The Federal Government wants to give young, innovative technology companies greater access to capital. This is to better support startups investing in areas such as AI, climate technology, quantum technology or biotech, and to give German and European startups better exit options. Furthermore, existing cooperation with institutional investors is to be deepened and young startups are to be supported with regard to impact investing. For these purposes, the Federal Government is bookmarking €1.6 billion from the Future Fund; a sum that was originally to be used as a strategic reserve, and €150 million from the ERP Special Fund.

Says Dr Robert Habeck, Federal Minister for Economic Affairs and Climate Action: We can now do even more to support innovative startups investing in forward-looking technologies. Our goal is to use financing from the Future Fund to help young companies establish themselves on the global market. In this way, we are strengthening Germany’s position as a centre of innovation and startups, and supporting forward-looking technologies such as artificial intelligence. Our investments will leverage additional private capital: the sum of €1.75 billion in public funding will at least be matched from private funds. This means that a total volume of at least €3.5 billion in additional public and private funding will be available for investments in the German venture capital market.

Parliamentary State Secretary at the Federal Ministry of Finance Dr Florian Toncar comments: Germany has no shortage of smart entrepreneurs with forward-looking ideas. So I’m all the more delighted that we have succeeded in using the Future Fund to mobilise a significant amount of private capital. The tight budgetary situation and the necessary prioritisation highlight once again just how important private capital is for maintaining and improving Germany’s attractiveness to investors. The private sector accounts for the majority of investment activity in Germany. But we can do even better. By making our economy more attractive, we can mobilise even more capital. To achieve this, we must make progress on cutting red tape, speed up our planning and approval procedures, and become more attractive for workers and skilled workers.

This is how the funds are to be invested:

  • €850 million is to be invested by KfW Capital alongside private venture capital funds in direct investments in young startups in innovative technology areas. These companies are to be supported on their capital-intensive growth path to allow them to compete successfully on the global markets and to future-proof Germany’s economy.
  • Up to €500 million is earmarked to be used as Germany’s contribution to strengthening exit financing for European tech champions. We are planning to create a European exit initiative together with our European partners. This is to allow successful German and European startups to stay in Germany and Europe for exiting, rather than having to move to non-European markets.
  • €200 million is to made available to KfW Capital to continue with Growth Fund Germany, which has made a successful start. The objective here is to put the successful growth fund on a permanent footing and mobilise additional capital from institutional investors.
  • €200 million is intended for investments by KFW Capital in so-called ‘impact venture capital funds’, which are designed to offer a measurable social or ecological return in addition to the financial return. The goal here is to support this new market segment of impact investing in a targeted way.

The process of designing and developing the individual products is now being started. They are to become available successively, with some likely to enter the market by the end of 2024.

Via the Future Fund for Germany

The Future Fund (‘venture capital fund for future technologies’) was established in 2021 and has a volume of €10 bn. Through its various financing programmes, it is designed to strengthen the venture capital market and the financing system for innovative, technology-driven startups in a lasting way – particularly during the growth stage of their development. As it co-invests with private investors, the Fund is able to mobilise additional private capital for investments in important forward-looking technologies.