Together with other investors
The federal government is investing one billion euros in the startup ecosystem
November 17, 2023, 4:16 p.m
Germany lags far behind in international comparison when it comes to venture capital, which investors use to invest in promising startups. A new growth fund is intended to make young companies more independent of Anglo-Saxon investors.
The federal government’s new growth fund for Germany to support startups is filled with one billion euros in venture capital. The fund has “slightly exceeded” this target, according to a statement from the state development bank KfW. She wants to present the fund together with representatives of the federal government. It is one of the largest venture capital funds of funds in Europe.
The Ministry of Economics and Finance initiated the fund to advance Germany as a startup location. Startups are finding it difficult to raise money given the increased interest rates and cautious investors in the wake of the Ukraine war. Especially for large financing rounds in the late phase, German startups are usually dependent on Anglo-Saxon investors. In addition, promising growth companies often go public in the USA in order to get closer to large investors.
Around a third of the money in the growth fund comes from the federal government, and the remaining two thirds come from private investors, wrote the “Handelsblatt”. These include the insurers Allianz and Munich Re as well as the world’s largest asset manager Black Rock. A growth fund is a fund of funds that invests money in other venture capital funds. These in turn support startups. When it comes to venture capital, which investors use to invest in promising startups, Germany lags far behind countries like the USA.
For Christian Miele, CEO of the startup association, the law is a “big hit by the traffic light coalition.” “Today is a good day for the German startup ecosystem. The new rules for employee participation are probably the biggest startup reform in Germany,” said Miele.