TechAngels Romania warns that the proposed mandatory capitalization of shareholder and investor loans endangers the local innovation ecosystem, discourages private investment, and risks accelerating the relocation of Romanian startups to more favorable jurisdictions.
Bucharest, August 29, 2025 – TechAngels, the most experienced and extensive network of private investors in technology startups in Romania, expresses deep concern regarding the measure proposed in Reform Package 2, which introduces the obligation to capitalize loans granted by shareholders/associates to companies that fall below the “half of share capital” threshold.
We acknowledge that the Government faces difficult decisions in order to stabilize the economy, combat fraud, and improve tax collection. We also appreciate the fact that consultations with the business community have been initiated, the only viable path to balanced solutions. In this constructive spirit, we stress that the following provision has severe consequences for technology startups:
“If […] the company […] also records debts to shareholders/associates resulting from loans or other financing granted by them, […] upon expiration of the deadline, it shall proceed with a share capital increase through the conversion of such receivables.” (Art. 153²⁴ para. (41) of the draft under consultation)
This provision directly impacts the specific way startups are financed. In their early years, startups almost always operate at a loss and with negative equity. To continue growing, they rely on successive funding from founders and investors in the form of convertible loans—an essential instrument, widely used worldwide for its flexibility.
Under the new rule, these loans would be automatically converted into equity, even if neither the company nor the investors wish this at that moment. The consequences are serious: convertible loans would no longer be usable, shareholder structures would be forcibly altered, unwanted dilution would occur for existing shareholders, and decision-making freedom would be stripped from those financing the company.
“Even the world’s largest tech giants were once startups financed through convertible loans; if we want global champions from Romania, we must preserve this simple, predictable, and functional instrument,” said Matei Dumitrescu, Vice President and Board Member of TechAngels.
This is not merely a legal technicality: the practical effect is to cut off the very mechanism that allows startups to survive until profitability or global scaling. Instead of supporting innovation and investment, the provision discourages private capital and pushes entrepreneurs to relocate their companies to more favorable jurisdictions.
“We, the business angel investors, have contributed over the past 13 years to the launch and development of several hundred Romanian tech companies. These companies pay taxes and create jobs, even during periods when they do not record profits. The proposed measure would block exactly the mechanisms that enable startups to attract funding and become global champions,” declared Marius Istrate, Chairman of the Board, TechAngels Romania.
We emphasize that no other EU member state imposes the forced conversion of loans into share capital. EU Directive 2017/1132 leaves the decision in the hands of shareholders, ensuring transparency and accountability without coercion. Romania risks becoming a negative exception, losing investments to countries that foster a predictable, innovation-friendly legislative environment.
We recognize that the Government has already taken positive steps, such as dropping the turnover tax (IMCA) and adopting proposals from the business environment. However, urgent correction of the mandatory capitalization measure is crucial to avoid blocking the financing of innovative startups and undermining Romania’s growth potential.
“Romania cannot afford to export innovation and globally competitive companies to other countries just because they offer a more predictable legislative environment. If we want added value and well-paid jobs to remain here, we must build a fiscal and legal framework that encourages, not drives away, private investment,” concluded Marius Istrate.
TechAngels Romania reaffirms its readiness to contribute with arguments and to present the specific context of the tech industry and startups, as well as its commitment to building a competitive innovation ecosystem that places Romania on the global technology map.
About TechAngels
TechAngels is an open group of private investors supporting the development of technology startups in Romania and the region. Since 2013, its members have invested over €46 million in the local and international ecosystem. The group includes over 130 members—entrepreneurs and executives with extensive local and global experience. To date, TechAngels’ portfolio includes more than 270 startups. Among the companies supported by its members from the earliest stages are UIPath, FintechOS, Veridion, Creatopy, Procesio, Druid, Tokinomo, Bright Spaces, Vatis Tech, Yarooms, TypingDNA, FieldOS, Machinations, MOCAPP, SmartDreamers, 123FormBuilder, AMSIMCEL, which have achieved significant progress on the global technology stage.