Karl Rapp and Julius Auspitzer founded the Rapp Motorenwerke GmbH on 27 October 1913 with a capital stock of RM 200,000. The company was established in Milbertshofen on the former site of the Munich branch of Flugwerk Deutschland GmbH, a firm at which Karl Rapp had held a leading position and that had gone into liquidation in the summer of 1913. General Consul Auspitzer was the company's sole shareholder, with the operational side of the company managed by Karl Rapp. The company's stated purpose was to build and sell "engines of all types, in particular internal combustion engines for aircraft and motor vehicles".