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Private investment is a key driver of stronger growth in Germany.
The Germany Fund is intended to mobilise private capital for investment in order to enhance the competitiveness and future viability of the German economy.
Using a range of instruments, it specifically addresses the needs of industry, SMEs and young companies, start-ups and scale-ups, as well as energy supply companies.
What exactly is the Germany Fund about?
With the Germany Fund, the Federal Government and KfW are creating a framework that makes it easier for private and municipal companies to invest in Germany on a large scale.
The Federal Government is providing public funds and guarantees of around €30 billion for the Germany Fund. This is intended to trigger total investments of around €130 billion – as an investment offensive alongside the government’s special fund.
KfW will coordinate the Germany Fund and serve as the point of contact for national and international investor advisory services.
Key areas in which the Germany Fund aims to stimulate private investment include industry and SMEs, venture capital, and energy infrastructure. These include, for example, major future-oriented investments in new technologies and production facilities, the expansion of renewable energy, heating networks and power grids, as well as the extraction of raw materials and the financing of innovative technologies in the fields of deep tech, artificial intelligence (AI) and biotechnology, along with the development of solutions to strengthen defence capabilities.
Federal Minister for Economic Affairs and Energy Katherina Reiche stated:
“The current state of our economy clearly shows how great the investment needs are for modernising our country. What matters is directing private capital in a targeted way to where innovation is created, where we can make our supply chains more resilient and make Germany fit for the future. The Germany Fund mobilises private capital for this purpose using public funds and thus enables effective investments in key future areas.”
Who benefits from the Germany Fund?
The financing opportunities offered by the Germany Fund are intended to be used by industrial companies, SMEs, start-ups, young high-growth companies, private and municipal energy supply companies, and firms in the defence and raw materials sectors. To address the full range of needs, the Germany Fund is not an investment fund itself, but rather a umbrella structure comprising various building blocks that specifically target these needs.
What building blocks does it consist of?
Industry and SMEs building block
Within the Industry and SMEs building block, the Germany Fund facilitates the financing of future-oriented investments to enhance competitiveness. This includes the risk-mitigation instrument for transformation industries, which supports large-scale industrial investments, for example in electricity generation or hydrogen, as well as in the automotive industry, among medium-sized suppliers and in mechanical engineering.
Through the Raw Materials Fund, KfW provides equity investments and loans to finance projects aimed at extracting critical raw materials for the German economy, such as supporting lithium extraction in Germany.
Example: A company invests in the expansion of battery storage facilities. Together with partner banks, KfW secures the delivery of the facilities through a guarantee. This enables the company to undertake a higher volume of investment.
Energy building block
Under the Energy building block, it is planned to back the borrowing of electricity distribution and district heating network operators. This would enable them to manage the sharply rising investments in electricity distribution and heating networks in the coming years. In the field of geothermal energy, the instrument covers the risk of not finding underground hot water sources during drilling (exploration risk).
In addition, given the high investment requirements, it is necessary for private and municipal energy supply companies to have a sufficient equity base to secure financing.
Example: An energy utility plans to modernise or expand its electricity distribution network. To finance the investment, KfW, in cooperation with the company’s house banks, provides a loan of up to €100 million, with KfW sharing the risk with the banks. In return, KfW receives a federal guarantee. This enables energy utilities to address their substantial investment needs.
Start-ups and scale-ups building block
Within the Start-ups and Scale-ups building block, KfW will now also act as a co-investor, investing directly in German start-ups together with private capital providers from the KfW Capital fund portfolio. Up to €50 million per investment and a total of €1 billion will be available for this purpose until the end of 2030.
A further €300 million is available for investments in credit funds that finance the expansion of novel industrial technologies. To strengthen venture capital financing, the Future Fund will be expanded and made permanent from 2026 onwards.
Example: Young companies, for example from the defence sector, receive venture capital from funds in which KfW participates. This supports the development of future-proof products and promotes innovation.
The new, additional funds from the “Growth and Innovation Capital (Future Fund II)” will be used for venture capital financing, particularly in the areas of deep tech, biotechnology, security and defence, as well as to cover existing financing needs in the SME sector.
When does the Germany Fund start?
The establishment of the Germany Fund is planned in stages.
Alongside an initial project in the raw materials sector, the first three instruments were launched in December 2025. These are:
- the risk-mitigation instrument for transformation industries,
- the loan programme to promote geothermal projects, and
- a new financing instrument for start-ups and scale-ups.
Further rollout
- In a second stage, additional instruments are to be launched gradually from 2026 onwards. These include instruments to modernise energy infrastructure, as well as new private credit funds for start-ups and growth and innovation capital, which will further expand the Future Fund. This will further strengthen venture capital financing in Germany and address financing gaps for SMEs.
- As the programme continues to expand, venture capital financing for innovative start-ups and scale-ups in the security and defence industry will also be strengthened through fund investments or direct equity stakes, placing a clear focus on Germany’s technological defence capabilities.
- In addition, another instrument will be introduced in the area of securitisation to deepen access to capital markets and improve financing conditions for the German economy.
- Further instruments will be developed in line with market needs. For example, in the construction sector, mobilising private capital is also essential for affordable and sustainable housing in Germany. For this reason, the Federal Government and KfW have launched a process to develop a new housing module under the umbrella of the Germany Fund. This module is intended to improve the housing market situation and accelerate private investment in residential construction.
Further information
Additional information, including a fact sheet, can be found on the Germany Fund website: deutschlandfonds.info
