How do profit participation rights compare to convertible loans, capital increases and SPVs?
Form of participation, voting rights, notary and effort compared side by side.
Profit participation rights give investors an immediate economic stake like shareholders, without a notary, without a commercial register entry and without an additional company. A convertible loan is a loan until it converts. A capital increase turns investors into shareholders. An SPV bundles investors in a separate company, which then becomes a shareholder of the startup.
| Criterion | Profit participation rights (beel) | Convertible loan | Capital increase | SPV / pooling |
| Form of participation | Contractual profit participation right | Loan, later converted into shares | New GmbH shares | Shares in an intermediate company that holds shares in the startup |
| Investor voting rights | No | No, only after conversion | Yes | Bundled via the SPV |
| Share in profits and exit | Yes, from issuance | Only after conversion | Yes | Yes, via the SPV |
| Notary | No | On conversion | Yes | Yes, when the SPV comes in |
| Startup's commercial register | No entry | Entry on conversion | Entry | One entry (the SPV) |
| Startup's balance sheet | Equity under commercial accounting | Debt until conversion | Equity | Equity |
| Ongoing effort | Low, digital via beel | Medium, conversion has to be prepared | Medium: information rights, shareholders' meetings and voting rights of the new shareholders | High: separate bookkeeping, annual accounts and tax return for the SPV |
| Adding more investors | Individually at any time | Per contract | Per round with a notary appointment | Via the SPV |
When does which option fit?
Profit participation rights fit if you want to bring on several business angels individually and on an ongoing basis without giving them voting rights or entering them in the commercial register. You can convert existing GmbH shares or convertible loans into profit participation rights with the Cap Table Cleanup in the Professional plan.
More on this form of participation: What are profit participation rights?