German companies have pledged billions to support startup funding. They want to invest around twelve billion euros in venture capital by 2030, as announced by the German government and the state development bank KfW at the Startup Summit in Berlin.
A joint declaration of intent was signed along with companies. These include Allianz, Commerzbank, Deutsche Bank and US asset manager Blackrock, as well as Deutsche Börse, Telekom and Henkel. The declaration states that previous investments and improved framework conditions for startups are insufficient compared to international ones.
According to Federal Finance Minister Christian Lindner (FDP), the venture capital market is too small in international comparison. In the US it is three times larger in relation to economic power.
Many German investors are cautious. This is another reason why the new initiative is so important. Stefan Wintels, head of the state-owned KfW development bank, has said it would take 30 billion euros of venture capital a year to catch up with the US. KfW is coordinating the new initiative. Federal Economy Minister Robert Habeck (Greens) said that Germany has a problem with financing the growth phase of startups. Now politicians are looking to join forces with the business community.
The Startup Association recently called for a tripling of venture capital investment by 2030 to close Germany’s annual funding gap of around €30 billion. This requires mobilising more private capital for venture capital, especially from institutional investors such as insurance companies. Numerous IPOs of young companies outside Europe have resulted in significant losses in creating value for Germany as a place to do business.
