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Who is to be supported?
The federal government aims to expand access to capital for young, innovative technology companies. This is intended to further support startups investing in areas such as artificial intelligence, climate, quantum, or biotechnology, and to increase exit opportunities for German and European startups. Additionally, existing partnerships with institutional investors are to be deepened, and support for young startups in impact investing is to be provided.
For this purpose, the federal government has earmarked 1.6 billion euros from the Future Fund, which were previously held as a strategic reserve, as well as 150 million euros from the ERP Special Assets.
Dr. Robert Habeck, Federal Minister for Economic Affairs and Climate Protection: "We can now better support innovative startups investing in future technologies. With funds from the Future Fund, we aim to help young companies in Germany establish themselves in the global market. This strengthens Germany's innovation and startup landscape, as well as future technologies like artificial intelligence. Through our investments, we leverage additional private capital: In addition to the 1.75 billion euros of public funds we are investing, at least the same amount of private funds will be added. This means we are talking about a total volume of public and private funds of at least 3.5 billion euros, which are additionally available for investments in the German venture capital market."
Dr. Florian Toncar, Parliamentary State Secretary, Federal Ministry of Finance: Germany does not lack clever entrepreneurs with forward-thinking ideas. Therefore, I am particularly pleased that we have succeeded in mobilizing private capital to a considerable extent with the Future Fund. The strained budget situation and the necessary prioritizations once again underline the importance of private capital for maintaining and expanding the German location. The majority of investments made in Germany are private. Here, we can achieve even more. We can mobilize more capital if we become more attractive as a business location overall. To do this, we need to make particular progress in reducing bureaucracy, speeding up planning and approval processes, and becoming more attractive to labor and skilled workers.
How should the funds be utilized?
The funds are intended to be invested as follows:
- KfW Capital, together with private venture capital funds, will allocate 850 million euros for direct investments in young startups in innovative technology areas. These companies will be supported on their capital-intensive growth path, enabling them to compete in the global market and make the German location future-proof.
- Up to 500 million euros are earmarked as Germany's contribution to strengthen the exit financing of European tech champions. Together with our European partners, the establishment of a European exit initiative is planned. The aim is to lay the groundwork so that successful German and European startups do not have to resort to non-European markets for exits.
- 200 million euros will be provided by KfW Capital for the continuation of the successful Growth Fund Germany. The goal is to sustain the successful model of the Growth Fund and mobilize further capital from institutional investors.
- 200 million euros are allocated for investments by KfW Capital in so-called Impact Venture Capital funds, which aim to achieve measurable positive social or environmental impact in addition to financial returns. This is intended to support the targeted new market segment of Impact Investing.
When will the funding be initiated?
The design and development of the individual products are now being initiated. The gradual introduction of the products is expected to begin as early as the end of 2024.
About the Future Fund for Germany
The "Future Fund" (Investment Fund for Future Technologies), launched in 2021 with a volume of 10 billion euros, contributes through various financing programs to sustainably strengthen the venture capital market and financing conditions for innovative, technology-oriented startups, particularly in their growth phase. Through its co-investments alongside private investors, it additionally mobilizes private capital for investments in key future technologies.
Source: Federal Ministry for Economic Affairs and Climate Action (BMWK)
