"Existenz grundung" just means "founding a company". It doesn't imply anything about grants being taken. What you're probably referring to is a "Gründerzuschuss", which is a form of unemployment payment which gives you about 60% of your former salary with a fixed amount of time to get out of unemployment benefits via founding your own company. It's only available to those that were previously full-time employees.

Also, it's horseshit that €500/month was a good salary 5 years ago. More like €3500/month. Rent is also still far cheaper in Berlin than virtually any other western European major city.