Rheingau Founders in conflict with its own backers
Berlin — The start-up investor Rheingau Founders is in a tangible conflict with its own backers. As reported by the business magazine ‘Capital’ (issue 11/2019, EVT October 24), one of them is the venture capitalist Born2Grow, which is financed by Lidl founder Dieter Schwarz. Several investors are considering lawsuits. Born2Grow is also negotiating a complete exit and sale of its investments. The dispute was sparked by fund fees that Rheingau Founders demanded from its financiers.
The founders of the startup fund had come into money in 2014 through an early investment in food delivery service Lieferando. They then began to build their own companies and formed an investors’ club. In addition to Born2Grow, the members include entrepreneurs such as Cornelius Boersch and the Mende family from Karlsruhe.
A dispute arose as early as a year ago when Rheingau Founders charged its investors for start-up investment costs, such as tax advisors and auditors. What was unusual was that the fund also claimed costs retroactively — in some cases for a period of five years. Born2Grow, for example, was to pay a quarter of a million euros in fees. Some investors ‘Capital’ spoke to refused to pay. The reason given: The suddenly accruing claims were too high and in part already time-barred.
Rheingau Founders partners Philipp Hartmann and Tobias Johann, on the other hand, call Born2Grow’s behavior “unprofessional.” The costs had been fixed in the contracts. Born2Grow had already taken the Berlin founders to court at the time. Before a verdict was reached, the parties reached an out-of-court settlement. Now, new lawsuits could be on the horizon.
There are further points of conflict between investors and the start-up fund: Several Rheingau investors complain that they have been inadequately informed about the business development of their start-up investments. One investor even got into trouble with the tax office because documents were missing. Rheingau Founders disputes this, saying the fund has always “fully complied” with all reporting requirements.