Patrick Collison, CEO of payment company Stripe, relayed the words of a German founder: the notion that starting a business in Germany is difficult is not an exaggeration, but rather an understatement. The founder's first company had a notary read approximately 90 pages of text publicly for an entire day to sign an investment contract, charging €30,000; the second company did not register in Germany again.

Article 13 states: the record must be read to the parties in the presence of the notary, acknowledged by them, and signed by hand; charts may be presented instead of being read aloud. In Germany, capital increases, amendments to articles of association, and changes in shares typically require notarization, with fees calculated based on the economic value of the transaction according to the Notary Fees Act, and are non-negotiable. The Karlsruhe Higher Regional Court confirmed a round of approximately €7 million investment with a pre-investment valuation of about €21 million, with the notary charging based on a business value of approximately €35 million, resulting in a certification fee of about €63,100, plus additional charges for English attachments. For seed rounds with a pre-investment of €3 million and a new issuance of €1 million, notary fees are often in the low four-digit range; establishing a limited liability company typically costs around €1,000 to €1,600, which does not equate to exorbitant financing round costs.

Starting from August 2023, subscription statements for cash capital increases allow for video notarization, but capital increase resolutions, physical contributions, and additional obligations still require in-person attendance. For cross-border transfers, some have gone to Basel, Bern, or Vienna to find foreign notaries. These loopholes do not eliminate the obligation to read aloud. In Delaware, USA, company articles and financing documents are generally established with just signatures, without requiring the notary to read the entire investment agreement aloud.

Collison's comparison is to the site selection logic of payment infrastructure companies: the first company paid for time plus a fixed cost of €30,000, while the second company avoided the same set of rituals by choosing a different registration location. Germany still has engineers and industrial clients, but the friction occurs on the day when equity is turned into executable documents.

The €30,000 fee can consume a small round's legal budget, and for larger rounds, it is relatively small compared to the financing amount, but a whole day of reading turns signing into an uncompressible schedule. Founders vote with their feet on the registration location of the next company, not on the check of the day.

In market mechanisms, buyers want German clients and talent, but also founders who can close deals quickly, while sellers are the legally monopolized notary system. The event is driven by site selection decisions. Funds flow from startups to notary offices and registration courts. Beneficiaries are notaries charging according to fee schedules and local consultants who remain; those under pressure are founders who close deals in Germany in the first round and move the next round away.

Source: Public Information