The German government plans to support local technology projects by allocating 1.75 billion euros, but experts believe that such funding is unlikely to significantly change the country’s position at the global tech stage.
The funds will be used for start-ups in the fields of artificial intelligence as well as climate, quantum and biotechnology to reinforce German high-tech companies. Robert Habeck, the minister for economic affairs and climate protection, declared:
“With funding from the Future Fund, we want to help young companies in Germany to become competitive on the global market. In addition to the €1.75 billion in public funds that we are investing, there will be at least the same amount of private funding.”
The Future Fund was established in 2021 to provide funding through a special fund for the European Recovery Programme (ERP). This will bring the total amount of public and private funds to around €3.5 billion.
To attract additional investment, the government also wants to further reduce bureaucracy, expedite planning and approval procedures, and take measures to attract skilled workers. Florian Toncar, State Secretary of the German Ministry of Finance, noted:
We can mobilise more capital, if we become more attractive as a business location overall.
Germany is currently lagging far behind other EU countries when it comes to start-up funding, according to Christoph Stresing, managing director of the German start-up association. Statistics from the start-up association revealed that France invested a total of €107 per capita in start-ups last year, whereas in Germany the figure was only around €85 per capita.
“Despite these positive measures, Germany is still weaker in terms of start-up financing than comparable European locations.”
The UK and the US are the leading investors in this area. In 2022, the UK invested €438 per capita in startups, whereas the US spent €691 per capita.
Most of the funding, totalling €1.6 billion, comes from the Future Fund, which has a total budget of €10 billion and aims to improve the conditions for financing technology-focused start-ups, especially in their development phase.
According to the Federal Ministry for Economic Affairs and Climate Action (BMWK), around €850 million will be invested in young technology start-ups through direct investment so that they can “compete on the global market.”
The focus with an investment volume of €850 million on AI as well as climate, quantum and biotechnology is consistent and recognises Germany’s great research potential.
A further €500 million has been allocated as Germany’s contribution to support European technology leaders to prevent successful German and European start-ups from leaving for other markets.
