The German government wants to expand the financing options for start-ups by investing 1.75 billion euros. Of this, 1.6 billion euros will be allocated to the Future Fund and a further 150 million euros will come from the ERP Special Fund. This planned measure meets with approval from Christoph Stresing, Managing Director of the Association for Startups (Startup Verband), who welcomes the further development but also calls for further efforts.
The Federal Ministry for Economic Affairs and Climate Protection and the Federal Ministry of Finance announced in a joint press release that the government wants to improve access to capital for young companies that are involved in new technologies such as AI, environmental protection, quantum technology or biotechnology. Their exit opportunities are also to be improved. It also wants to intensify existing cooperation with institutional investors and support young start-ups with impact investing. The German government is earmarking 1.6 billion euros from the Future Fund, which was previously held as a strategic reserve, as well as 150 million euros from the ERP Special Fund.
The funds are to be invested as follows:
- 850 million euros is to be used by KfW Capital together with private venture capital funds for direct investments in young start-ups in innovative technology sectors. The companies are to be supported on their capital-intensive growth path so that they can assert themselves on the global market and make Germany fit for the future.
- Up to 500 million euros are earmarked as a German contribution to strengthen the exit financing of European tech champions. Together with European partners, the establishment of a European exit initiative is planned. This is intended to lay the foundation for ensuring that successful German and European start-ups do not have to switch to non-European markets for exits.
- 200 million euros are to be made available to KfW Capital for the continuation of the successful Growth Fund Germany. The aim is to consolidate the growth fund’s successful model and mobilise further capital from institutional investors.
- 200 million euros is earmarked for investments by KfW Capital in so-called impact venture capital funds, which aim to achieve a measurable positive, social or ecological impact in addition to a financial return. This is intended to provide targeted support for the new market segment of impact investing.
The design and development of the individual products has now begun. The gradual introduction of the products is scheduled to begin as early as the end of 2024.
Dr Robert Habeck, Federal Minister for Economic Affairs and Climate Protection:
“We can now provide even better support for innovative start-ups that invest in future technologies. With funding from the Future Fund, we want to help young companies in Germany to establish themselves on the global market. In doing so, we are strengthening Germany as a centre of innovation and start-ups as well as future technologies such as artificial intelligence. With our investments, we are leveraging further private capital: in addition to the 1.75 billion euros in public funds that we are investing, we are adding at least the same amount in private funds. This means that we are talking about a total volume of public and private funds of at least 3.5 billion euros that are additionally available for investment in the German venture capital market.”
Dr Florian Toncar, Parliamentary State Secretary, Federal Ministry of Finance:
“The tight budget situation as well as the necessary prioritisation once again impressively demonstrate the importance of private capital for maintaining and expanding Germany as a business location. The majority of investments made in Germany are private. We can achieve even more here. We can mobilise more capital if we become more attractive as a business location overall. To achieve this, we need to make progress in reducing bureaucracy, speed up planning and approval procedures and become more attractive for labour and skilled workers.”
Christoph Stresing, Managing Director of the Startup Association:
“The Future Fund is a decisive lever for further strengthening the venture capital market in Germany and supporting the growth trajectory of startups and scaleups. It is good that it is now continuing. We welcome the planned further development. This applies in particular to the increase of an additional 150 million euros and the further development of the growth fund. The focus with an investment volume of 850 million euros on AI, climate, quantum and biotechnology is consistent and recognises Germany’s great potential with its research strength. The capital is urgently needed there.
We must create the conditions here for global tech champions ‘made in Germany’. It is therefore also logical and necessary to strengthen the European exit markets as part of further development Exits are of crucial importance for a vital start-up ecosystem. In this context, strengthening the Capital Markets Union is also crucial. Despite these positive measures, Germany is still weaker in terms of startup financing than comparable European locations. We must therefore not slacken our efforts. On the contrary. The money is basically “there”, but it must also be invested in a future-oriented manner. To do this, we need to mobilise more capital from institutional investors. Otherwise, we will lose our relevance as a centre of innovation in the medium term. ”
About the Future Fund for Germany:
Launched in 2021, the “Future Fund” (“Investment Fund for Future Technologies”) with a volume of 10 billion euros contributes to sustainably strengthening the venture capital market and the financing conditions for innovative, technology-oriented start-ups – especially in their growth phase – through various financing programmes. Through its co-investments together with private investors, it mobilises additional private capital for investments in important future technologies.
About the Startup Association:
The Startup Association (Startup Verband) has almost 1,200 members and was founded in Berlin in September 2012. The association sees itself as the representative and voice of startups in Germany: it represents the interests, viewpoints and concerns of startup companies vis-à-vis legislation, administration and the public. It promotes innovative entrepreneurship and aims to promote the startup mentality in society. The association sees itself as a network for startups in Germany.
