7y ago
      True that, in ermany you legally have to pass through a notary, while in the US it would simply be wise to do so. The incorporation of my company in germany, including documentation, notary fees and registration, cost me less than 1.000 € and took 7 days from notary to registration. VAT registration took almost 5 weeks, so. But that was independent from the legal entity.
  - barry-cotter 7y ago
    > My impression was that investments in US entities requires, kind of, a lawyer. So not that much different, if you ask me. Germany doesn’t kind of require a layer. You actually need a lawyer. In the Anglosphere you would be wise to procure the services of a lawyer if you’re doing anything remotely out of the ordinary and dealing with lots of money but if not you can set up an LLC or Ltd. or some other standard corporate structure using off the shelf documentation and b filling in the appropriate blanks yourself.
  - robk 7y ago
    In the UK or USA I can setup a company in a few days and generally legals for a Seed round wouldn't really ever exceed $25k. In Germany there's far far more hassle sadly, German language capability is a must and the notary requirement creates enough inertia I'd rather just never deal with a GmbH unless it's absolutely necessary. One of our deals required reading legal documents out loud in person for 3 hours - that's just not really feasible as an investor at scale.
kick 7y ago
That increases complexity drastically for what's basically a third and a sixth of the reward, if even that. I don't think it makes that much sense.
- ThePhysicist 7y ago
  Not sure I understand what you mean by "a third and a sixth of the reward", can you explain?
  - kick 7y ago
    Population of Germany and the UK, respectively, compared to the United States (probably a little fuzzy because it was recalled from memory, though). Not only smaller pool of applicants, but also smaller markets.
    - jedberg 7y ago
      The market of "Germany" is actually the entire EU, which is bigger than the US.
      - kick 7y ago
        Only slightly bigger, much of it is dramatically more poor, and a sizeable portion of it can't understand English, much less German.
        xchaotic 7y ago
        Where do you get the dramatically more poor from?
        bpodgursky 7y ago
        Poland, Bulgaria, Romania, Greece have a lot of very smart and hard workers, but they are not (yet) wealthy countries. People in eastern Europe simply do not have the disposable income that Americans or western Europeans (usually) have.
contingencies 7y ago
IIRC they attempted the same approach in China. They tried to take the US strategy and demand a particular legal structure for Chinese startups that was neither normal for domestic startups nor common for international startups beneath the size of a multinational with deep pockets and switched on lawyers. This was probably a significant contributor to the lack of traction in China, and almost certainly removed by the follow-on program.

deleted 7y ago

[deleted]

robk 7y ago

German notary requirements make investing hell compared to us or uk

ThePhysicist 7y ago
Yeah I know that's unfortunate. Maybe we will see some innovation in that area with Covid-19 now, the problem is that the notary system has created a class of wealthy people that will fight vigorously against anything that threatens their income stream, even though many transactions could be done digitally. The main problem is that you need to appear personally, otherwise it's not such a big deal I find.
hef19898 7y ago
My impression was that investments in US entities requires, kind of, a lawyer. So not that much different, if you ask me. With Germany being in the EU, you can also incorporate in whatever EU country you want. The UK is obviously out for now, but take Estonia for example. Makes taxes a lot more complex for the company, but much less so when compared to YCs way of transforming into a US Inc. with a German / EU local entity. Especially when there are now US based operations. That being said, there is nothing wrong with sticking to one market. Not the last reason being to avoid the above mentioned entanglements.
- vikramkr 7y ago
  From what I understand, The us market is way way easier than most foreign markets you dint need a lawyer to incorporate or frankly to deal with the first few hundred thousand bucks of investment using standard terms, and the amount of bureaucracy and red tape is far far less here. Caveat: I cant speak to Germany specifically and can only speak to my experience with building a company in the us and what I hear from friends in europe and asia
  - hef19898 7y ago
    True that, in ermany you legally have to pass through a notary, while in the US it would simply be wise to do so. The incorporation of my company in germany, including documentation, notary fees and registration, cost me less than 1.000 € and took 7 days from notary to registration. VAT registration took almost 5 weeks, so. But that was independent from the legal entity.
- barry-cotter 7y ago
  > My impression was that investments in US entities requires, kind of, a lawyer. So not that much different, if you ask me. Germany doesn’t kind of require a layer. You actually need a lawyer. In the Anglosphere you would be wise to procure the services of a lawyer if you’re doing anything remotely out of the ordinary and dealing with lots of money but if not you can set up an LLC or Ltd. or some other standard corporate structure using off the shelf documentation and b filling in the appropriate blanks yourself.
- robk 7y ago
  In the UK or USA I can setup a company in a few days and generally legals for a Seed round wouldn't really ever exceed $25k. In Germany there's far far more hassle sadly, German language capability is a must and the notary requirement creates enough inertia I'd rather just never deal with a GmbH unless it's absolutely necessary. One of our deals required reading legal documents out loud in person for 3 hours - that's just not really feasible as an investor at scale.

kick 7y ago

That increases complexity drastically for what's basically a third and a sixth of the reward, if even that. I don't think it makes that much sense.

ThePhysicist 7y ago
Not sure I understand what you mean by "a third and a sixth of the reward", can you explain?
- kick 7y ago
  Population of Germany and the UK, respectively, compared to the United States (probably a little fuzzy because it was recalled from memory, though). Not only smaller pool of applicants, but also smaller markets.
  - jedberg 7y ago
    The market of "Germany" is actually the entire EU, which is bigger than the US.
    - kick 7y ago
      Only slightly bigger, much of it is dramatically more poor, and a sizeable portion of it can't understand English, much less German.
      - xchaotic 7y ago
        Where do you get the dramatically more poor from?
        bpodgursky 7y ago
        Poland, Bulgaria, Romania, Greece have a lot of very smart and hard workers, but they are not (yet) wealthy countries. People in eastern Europe simply do not have the disposable income that Americans or western Europeans (usually) have.

contingencies 7y ago

IIRC they attempted the same approach in China. They tried to take the US strategy and demand a particular legal structure for Chinese startups that was neither normal for domestic startups nor common for international startups beneath the size of a multinational with deep pockets and switched on lawyers. This was probably a significant contributor to the lack of traction in China, and almost certainly removed by the follow-on program.